Managed care and health insurance companies are trying to set cancer drugs pricing based on how well they work for patients. These so-called pay-for-performance deals with pharmaceutical companies would greatly benefit patients and families struggling with the rising cost of cancer medications.
Our team of lung cancer lawyers recently reported on the dangers of rising drug costs, particularly among cancer medications, many of which cost more than $100,000 per patient per year. Experts have been warning about the consequences of rising drug prices for the past decade and the tide is finally beginning to turn as doctors, hospitals, insurers and health managers are outright refusing to pay for or prescribe these overpriced drugs.
Traditionally, neither American doctors nor the FDA consider drug pricing when deciding whether a drug would be safe and effective in patients. Recently oncologists at Sloan-Kettering Cancer Center, one of the country's most esteemed hospitals, refused to offer a cancer drug because of its outrageous price. The drug, Zaltrap, was nearly identical to another drug already on market but cost twice as much: $11,000 per month. And it is useless when used on its own. Zaltrap is a second-line treatment, meaning it must be used in addition to other chemotherapies.
This was the first doctor-initiated revolt against drug prices in recent memory. What happens next? One health manager, Express Scripts Holding, is arguing for one possibility: pricing drugs based on how well they work. Health managers say they should pay less when drugs do not work well in certain patients with certain types of tumors.
Currently, insurers and managers pay the same per-unit price for all cancer drugs regardless of what type of tumor it is being used to treat. Drugs work differently for different cancers, however. The drug Tarceva, for example, extends the life of pancreatic cancer patients by an average of just two weeks, though it extends lung cancer patients' survival by about 3.5 months.
Therefore, Express Scripts is seeking to pay less for Tarceva for pancreatic cancer patients than for lung cancer patients. Tarceva costs $6,850 per month.
The U.S. spent $42.4 billion on oncology drugs in 2014. Yet, most cancer drugs provide minor survival benefits, shrinking tumors but never eradicating them fully.
Pharmaceuticals as a whole treat symptoms rather than underlying causes; this is why our national reliance on drugs has made us sicker instead or healthier, draining our healthcare system while fattening the pockets of Big Pharma.
A director at Sloan Kettering Cancer Center proposed a similar pay-for-performance model last year. He suggested dropping the price of the drug Erbitux, which typically costs $10,320 per patient, to about $420 per patient for its least-effective use (metastatic head and neck cancer).
Insurers and managers are also seeking simple price cuts, which Big Pharma has been able to avoid due to the country's fragmented healthcare system. Other tactics include providing new drugs for free for the first few months. If the drug works, patients are then expected to pay full price; if not, the patient is free to move on to another treatment.
Many drug companies are experimenting with various alternative-pricing systems due in no small part to public dislike and distrust. Physicians know that the rise in drug prices has far exceeded drugs' effectiveness - but a stunning number of patients do not. A study recently published showed that nearly 70% of advanced lung cancer patients did not understand that the drugs used in their treatments would not cure them.