Drugs, Profits and the Eternally Rising Cost of Health Care

This morning I awoke to this wonderful opinion piece in the New York Times called Drugs and Profits.  The article discusses a cancer treatment called Avastin produced and marketed by a company called Genentech.

Let’s breakdown the facts:

1. This drug is a treatment and not a cure for any type of cancer.
2. The following quote from another NYT article F.D.A. Rejects Use of Drug in Cases of Breast Cancer:
• However, Avastin did not prolong lives by a statistically significant amount.
3. Sales of this drug top $6,000,000,000 per year – that’s 6 billion dollars a year and it is, according to the above mentioned NYTs article, the worlds best-selling cancer drug.
4. Close to $1 billion dollars of those annual sales were to treat around 15,000 breast cancer patients.
5. The drug retails at about $90,000 per year for treatment but it is discounted to $57,000 per year for people who earn less than $100,000 per year.
6. The drug was approved for use against breast cancer as part of accelerated approval program back in 2008 but continued studies have failed to show that the drug  even prolongs life.  Note – that the drug would cure cancer is not even on the table.
7. Even if the FDA pulls the drug for breast cancer it will remain approved for treating a number of other cancers to the tune of over $5 billion dollars per year.

Imagine the following conversation with a doctor:

Patient:  “So will this drug cure me?”

Doctor: “No.”

Patient: “Will it help me to live longer?’

Doctor: “Not likely.  This drug can’t beat a placebo in helping patients live longer.  What that means is that I could feed you a sugar pill and tell you it would help you live longer and that would have a better chance of increasing your life simply by the hope it would give you than this drug will.”

Patient: “How much does it cost?”

Doctor: “$57,000 to $90,000 per year, depending on your income.”

I think you can imagine the conclusion of this conversation if the patient had to shell out the money to pay for this themselves.

But let’s examine things in the real world where doctors are enticed by pharmaceutical reps and the costs are covered by health insurance programs.

Patient:  “So will this drug cure me?”

Doctor: “Unfortunately there is no cure for cancer.  The best we can do is offer treatments and hope for the best.”

Patient:  “Will it help me live longer?”

Doctor: “There are studies that show that this drug, along with chemo therapy, helps to inhibit the growth of metastatic cancers but the exact effects of that on the patient are undetermined.”

Patient:  “How much does it cost?”

Doctor: “Don’t worry about that – this drug would be covered by your insurance, especially if you have Medicare and if you have no insurance Medicaid will cover it.”

Just to back up my little theater above here are some more quotes from the NYTs article:

Dr. Janet Woodcock, director of the Center for Drug Evaluation and Research at the F.D.A., said cost was not a factor. She said that Medicare and Medicaid would not consider changing reimbursement policies until a final decision was rendered.

Dr. Edith A. Perez, a breast cancer specialist at the Mayo Clinic, said she was shocked and saddened by the decision, saying the option should remain open to patients.

“It’s like any other drug I have in oncology,” said Dr. Perez, who consults for Genentech but whose fees go to her hospital, not her. “I never know if the patient in front of me will benefit.”

I don’t know how many people out there are not as stunned as I am that a drug that doesn’t cure and can’t even be shown to have a statistically significant effect on the life expectancy of a patient is the best-selling cancer drug in the world at around $6 billion in annual sales.  I didn’t even get into the side effects which are no walk-in-the-park either.

It costs $57,000 a year with a discount.

That is insanity.

A consumer who would have to pay for this out of pocket wouldn’t even consider this treatment.

But when a drug is approved by the FDA and thus covered by Medicare and Medicaid this then sets the stage for coverage by all other insurance companies, often by the state legislatures passing laws requiring the insurance companies that operate in their states to cover the drugs covered by Medicare and Medicaid.  These costs are passed on to our insurance premiums and Federal and state deficits which will ultimately come to us via taxation.