Menus Subscribe Search

Health Care

pills

(Photo: Nenov Brothers Images/Shutterstock)

The High Cost of Living With Cancer

• May 12, 2014 • 6:00 AM

(Photo: Nenov Brothers Images/Shutterstock)

The biggest pharmaceutical companies are celebrating huge profits while their patients struggle to afford their cancer-fighting drugs.

Bristol-Myers Squibb was the darling of Wall Street recently, with an impressive five percent increase in first-quarter revenue to $3.63 billion. Its research and development cost in that same quarter increased by only two percent to $946 million.

It is noteworthy that marketing, selling, and administrative expenses at the pharmaceutical giant decreased by four percent over the same period, with a 14 percent decrease in advertising and product promotion spending.

This remarkable boost in revenue was driven by robust sales in the company’s oncology portfolio, which includes the drugs Yervoy and Sprycel. While champagne corks were popping in the Bristol-Myers boardroom, some oncology patients were likely counting their pills and sliding precipitously into debt just for a chance at living a few more months.

Without a doubt, progress has been made in treating certain cancers; it is no longer necessarily a death sentence. But even so, most patients currently receiving cancer treatment will die of their disease.

Because the return on investment has been robust for big pharma, but not so great for patients, some oncologists have started calling for value-based pricing for cancer drugs in the United States.

Except for cancers caught in the early-stages, cancer of the testes, and certain blood cancers, most cancers remain incurable and are now chronic illnesses. The very life-threatening nature of a diagnosis exerts great pressure on both patients and physicians to use extremely expensive drugs that in many cases provide little clinical benefit. Cancer patients consider it the cost of staying alive.

According to a report in the Journal of the National Cancer Institute, 11 of the 12 cancer drugs approved in 2012 by the Food and Drug Administration cost more than $100,000 per year.

Currently, one of the most expensive cancer drugs is Bristol-Myers’ Sprycel, approved by the FDA in 2006 for treatment of chronic myeloid leukemia, a type of cancer that starts in blood-forming cells in the bone and then enters the blood stream.

The drug saw worldwide revenue increase 19 percent, or $342 million, in the last quarter. In the United States alone, a 30-day supply of Sprycel, which extends the average person’s lifetime by approximately 42 months, costs approximately $9,000. That’s an expense, averaged out, of about $215 per month for the drugs alone.

To understand why pharmaceutical companies charge so much for cancer drugs, one has to simply be reminded that they’re businesses and thus focused on revenue.

In 2013, Bristol-Myers’ net sales were $16.4 billion, with research and development expenses of only $3.7 billion. Sprycel was one of the company’s top-selling drugs—at $1.3 billion in sales—for that year.

Two years earlier, in 2011, Bristol-Myers’ was charging $120,000 for four doses of Yervoy, an FDA-approved drug for treating metastatic melanoma, or skin cancer that has left the skin and moved to other places in the body. Despite its high cost, Yervoy yielded only 3.7 more months of survival in patients previously treated with other cancer drugs and 2.1 months in patients who had never received treatment.

Because the return on investment has been robust for big pharma, but not so great for patients, some oncologists have started calling for value-based pricing for cancer drugs in the United States—and they want the government to lead the way.

To be sure, our population is aging and cancer disproportionately affects older individuals, especially those of Medicare age. Half of this demographic gets by on a fixed income, made up of Social Security, pensions, earnings, and other income sources that amounted to less than $22,500, on average, in 2012, according to The Henry J. Kaiser Family Foundation. (For blacks and Latinos, this median income was $15,250 and $13,800 respectively.) For these patients, a diagnosis of cancer that requires the treatment of expensive cancer drugs can be a death sentence.

Further complicating the discourse over the cost of cancer drugs is the fact that there is no requirement for pharmaceutical companies to show magnitude of benefit, as the FDA approves drugs based on evidence of safety and efficacy. Here, statistics often trump clinical significance. That means a pharmaceutical company can show statistically significant extension of life, even though clinically the patient lives for only a few weeks to months on that particular drug.

