By Richard Knox
The rocketing cost of prescription drugs garners almost daily attention lately. Polls say it’s high on the list of Americans’ health care worries; presidential candidates are calling for sweeping reform; a storm erupts when one company jacks up the price of an HIV drug by 5,000 percent.
And now, research reveals the yawning gap between the price of widely used cancer drugs and their actual cost.
The true cost — what drug makers have to spend to get those pills to your local pharmacy — is made up of the active ingredient and other chemicals, their formulation into a pill, packaging, shipping and a profit margin.
British researchers, in a report to be delivered this weekend at a European cancer conference, say the price of five common cancer drugs is more than 600 times higher than they cost to make.
For instance, the analysis figures the true cost of a year’s supply of Gleevec (generic name imatinib), used to treat certain kinds of leukemia, at $159.
“This is a ginned-up pricing structure that isn’t a product of careful analysis. It’s not a bunch of guys in green eye-shades but a bit of dart-throwing and chutzpah.”
But the yearly price tag for Gleevec is $106,322 in the U.S. and $31,867 in the U.K. A generic version costs about $8,000 in Brazil.
“We were quite surprised just how cheap a lot of these cancer drugs really are,” pharmacologist Andrew Hill of the University of Liverpool said in an interview. “There’s a lot of scope for prices to come down.”
Hill’s team got the ingredient costs from a public data base called IndiaInfoDrive.com. The Liverpool group did the same analysis for four other drugs in the same class, called tyrosine kinase inhibitors, or TKIs. They’re used to treat lung, breast, liver, pancreas and thyroid cancer as well as leukemias. Their names are Tarceva (erlotinib), Nexavar (sorafenib), Tykerb (lapatinib) and Sprycel (dasatinib).
The true yearly cost of these four drugs ranges from $236 for Tarceva to $4,022 for Tykerb. But their U.S. sticker prices range from $78,797 to $135,679.
The analysis has implications beyond the United States. Hill says more than a million cancer patients around the world meet criteria for taking the five TKI pills. “Very few of them are being treated now,” he says, because the drugs are so expensive.
A 100-Fold Rise
And the implications stretch way beyond these specific cancer drugs. Overall prices for cancer medications have been going up at a fast clip. Dr. Peter B. Bach of Memorial Sloan Kettering Cancer Center in New York has documented a nearly 100-fold increase in cancer drug prices since 1965 after adjusting for inflation.
“The rate of rise exceeds the rise in benefits from these drugs,” Bach says. “This is a ginned-up pricing structure that isn’t a product of careful analysis. It’s not a bunch of guys in green eye-shades but a bit of dart-throwing and chutzpah. And if there’s a critical Op Ed piece or a Twitter avalanche [in response to a high price] they’ll lower it.” Continue reading