The Cost of Chemotherapy Comes Home to Roost
Updated: Oct 25
Medical care in the United States is a $2.7 trillion industry. That translates into almost $8,000 per person per year. One of the most expensive aspects is cancer care. This has caught the attention of the medical oncology community. A highly touted editorial in the October, 2012 New York Times described the unwillingness of physicians at Memorial Sloan Kettering Cancer Center to add a new and expensive drug to their formulary. The authors opined that the new drug provided outcomes similar to those for an existing drug, yet cost twice the price.
A subsequent editorial in the Journal of Clinical Oncology from MD Anderson (Cancer Drugs in the United States: Justum Pretium – The Just Price) further examined the cost of cancer therapy, profit margins and some of the drivers. Among the points raised was the fact that the monthly cost of chemotherapy had more than doubled from $4,500 to $10,000 in just one decade. Furthermore, of twelve anticancer drugs approved in 2012, only three prolonged survival and for 2 of 3 by less than two months. Despite these marginal benefits, nine of the twelve drugs were priced at more than $10,000 a month. This caught the attention of the media with 60 Minutes recently conducting an interview with the authors of the New York Times editorial. While Lesley Stahl pointedly decried the rather marginal 4 – 6% markups that many physicians apply to cover their costs of chemotherapy drug administration, there are in fact much darker forces at work.
The cost of cancer drug development reflects the expense of human subject trials, cost of R & D, the regulatory burden, as well as an extraordinary new drug failure rate. Fully 50% of new agents fail at Phase III (the last and most expensive type of study). Phase III trials cost tens to hundreds of millions of dollars. An article in Forbes magazine stated that the average drug approved by the FDA now costs, not the one billion dollars often cited but instead five billion dollars when one factors in the failures against the rare successes.
Drug development begins with a novel idea, a small molecule and a few preliminary results. At this point the expenses are low but the drug is of little commercial value. As one moves from cell lines to animal models, the price goes up but the value remains low. The cost of formulation, toxicology and animal studies continue to add up but doesn’t influence interest in the agent. Then come human studies as the Phase I trials begin. Specialized institutions across the United States accept contracts with the pharmaceutical industry to examine the tolerability of the drug. I use that term advisably as the intent of Phase I trials is only to determine safety not efficacy. If the drug proves tolerable, it then moves to Phase II to explore it’s activity against cancer. This is where the money starts flowing.
Phase II clinical trials are conducted by university medical centers. Each patient accrued costs the pharmaceutical sponsors from $25,000 to more than $50,000 per patient. As drugs are tested in many schedules against many diseases it can take hundreds or even thousands of patients for statistical analysis. Nonetheless, a successful Phase II trial showing meaningful benefit in a cancer population generates a buzz and the drug’s value begins to gain traction. With hundreds of millions already expended, the final testing pits the new drug against an existing standard in one or more Phase III trials. Endpoints like progression-free-survival must then fold into overall survival if the drug has any hope to gain full approval by the FDA. These registration trials at the national or international Phase III level cost up to $100,000 per patient and most of the participating institutions are university-based medical centers or their affiliates.
So, why do chemotherapy drugs cost so much? While it may be convenient to point fingers at the pharmaceutical industry, private practitioners or the smaller institutions, the university medical centers and their affiliates have added greatly to the costs of drug development as have the increasingly byzantine regulatory standards that have so encumbered the process that it is now increasingly only a rich man’s game.
We applaud the investigators at Memorial Sloan-Kettering for focusing attention upon this important matter. We applaud 60 Minutes and the authors of the Journal of Clinical Oncology editorial for their exploration of the same. While the willingness of these physicians to raise the issue is laudable, the solution may be somewhat more complex than these authors have been willing to admit. Before we vilify private practitioners who have time and again proven to be more efficient and less expensive purveyors of cancer care than their university brethren we should examine other drivers.
To wit, a review of one of the NY Times editorial author’s conflicts of interest statement listed in the 2012 American Society of Clinical Oncology proceedings revealed that his co-presenters at this national meeting disclosed fully 16 separate pharmaceutical affiliations for employment or leadership positions, consultant or advisory roles, stock ownership, honoraria, research funds, expert testimony, or other remuneration. With the research community enjoying these levels of compensation, it must be surmised that the costs of clinical trials reflect in part these expenditures. When one adds to this, the increasingly burdensome regulatory environment, the cost of cancer chemotherapy development appears to have plenty of blame to go around.