Amid all the drug-pricing brouhaha this week, a British pharmacologist was preparing to unveil his research showing just how much more Americans pay for cancer therapies. And while it’s well known that medications cost more in the U.S. than in other countries, this new study puts some surprising numbers to that spread.
In a Reuters interview in advance of the release, University of Liverpool researcher Andrew Hill said U.S. prices for a class of drugs called tyrosine kinase inhibitors are twice those in Europe. Drugmakers charge up to 600 times the production cost for some treatments, Hill calculated, though that doesn’t include investment in R&D.
For instance, Roche’s ($RHHBY) lung cancer drug Tarceva carries a U.S. price of $79,000, compared with $26,000 to $29,000 in a selection of Western European nations, Hill found. Novartis’ ($NVS) leukemia drug Gleevec (also known as Glivec) runs $106,000 in the U.S. compared with $29,000 to $35,000 in Europe. Tykerb, the breast cancer drug Novartis recently acquired from GlaxoSmithKline ($GSK) in their multibillion-dollar sale-and-swap, has a U.S. list price of $74,000, compared with $35,000 in Europe.
That puts U.S. prices at up to three and a half times those in Europe.
“Why should the U.S. bear this huge burden [of] cost?” Hill asked Reuters. “It is not as if the GDP of the United States is so much higher than that of European countries, but they just seem to pay these big premiums.”
This is exactly the question asked by Sen. Bernie Sanders, his Democratic presidential rival Hillary Clinton, and others who advocate new price-negotiation powers for Medicare. The quick answer is that European countries with single-payer or other tightly controlled healthcare systems use cost-benefits assessments and reference pricing to keep drug spending down.
In the U.S., the FDA is forbidden to consider cost when weighing new drugs for approval, and there’s no agency charged with putting a value on drug treatments. Previous efforts in that direction have met charges of “rationing” healthcare, and even Medicare price negotiation has been a non-starter in previous congresses.
But the fast-brightening spotlight on U.S. prices has spawned new proposals that would limit price hikes directly and make other changes that could force down spending, such as quicker approvals for generic meds. Sanders and Rep. Elijah Cummings introduced their drug-pricing bill earlier this month, and Tuesday, Clinton unveiled her own proposals to combat increases.
The fact is, as Hill says, high U.S. prices subsidize lower prices around the world, covering R&D spending–and profits–for pharma companies. With new cancer drugs rolling out at prices well above $100,000 per year, and older meds reaching new heights via ongoing increases, some oncologists have turned into activists, and a handful of private groups have proposed ways to evaluate treatments by their effectiveness, side effects and cost.
Memorial Sloan-Kettering’s Center for Health Policy and Outcomes, posted an interactive Drug Abacus, for instance, and it advocates pricing meds according to their effectiveness in individual indications. The influential American Society of Clinical Oncology has put in its two cents with a drug-evaluation framework. And top doctors have put in their two cents; as one Memorial Sloan-Kettering oncologist put it during a speech at this year’s ASCO meeting, “These drugs cost too much.”
“All of the stakeholders involved need to stop pretending that price is something we don’t need to discuss,” Dr. Leonard Saltz said at the time, “because it affects all of us, and it’s affecting our ability to deliver quality care to everyone.”
September 24, 2015 – By Tracy Staton