Volume 1, Issue 3

Reasons and solutions for high cost of cancer drugs

S. Vincent Rajkumar, M.D.

A virtual monopoly held by some drug manufacturers in part because of the way treatment protocols work is among the reasons cancer drugs cost so much in the United States, according to a commentary by two Mayo Clinic Cancer Center physicians in the October issue of the journal Mayo Clinic Proceedings. Value-based pricing is one potential solution, they wrote.

Mustaqeem A. Siddiqui, MBBS

"Cancer care is not representative of a free-market system, and the traditional checks and balances that make the free-market system work so efficiently in all other areas are absent when it comes to most cancer treatment," wrote authors Mustaqeem A. Siddiqui, MBBS, an oncologist, and S. Vincent Rajkumar, M.D., a hematologist.

For example, when it comes to over-the-counter painkillers or antibiotics, a physician or patient can choose from multiple drugs. But cancer drugs are administered to patients sequentially or in combination, creating a virtual monopoly for each drug. This is one of the principal reasons for the high cost of cancer therapy.

Other factors include the expense of drug development; the high price that patients and insurers are willing to pay for even modest improvement in outcomes; and a lack of regulations, such as a cost-effectiveness analysis to account for economic and value-based considerations in the drug-approval and pricing process, the physicians wrote.

Solutions the authors recommend include:

• Value-based pricing that includes discrete metrics, such as an incremental cost-effectiveness ratio per quality-adjusted life years gained, as a result of a particular treatment. Quality-adjusted life years is an estimate of the number of years added to a patient's life by a specific drug intervention, adjusted for quality of life.
• A Food and Drug Administration mandate requiring drug companies to submit a value dossier when seeking drug approval. This information would give patients and physicians the ability to make better informed decisions about treatment.
• Authority for the Centers for Medicare and Medicaid Services to negotiate payments for cancer drugs.
• Improved national cancer guidelines providing evidence-based analysis of quality of life, mortality data, benefits, risks and cost for all possible treatment options.
• Monopoly rules to determine if a particular drug will operate in a monopoly situation. Such drugs would be subject to legally mandated or voluntary price controls in exchange for expedited approval.
• Requiring nonprofit drug companies to manufacture and distribute generic cancer drugs at a very low cost.

Watch a video of Dr. Rajkumar discussing this study.