Reasons for high cost of cancer drugs and possible solutions
| Reasons and solutions . |
|---|
| Why are cancer drugs so expensive? |
| • High cost of drug development |
| • Existence of virtual monopoly; lack of free market competition |
| • Sustaining monopoly with “new and improved” versions of a drug as patents expire |
| • Willingness of patients to pay high costs even for marginal improvements in outcome due to the seriousness of the diagnosis |
| • Higher reimbursement to providers when more expensive drugs are administered |
| • Legal barriers that prevent the FDA from taking economic and cost-effectiveness considerations into account when approving new drugs |
| • Laws that prevent CMS from being able to negotiate the price of new drugs |
| • Prohibition of importation of drugs for personal use |
| • Resistance to change in policies from pharmaceutical companies and from professional and patient support organizations who receive financial support from pharmaceutical companies |
| What can we do about it? |
| Value-based reimbursement and pricing |
| • FDA, CMS, or other agency should be able to negotiate the sale price based on the incremental value provided by the drug as is done by health authorities in Canada and Europe |
| • PCORI should be authorized to allow cost-effectiveness as a metric to compare relative value of treatments |
| • Support organizations such as Institute for Clinical and Economic Review which evaluate the cost -effectiveness and affordability of new treatments |
| Negotiation of prices and formulary control |
| • CMS should be authorized to negotiate cost and have formulary control |
| • Strong advocacy and a patient-driven grass-roots movement for the required changes in federal law |
| Increase market competition |
| • Allow importation of drugs for personal use |
| • Facilitate easier approval of generics |
| • Selectively invoke compulsory licensing provisions |
| New modalities for drug development |
| Reasons and solutions . |
|---|
| Why are cancer drugs so expensive? |
| • High cost of drug development |
| • Existence of virtual monopoly; lack of free market competition |
| • Sustaining monopoly with “new and improved” versions of a drug as patents expire |
| • Willingness of patients to pay high costs even for marginal improvements in outcome due to the seriousness of the diagnosis |
| • Higher reimbursement to providers when more expensive drugs are administered |
| • Legal barriers that prevent the FDA from taking economic and cost-effectiveness considerations into account when approving new drugs |
| • Laws that prevent CMS from being able to negotiate the price of new drugs |
| • Prohibition of importation of drugs for personal use |
| • Resistance to change in policies from pharmaceutical companies and from professional and patient support organizations who receive financial support from pharmaceutical companies |
| What can we do about it? |
| Value-based reimbursement and pricing |
| • FDA, CMS, or other agency should be able to negotiate the sale price based on the incremental value provided by the drug as is done by health authorities in Canada and Europe |
| • PCORI should be authorized to allow cost-effectiveness as a metric to compare relative value of treatments |
| • Support organizations such as Institute for Clinical and Economic Review which evaluate the cost -effectiveness and affordability of new treatments |
| Negotiation of prices and formulary control |
| • CMS should be authorized to negotiate cost and have formulary control |
| • Strong advocacy and a patient-driven grass-roots movement for the required changes in federal law |
| Increase market competition |
| • Allow importation of drugs for personal use |
| • Facilitate easier approval of generics |
| • Selectively invoke compulsory licensing provisions |
| New modalities for drug development |