Cost of Cancer Drugs
This article was sent to me by Ien van Houten
as a companion piece to
Cancer Treatment Gravizon
By ALEX BERENSON, NY Times, July 12, 2005
Ten thousand dollars once seemed a lot to pay for a few months'
supply of a drug.
No more. Avastin. Erbitux. Gleevec. Herceptin. Rituxan.
Tarceva. These are among the first in a wave of new drugs
giving hope to millions of cancer patients by treating the
disease in new ways, like blocking the blood vessels that feed
But they are all highly expensive, up to $100,000 for a course
of treatment that lasts a few months. That is hundreds of times
the cost of older, more toxic cancer drugs, and several times
the annual cost of AIDS drugs, whose prices caused widespread
anger during the 1990's.
And except for Gleevec, a leukemia drug from Novartis that has
produced spectacular results, the new cancer drugs help most
patients only marginally, prolonging life by a few weeks or
For now, the high-priced cancer drugs are a relatively small
part of overall medical spending. But some doctors warn that
with more new drugs coming, the use of super expensive
therapies may further fuel the runaway costs of the health care
Dr. Leonard Saltz, a colon cancer specialist at Memorial
Sloan-Kettering Cancer Center in New York, said patients might
face rationing of care if costs continued to rise.
"I don't know how much money there is in the till to pay for
all this, but I have to be worried there isn't enough," Dr.
Saltz said. "There is a limit as a society to how much we'll be
able to spend on each patient."
Health care economists say the rising costs of the new cancer
treatments and other drugs will force difficult questions on
doctors and policy makers. Should patients be guaranteed access
to drugs no matter what their cost? And should physicians be
encouraged to consider cost when they decide on treatment -
something most doctors in this country now say they do not
Drug companies say many factors drive the pricing of their
drugs, including the high cost of research and development,
complex and expensive manufacturing processes and the value the
drugs provide for patients.
As doctors learn how to use combinations of new drugs in
treatment, the therapies will extend the lives of more and more
patients, said Dr. Susan Desmond-Hellmann, president for
product development at Genentech, a biotechnology company in
South San Francisco, Calif. The company makes several of the
new drugs, including Avastin, that are widely considered the
most promising. A year's supply of the drug for an average
colon cancer patient costs $54,000.
"It's a very reasonable thing to ask about the cost of
therapies," Dr. Hellmann said. "But I just don't want people to
lose sight of how meaningful the changes in treatment are."
For now, most patients are able to obtain the new drugs, either
through insurance coverage or assistance programs. Lung cancer
was diagnosed in Shawnette Treat, 37, early last year and she
was told her life expectancy was less than two years. She now
takes Tarceva, which costs almost $90 a day, or $31,000 a
Ms. Treat, who lives with her husband and two children in
Melbourne, Ark., has private insurance, which covers 80 percent
of Tarceva's cost. But she stopped working in March after
undergoing a double mastectomy when the cancer spread. She said
she could not afford her insurer's $500 monthly co-payment for
"My husband's the only one working, and we have bills and stuff
that we have to pay, and it takes all he makes for us to make
it," Ms. Treat said. "Five hundred dollars is a lot to us a
The Patient Advocate Foundation, a nonprofit group based in
Newport News, Va., that helps people obtain medical care, is
covering the monthly payment, Ms. Treat said. "I wouldn't be
able to take it if they didn't pay my co-pay."
But the foundation covers only a few kinds of cancer and does
not directly assist people who are uninsured, said Beth
Darnley, the foundation's chief program officer. Those patients
must apply to Medicaid or to the companies for discounted
In some cases, patients are discontinuing treatments or taking
other drastic steps, doctors say.
Dr. Angela Dispenzieri, an oncologist at the Mayo Clinic who
specializes in treating a blood cancer called multiple myeloma,
said she avoided discussing a drug called Thalomid with
patients who could not afford it. The drug costs $25,000 a year
and will not be covered by Medicare until next year.
"I don't want them to feel bad," she said.
If history is any guide, health care professionals say,
patients, doctors and lawmakers will not want to confront
questions about how the medical system should deal with the
cost of the new drugs.
"There's not really any incentive in the system to be more
rational," said Dr. John Hornberger, an adjunct clinical
professor of medicine at Stanford University and a practicing
physician who studies drug costs.
Policy makers in the United States, unlike those in Britain and
some other countries, do not measure the cost-effectiveness of
new drugs, Dr. Hornberger said. The government does not control
drug prices, and Medicare is prohibited from making coverage
decisions based on cost; it must base its decisions solely on
the drugs' performance.