Many oncologists are pushed into a corner, and worry that they’ll be labeled as “killers” if they dare to tell their patients the truth: That the exorbitant drug cost—the loss of their homes, the depletion of savings, the inability to pass something on to their children or other relatives—might not be worth the return on investment.

Pharmaceutical companies are businesses, focused on money-generating innovations. Yes, they have a fiduciary duty to their shareholders to maximize profits. Certainly, no one wants to slow innovation nor temper the pharmaceutical companies’ ability to bring truly life-saving cancer drugs to market.

However, the price paid for cancer drugs should reflect their clinical impact on patient survival. While one cannot discount the high cost of drug R&D and the time and cost incurred in bringing a new treatment to market, there must be a balance between innovation/profit maximization and cost to society in terms of lives lost and rising overall health care expenses.

How can we fix the problem? Pharmaceutical companies should decrease cancer drug costs over time; most companies recoup their R & D costs within the first five years of going to market. Thereafter, the incoming revenue is almost all profit. On the government side, Congress needs to revisit the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which prohibits Medicare from directly negotiating with drug companies in order to allow for a better pricing structure.

Additionally, the federal government, through the Centers for Medicare and Medicaid Services, should consider modified use of compulsory licensing to depress drug costs among Medicare patients with limited income. Under compulsory licensing, a country grants license to a low-cost generic drug company to manufacture a drug that is still under patent protection. This strategy has been effective in addressing the high cost of AIDS therapy in developing countries.

In 2012, approximately 120 physicians from 15 countries authored a commentary in the journal Blood, calling for drug companies to lower cancer drug costs. These physicians were not against company profits, but against profiteering.

Physicians must continue to critically evaluate the cost of emerging cancer drugs against the backdrop of tangible long-term benefits, and should be willing to say, “No, we will not recommend these drugs to our patients given the marginal return on investment or marginal improvement in outcome.”

Bristol-Myers anticipates that, going forward, gross margin will be in the 75-76 percent range, and selling, general, and administrative expenses will continue to decrease. As the company plans its forward-looking strategy, patients grapple with the high costs of cancer drugs with no relief in sight.

June M. McKoy
Dr. June M. McKoy is an associate professor at Northwestern University’s Feinberg School of Medicine, a graduate of the Kellogg School of Management, a licensed Illinois attorney, and director of geriatric oncology for the Robert H. Lurie Comprehensive Cancer Center. She is a 2013-14 Public Voices Thought Leadership Fellow at Northwestern University through The OpEd Project.

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

August 29 • 4:00 AM

Forgive Your Philandering Partner—and Pay the Price

New research finds people who forgive an unfaithful romantic partner are considered weaker and less competent than those who ended the relationship.


August 28 • 4:00 PM

Some Natural-Looking Zoo Exhibits May Be Even Worse Than the Old Concrete Ones

They’re often designed for you, the paying visitor, and not the animals who have to inhabit them.


August 28 • 2:00 PM

What I Learned From Debating Science With Trolls

“Don’t feed the trolls” is sound advice, but occasionally ignoring it can lead to rewards.


August 28 • 12:00 PM

The Ice Bucket Challenge’s Meme Money

The ALS Association has raised nearly $100 million over the past month, 50 times what it raised in the same period last year. How will that money be spent, and how can non-profit executives make a windfall last?


August 28 • 11:56 AM

Outlawing Water Conflict: California Legislators Confront Risky Groundwater Loophole

California, where ambitious agriculture sucks up 80 percent of the state’s developed water, is no stranger to water wrangles. Now one of the worst droughts in state history is pushing legislators to reckon with its unwieldy water laws, especially one major oversight: California has been the only Western state without groundwater regulation—but now that looks set to change.


August 28 • 11:38 AM

Young, Undocumented, and Invisible

While young migrant workers struggle under poor working conditions, U.S. policy has done little to help.


August 28 • 10:00 AM

The Five Words You Never Want to Hear From Your Doctor

“Sometimes people just get pains.”


August 28 • 8:00 AM

Why I’m Not Sharing My Coke

Andy Warhol, algorithms, and a bunch of popular names printed on soda cans.


