Cancer drug prices are high at launch and stay that way

By ED SILVERMAN @Pharmalot, Stat News | May 2, 2016

The cost of new oral cancer medicines is rising no matter how you slice it.

Between 2007 and 2013, these pills increased in cost 5 percent each year, and rose another 10 percent when regulators approved additional uses for the drugs, according to a new study in the May issue of Health Affairs. Moreover, the introduction of rival treatments had only a modest effect on cost — generating a decline of about 2 percent. In other words, competition did not do very much to keep a lid on costs.

Meanwhile, a month of treatment with the newest cancer drugs, introduced in 2014, were on average six times more expensive at launch than pills introduced in 2000. Put another way, cancer pills approved in 2000 cost an average of $1,869 per month compared to $11,325 for those approved in 2014, according to a research letter published last week in JAMA Oncology. The paper examined 32 drugs.

“The conclusions in both studies are very similar — whether it’s the prices taken at launch or prices over time, there have been large increases,” said Carrie Bennette, a health economist at the University of Washington in Seattle and lead author of the Health Affairs study.

The findings, which are adjusted for inflation, are only the latest sign that the costs of prescription medicines are rising at an accelerated pace. This has been especially true for hard-to-treat illnesses — notably, different types of cancers — as drug makers seek to justify rising price tags by pointing to other health care costs that can saved in the future. Some call this the value proposition.

“We have seen dramatic improvements in cancer survival as a result of innovative treatment advances, with death rates declining 23 percent since their peak,” a spokeswoman for the Pharmaceutical Research and Manufacturers of America, an industry trade group, wrote us. “New oral therapies are giving patients treatment options that are not only easier to receive but also result in reduced side effects for many patients, compared to many traditional forms of chemotherapy and radiation.”

Drug makers also argue that high prices for such treatments are justified since the patient populations can be relatively small. Instead, costs keep rising even as additional regulatory approvals widen the number of patients who can be treated, said Stacie Dusetzina, the JAMA Oncology author and a professor at the University of North Carolina at Chapel Hill, who specializes in pharmaceutical outcomes.

We should note that both studies focused on cancer pills reimbursed by commercial health plans, and neither reflected rebates that drug makers provide to pharmacy benefit managers and other payers. IMS Health noted net prices for brand-name medicines, in general, increased 2.8 percent last year, down from 5.1 percent in 2014. For her part, Dusetzina argued that “it doesn’t seem rebates would be high enough to counter the price increases year to year,” which is why she focused on changes over time.

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