In terms of the cost per life saved, cholesterol-lowering drugs
like Lipitor, which reduce heart attacks and strokes, are
probably far more effective than cancer drugs, Dr. Hornberger
said. But cancer is a uniquely frightening disease, and people
will pay almost any price for treatments. Also, most cancer
drugs do not have good substitutes; if a drug works - even
marginally - patients and doctors clamor for it, and insurers
have little choice but to cover it, Dr. Hornberger said.
While some of the new drugs are difficult to make, their prices
are unrelated to their manufacturing costs, said Geoffrey
Porges, a biotechnology analyst at Sanford C. Bernstein &
Company. Drug makers charge what they think the market will
accept, he said.
"It's sort of one of those things where everyone looks over
their shoulder at everyone else, says, 'He started it, it
wasn't me,' and it builds," Mr. Porges said.
Advocacy groups for cancer patients have been mostly silent on
drug prices because pressing drug makers might discourage them
from making the billion-dollar investments necessary to find
Doctors also do not want to consider cost, said Dr. Eric
Nadler, a researcher at Harvard Medical School who has studied
the attitudes of oncologists on the issue. In his study, about
80 percent of cancer doctors said they would prescribe a drug
costing up to $70,000 if it would extend a patient's life just
two months longer than the standard treatment.
In fact, the way doctors are reimbursed for cancer drugs gives
them an incentive to prescribe the most expensive treatments.
The drugs are generally given intravenously in a hospital or
doctors' office, and Medicare pays doctors for the cost of the
drug plus a slight extra fee to help cover their overhead. The
higher the price of the drug, the greater the extra fee.
As a result of these forces, drug makers have faced only
scattered opposition to the rising prices of new cancer
treatments. The upward spiral started in 1992, when
Bristol-Myers Squibb began charging $4,000 a year for Taxol, a
breast cancer treatment that was among the first so-called
targeted drugs, which are aimed at destroying tumors without
the side effects of traditional chemotherapy.
At the time, some lawmakers and patient advocates complained,
noting that Taxol had been invented at taxpayer expense at the
National Cancer Institute. But Bristol held firm.
Then in 1998, Genentech began charging $20,000 a year for
Herceptin, another targeted therapy for breast cancer. The
price attracted notice, but little criticism.
Four years later, Bristol and ImClone Systems began charging as
much as $100,000 a year for Erbitux, a drug for advanced colon
cancer. (Because different patients have different treatment
cycles, these prices are averages, as computed by the companies
or financial analysts.)
For drug makers, the high prices have been a boon. Shares of
Genentech have quadrupled in the last two years. Dr. Hellman of
Genentech noted that the company began researching Avastin in
1989, at a time when many scientists doubted it could work.
Genentech spent hundreds of millions of dollars researching the
drug, and decided to build a plant to manufacture it years
before receiving approval to sell Avastin in 2004.
Considering the expense and risk Genentech incurred - as well
as the costs of similar treatment - Avastin is fairly priced,
Dr. Hellman said.
"It's a giant breakthrough therapy," she said. "The value to
patients is very high."
Cancer drugs will be the fastest-growing part of the drug
market for the next five years, with costs rising 20 percent a
year, more than double overall drug spending, analysts say.
Every major drug maker is now investing heavily in oncology,
rushing to capitalize on new research about the way cancer
cells reproduce. Most of the new drugs attack the proteins that
help tumors grow, and most are produced by specially engineered
bacteria, unlike the older drugs which can be chemically
Cancer drugs are not the only expensive new treatments; some
drugs for rheumatoid arthritis cost more than $10,000 a year.
But the gap between performance and cost is especially
pronounced for the cancer treatments. A Genentech study of
colon cancer patients showed that a combination of Avastin and
standard drug therapy extended the life of the average patient
less than 5 months - to 20.3 months from 15.6 months - compared
with the standard treatment. With the notable exception of
Gleevec, from Novartis, which has been widely praised for
prolonging the lives of leukemia patients, most other drugs
show even smaller improvements in survival.
Some oncologists are beginning to question cancer drug prices
publicly. Dr. Saltz of Memorial Sloan-Kettering Cancer Center
said doctors must consider drug cost when they discuss
treatments with patients.
"We'd like to feel that it's wrong to put a value on human life
and that we as a society won't do it," he said, "but we do it
Copyright 2005 The New York Times Company