Rising Cost of Cancer Drugs: Is There an End in Sight?

In 2013, U.S. health-care spending continued its relentless climb, reaching $2.9 trillion, far outspending any other developed nation.¹ About $271.1 billion of that – or almost one out of every 10 dollars spent on healthcare – was spent on prescription drugs.

A recent example of the skyrocketing prices of treating hematologic malignancies: In 2012, three new drugs were approved by the FDA to treat chronic myeloid leukemia (CML), each with an annual price tag of more than $100,000.²

At the 2014 ASH Annual Meeting, experts tackled the rising cost of cancer drugs and their associated “financial toxicity” in the Special Symposium on Quality with a passionate, and often heated, discussion. As the cost of health care is a difficult subject that requires the attention of the entire medical community, a diverse panel was invited to discuss these challenges.

Reducing Burden Without Compromising Outcomes
The rising cost of cancer drugs is a relatively new phenomenon, Hagop Kantarjian, MD, of MD Anderson Cancer Center, asserted in his presentation – and one that poses direct harm to patients.

“My first awareness of the high cost of cancer drugs was in 2012, and this was 30 years into my career,” he said. Spending on cancer drugs can lead to personal bankruptcy, emotional distress and, potentially, lack of compliance. “I believe that as physicians, we have to protect our patients at the individual and society level,” Dr. Kantarjian said. “When drugs are not affordable, then they are harming the patient.”

So, who are the high prices helping? According to Dr. Kantarjian, big pharma is benefitting from unsustainable pricing, and many of the justifications for the rising costs of cancer drugs are unfounded. “You have heard that it costs $1 billion to develop a drug for the market – I think that statement is a myth propagated by the pharmaceutical companies,” he said.

Price shouldn’t stifle innovation, he said, “when 85 percent of basic research is funded by taxpayers and 20 percent of earned revenue goes to advertisements.”

There are a number of solutions to the problem, Dr. Kantarjian explained, including establishing mechanisms for ensuring fair prices, allowing Medicare to negotiate drug prices, and eliminating the practice of “pay for delay” (in which pharmaceutical companies pay to prevent generic competitors from becoming available).

A Natural Market Response?
Playing devil’s advocate, Alex W. Bastian, MBA, of GfK Market Access (a health-care consulting firm), argued that current drug prices actually do reflect value and are the result of practical market forces. He also maintained that the cost for cancer care has remained relatively small – only about 5 percent of the total expenditure.

Investors, he claimed, deserve to see a return on their investment, especially in the area of hematology, where drug development is more difficult than other areas, such as solid tumor oncology.

“It’s not that current therapeutics are being sold at a high price to pay for past investments, but quite the contrary,” he noted. “High prices and healthy margins justify the continued investments for future therapies.”

However, cost should not be the sole focus of these discussions – the value of therapy also needs to be discussed, Mr. Bastian stated. “We need a long-term view of the situation,” he said. “The market will fix itself – it always has.”

How Patients Experience “Financial Toxicity”
In the discussions of the “how and why” behind cancer drug pricing, the patient experience cannot be overlooked. According to CMS data, in 2013, the amount of out-of-pocket spending grew 3.2 percent to $339.4 billion – or 12 percent of total expenditures.

In his presentation Yousuf Zafar, MD, MHS, of Duke Cancer Institute, reported results from a study that asked, “Should cost-effectiveness enter into physician-patient discussions about treatment decisions?” Of the 300 patients in the study, 52 percent expressed some desire to discuss treatment-related out-of-pocket costs with their doctor, and 51 percent wanted doctors to consider these costs when making treatment decisions. However, only 19 percent of respondents had actually discussed cost with their doctors.

For those that had discussed costs, 57 percent had reduced out-of-pocket costs – often without any change in treatment. “Our study highlights that patient-physician cost communication can reduce out-of-pocket costs, even in oncology where treatment options are often limited,” Dr. Zafar said. “It is important to recognize patients at risk for financial toxicity.”

Andreas Laupacis, MD, of St. Michael’s Hospital in Toronto, offered an outsider’s perspective on the U.S. health-care spending conundrum, explaining how the Canadian Patented Medicine Prices Review Board evaluates cost-effectiveness in reimbursing pharmaceutical companies for new drug development. The evidence for the drug’s effectiveness is assessed, as is the evidence for cost-effectiveness – or “value for money,” he said.

If the drug proves cost-effective based on these criteria, a decision is made to fund the research. In other circumstances, the research will not be funded, or would be funded with certain restrictions. The Board’s decision can be changed, however, if an acceptable price is negotiated.

The issue of high cancer drug costs is far from being resolved, as evidenced by the vigorous question-and-answer session that took place after the panel discussion. Members from both sides of the aisle continued the debate, including one brave soul who asserted that the high cost of new drugs is largely overstated.

A number of physicians who are also cancer patients offered a unique perspective on the issue, stressing the importance of involving the patient in any cost-effectiveness conversations and raising the question: Even if a patient can “tolerate” the financial toxicity of cancer drugs, should he or she have to?


  • Hartman M, Martin AB, Lassman D, et al. National health spending in 2013: growth slows, remains in step with the overall economy. Health Aff. 2014 December 3. [Epub ahead of print]
  • Fojo T, Grady C. How much is life worth: cetuximab, non-small cell lung cancer and the $440 billion question. J Natl Cancer Inst. 2009;(101):1044-48.