Cancer drug costs outpacing innovation?

Sombit Mishra

"We're in a situation where a cancer diagnosis is one of the leading causes of personal bankruptcy."

~Dr. Leonard Saltz, Chief of Gastrointestinal Oncology at Memorial Sloan Kettering

In a recent 60 Minutes segment, Lesley Stahl identifies many key challenges that are keeping cancer drug costs prohibitively expensive for the Middle Class.  Here are a few highlights and the full video segment is below: 

  • A single drug therapy may cost well over $100,000/year for a family
  • Drug companies report that it costs over $1 Billion to bring a new drug to market.  This is referred to as the "cost of innovation"
  • Middle Class families struggle to cover high insurance co-pays to the point where many are taking half-dose regimens instead of full regimens
  • Newer drugs like Zaltrap ($11,000/month) cost over twice as much as previous drugs on market like Avastin ($5,000).  And yet in clinical trials, when given as part of chemotherapy, Zaltrap has extended median patient survival by only 42 days over Avastin.  That's lame.
  • The single biggest source of income for private-practice oncologists is the Medicare margin earned from cancer drug prescriptions. The average Medicare margin oncologists earn is 6%, which naturally incentivizes prescriptions of higher priced drugs vs. lower priced drugs, regardless of efficacy. 

The Zaltrap findings are shocking.  If it takes $1 Billion to get a new drug to market, and the majority of these "costs of innovation" are passed onto the Middle Class, we are on a collision course to nowhere.  The silver lining of this collision is that it will likely force the hands of Congress, innovators, and consumers to take even more proactive, cost-effective steps in the future...hopefully it won't come too late.