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Why Are Cancer Medicines Expensive?

John Castellani   |     October 6, 2014   |   SHARE THIS

This post first appeared on the Morning Consult

Prescription medicines account for just nine cents of every dollar spent on health care in the U.S., and cancer medicines represent just one percent of health care spending.

Yet when it comes to cancer medicines, the first question we often get asked is: why are cancer medicines so expensive?

patientsI understand why this question gets asked. And when I get asked, I think of the many patients – husbands and wives, mothers and fathers, brothers and sisters, children – who get diagnosed with cancer every day

One in two people born today will be diagnosed with cancer.

A cancer diagnosis causes life to change in an instant. Under the shroud of a diagnosis, patients’ outlook on life may darken. They assess what the future looks like, and ask themselves: what if I never get cured?

Fortunately for the millions of cancer patients around the world, people have been working on answers.

Since 2000, America’s biopharmaceutical research companies have invested a half-trillion dollars researching and developing new medicines. Last year alone, this investment totaled more than $51 billion– more than any other industry in the world, including research-reliant businesses like computers and electronics

The return on this investment has been profound for patients and society.

Health innovation has helped raise average U.S. life expectancy from 47 years in 1900 to 78 years more recently, led by advances against heart disease, HIV and cancer.

New cancer medicines have helped cut the overall cancer death rate in the U.S. by 20 percent since its peak in 1991. Since the beginning of the “war on cancer” in the 1970s, the five-year survival rate has increased 21 percent for breast cancer, 50 percent for prostate cancer, 36 percent for colon cancer and 54 percent for lung cancer. Survival rates for childhood cancers are up 58 percent.

But what about the cost of medicines to treat those cancers. Why do they cost so much?

A simple analogy may help answer this question. Today, two-thirds of all Americans have smartphones. More than a billion iPhones and Androids have been sold globally, and, generally, they function the same way for each of us. And they also generally cost us all the same.

But that person you see at work, at school or in an airport halfway around the world might have had skin cancer.

Your neighbor might be a breast cancer survivor.

And that student waiting for a bus? She might be recovering from leukemia.

And while each of them might have the same smartphone in their pocket, and each of them might have paid the same amount for it, none of them had the same cancer. And every individual’s body functions differently, so none of them could have taken the same medicine.

Each person got a medicine made specifically for their cancer. And it took biomedical researchers, oncologists, government, academic experts and others to help determine exactly which medicine would work best for each of them.

There’s no question it costs a lot to create smartphones for a billion people. But it costs more – much more – to create a medicine for an individual.

While the need to target medicines to narrow populations is one reason, another is that success usually comes only after extensive failures.

Today, it costs more than $2.6 billion and takes more than 10 years of research to investigate a new drug. We must remember cancer is an extremely complex set of more than 200 diseases, and the path to new cancer medicines is paved with potential treatments that do not make it past clinical trials.

A new report being released this week found between 1998 and 2014, 96 potential treatments for melanoma didn’t make it through clinical trials; only 7 were eventually approved. Similarly, 167 potential lung cancer medicines failed in clinical testing, while 10 were approved. And three potential brain cancer treatments were approved, compared to 75 that failed.

Any clinical trial is a risk. It is a step into the unknown.

And, importantly, the full clinical value of a medicine may not be known for years after it is approved by the Food and Drug Administration (FDA). A 2012 report from Boston Healthcare points out how ongoing research evaluates the medicine’s effectiveness “in less-advanced disease, in combination with other therapies, in patient subpopulations, and in different cancer types altogether.” This research usually leads to a broader understanding of the full clinical value of the medicine and “may prove a greater benefit to patients than demonstrated at the time of initial approval.”

There is no reward without risk and continued investment. That is why biopharmaceutical companies continue to search for new treatments despite these incredible odds.

After all, the societal value of medicines is evident: longer lives mean more time with family, friends, work or however you choose. The economic value is known, too, as health breakthroughs are estimated to add about $3 trillion per year to national wealth.

And there is hope for the future. Right now biopharmaceutical companies currently have 771 medicines and vaccines to treat or prevent cancer in clinical trials or awaiting FDA review.

The biopharmaceutical pipeline has never been more promising. But for the full promise of medical innovation to be achieved, we must ensure that patients who need these medicines are able to access them. Unfortunately, the current insurance model requires patients to pay a larger and larger share of their medicine costs – far more than for the care they receive at a physician’s office or in the hospital.

Rapidly growing cost-sharing for cancer medicines is making it harder for patients to afford life-saving medicines that can transform their lives. And it distorts the important public dialogue about the cost of cancer medicines by making cancer medicines appear to be more expensive than they are, particularly compared to other health care services.

Why are cancer drugs expensive? is a good question. But so is: what is the ultimate value of cancer medicines for patients?

If we only ask ourselves the first question and ignore the second, it could have unintended consequences for the millions of patients who are asking themselves every day: what if I never get cured?

John Castellani

John Castellani John J. Castellani is past President and Chief Executive Officer of the Pharmaceutical Research and Manufacturers of America (PhRMA). He is a passionate advocate for a strong, innovative and growing American biopharmaceutical research industry that plays a critical role in helping to improve the health of every American and patients the world-over. Mr. Castellani is also the former President and CEO of Business Roundtable, an association of chief executive officers of leading U.S. corporations with a combined workforce of nearly 12 million employees and $6 trillion in annual revenues.

Topics: Cancer, Drug Cost

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