August 28 • 6:00 AM

Can Outdoor Art Revitalize Outdoor Advertising?

That art you’ve been seeing at bus stations and billboards—it’s serving a purpose beyond just promoting local museums.


August 28 • 4:00 AM

Linguistic Analysis Reveals Research Fraud

An examination of papers by the discredited Diederik Stapel finds linguistic differences between his legitimate and fraudulent studies.


August 28 • 2:00 AM

Poverty and Geography: The Myth of Racial Segregation

Migration, regardless of race, ethnicity, gender, or sexuality (not to mention class), can be a poverty-buster.


August 27 • 4:00 PM

The ‘Non-Lethal’ Flash-Bang Grenades Used in Ferguson Can Actually Be Quite Lethal

A journalist says he was singed by a flash-bang fired by St. Louis County police trying to disperse a crowd, raising questions about how to use these military-style devices safely and appropriately.


August 27 • 2:00 PM

Do Better Looking People Have Better Personalities Too?

An experiment on users of the dating site OKCupid found that members judge both looks and personality by looks alone.


August 27 • 12:00 PM

Love Can Make You Stronger

A new study links oxytocin, the hormone most commonly associated with social bonding, and the one that your body produces during an orgasm, with muscle regeneration.


August 27 • 11:05 AM

Education, Interrupted

When it comes to educational access, young Syrian refugees are becoming a “lost generation.”


August 27 • 9:47 AM

No, Smartphone-Loss Anxiety Disorder Isn’t Real

But people are anxious about losing their phones, even if they don’t do much to protect them.


August 27 • 8:00 AM

A Skeptic Meets a Psychic: When You Can See Into the Future, How Do You Handle Uncertainty?

For all the crystal balls and beaded doorways, some psychics provide a useful, non-paranormal service. The best ones—they give good advice.


August 27 • 6:00 AM

Speaking Eyebrow: Your Face Is Saying More Than You Think

Our involuntary gestures take on different “accents” depending on our cultural background.


August 27 • 4:00 AM

The Politics of Anti-NIMBYism and Addressing Housing Affordability

Respected expert economists like Paul Krugman and Edward Glaeser are confusing readers with their poor grasp of demography.


August 26 • 4:00 PM

Marching in Sync May Increase Aggression

Another danger of militarizing the police: Marching in lock step doesn’t just intimidate opponents. It impacts the mindset of the marchers.


August 26 • 3:03 PM

The Best Reporting on the Federal Push to Militarize Local Police With Riot Gear, Armored Vehicles, and Assault Rifles

A few facts you might have missed about the flow of military equipment and tactics to local law enforcement.


August 26 • 2:00 PM

How the Other 23 Percent Live

Almost one-fourth of all children in the United States are now living in poverty, an increase of three million kids since 2005.


August 26 • 12:00 PM

Why Sports Need Randomness

Noah Davis talks to David Sally, one of the authors of The Numbers Game: Why Everything You Know About Soccer Is Wrong, about how uncertainty affects and enhances the games we watch.


August 26 • 10:00 AM

Honor: The Cause of—and Solution to—All of Society’s Problems

Recent research on honor culture, associated with the American South and characterized by the need to retaliate against any perceived improper conduct, goes way beyond conventional situations involving disputes and aggression.



Follow us


Subscribe Now

Young, Undocumented, and Invisible

While young migrant workers struggle under poor working conditions, U.S. policy has done little to help.

Education, Interrupted

When it comes to educational access, young Syrian refugees are becoming a “lost generation.”

No, Smartphone-Loss Anxiety Disorder Isn’t Real

But people are anxious about losing their phones, even if they don’t do much to protect them.

Being a Couch Potato: Not So Bad After All?

For those who feel guilty about watching TV, a new study provides redemption.

How Gay Men Feel About Aging

Coming to terms with growing old can be difficult in the gay community. But middle-aged men are inventing new strategies to cope.

The Big One

One in two full-time American fast-food workers' families are enrolled in public assistance programs, at a cost of $7 billion per year. July/August 2014 fast-food-big-one

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.