They ask, sometime in pure ignorance and oft times with
incredulity, “why is cancer care so expensive?”
The rabbit hole is deep and dark, but if you shine the light, you can see the trail of the smoking caterpillar.
The rabbit hole is deep and dark, but if you shine the light, you can see the trail of the smoking caterpillar.
Some try to create cost algorithm based on survival benefit
of a drug on cancer care, others are trying to legislate lower costs, while still
others reach out for subsidies from the eternal fountain of taxpayer wealth.
Life in these United States is indeed interesting.
While searching for a gradient to seek the fissures of
thought, let me break it down by category:
Drug development:
The claim is that bringing a new drug to market is valued at $2.6 Billion (of
which $1.2 Billion are time costs). ①
Incurred in this cost is the old premise
that of the 5000 drugs tested only one enters the market, showing benefit in
the petri dish, mouse model and then through human Phase I and II trials
leading to FDA approval. That $1.4 billion in actual expense is amortized over
the next 7 years of patent protection with a certain Return on Investment or
ROI for the risk undertaken by the company. There are quite a few “wrong-headed
methodologies” in use there. ② However not all costs are related to drug development, some are purely annual price increases to keep up with the earnings per share (EPS).
Insurers:
The Cost to insurers is defrayed easily by the price of the premiums. In
essence for all the talk of “Risk Mitigation” from the insurers, there is
little risk involved, except the agency risk of losing a bonus for the managers
should the benchmark of the stock price not reach the intended target. Overall
unless you happen to take some real wild risks like AIG with Credit Default
Swaps and the like, your chance as an insurer of an extremal event is nigh
impossible. ③ Meanwhile as the money trail indicates that the Insurers paid $102 million to lobby the congress to tweak the Obamacare and in return the Health Care Index has risen by 305% over the past three years! Stupendous Returns eh?
Supply and Demand:
If a drug is developed for a condition that afflicts only a few souls, it is
given an orphan drug status. The price of the drug development will always be
high to amortize the drug development costs. But a drug for an affliction of
the masses should not be that expensive. The case in point is a company named
Dendreon and their drug product Provenge used for Prostate Cancer. The Provenge
cost was $93,000 per treatment and enhanced survival by only 4 months led to
the eventual decline in the fortunes of that company into a bankruptcy. ④
The
fault line in this exceedingly pure appearing surface had been discovered. But
there were two important lessons from that case; one, the concept of using
immunity against malignancies and two, careful how you price the product with
limited benefit. Careful of the faint light that beckons, like a mirage, and then dies.
Oncologists in
delivery of care: Much is made of the physician who uses the expensive
medicine for his or her own benefit. Fortunately except in a select few
unfortunate cases, the majority of the physicians use cancer drugs based on the
data they have for the fullest benefit to their patients. This might appear a
heresy to the journalists since it does not follow their narrative, but based
on talking with my colleagues, the foregoing is a fact. The problem in most
cases is the transparency of the drug cost itself. We as oncologists offer
treatment on the basis of the best benefit against the malignancy and not
necessarily based on cost to benefit ratio. We are after all doctors and not
businessmen or women. Our purpose is to heal. And therein is the crux of the
matter. Big Pharma and Biotech companies know our ethos and price their
products according to their cost plus ROIs. Unfortunately more often than not
the “studies” being quoted are based on a low “n” and tortured statistics based
on assumptions that carry their argument. The studies are touted as the next
best thing since sliced bread! ⑤. The fault may not fall too far from the physicians either at times when more expensive drugs are used where cheaper ones would suffice. The human dignity is best served through truth.
Mini-incrementalism: There are very few large leaps in oncology patient
care, more of the medical literature litters the landscape with
mini-incrementalism in benefits through the tortured use of Progression Free
Survival or PFS. Unfortunately half of those studies cannot be verified or
validated. The purpose in some cases is a continuous source of incremental
revenue. This is by far the most destructive force in medicine today. Read here on...PFS
800lb Gorilla:
The Insurer-Lobbyist-Expert-Middling-Manager remains the big culprit. Realizing
that from 1970 to 2009 physician population increased minimally less than 5% in spite
of the total population of the United States that grew to 320 million, the
administrators however grew by over 3000% according to the Bureau of Labor
Statistics (BLS).
To apply the Supply – Demand metrics to the oncology dilemma
is akin to creating a skin in the game for the two main entities concerned; the
patient and the physician. If the patient cannot afford the medication then the
volume will dry up and the cost of the product will of necessity go down as
long as the intermediaries are not in the process of processing these payments
and extracting their bounty. Already China rejected the patent for Solvadi ($84,000 drug against Hepatitis C) India and France successfully negotiated the cost at
70% less. But in truth if one looks at the cost of the Hepatitis C infection, its complications and overall health costs of are for the illness, the cost of Solvadi is actually a fraction of that expense ⑥. Using mandated price controls however is a
top-down measure that governments and policy makers use in an attempt to control price and show how they are working for the public benefit. Alas price controls never achieve their objective of cost reduction but in
effect becomes the force du jour for control of care and higher prices.
We have come a long way baby! True. But where we are going is not that long. At this rate it will be a long hard winter soon and the chilling frost will last a very long time.
We have come a long way baby! True. But where we are going is not that long. At this rate it will be a long hard winter soon and the chilling frost will last a very long time.
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