Why Medicare Has Not Been Able Rein In the Cost of Cancer Drugs

[Richard D]

Why Medicare Has Not Been Able Rein In the Cost of Cancer Drugs

If you want to understand why U.S. health care is so expensive, take a look at the chart below. It illustrates how the price of cancer drugs has levitated in recent years, revealing how, in our largely unregulated for-profit health care industry, the seller is the price-maker and the patient is the price-taker. In other advanced countries, the government intervenes with an eye to protecting desperate patients from being gouged. In the U.S. the law specifically prohibits Medicare from trying to negotiate for discounts.

In an article titled “Limits on Medicare’s Ability to Control Rising Spending on Cancer Drugs,” published in a recent issue of the New England Journal of Medicine Dr. Peter B. Bach, a physician and epidemiologist at Memorial Sloan-Kettering Cancer Center, uses this chart to demonstrate the steep rise in Medicare spending on cancer drugs in just the past ten years.


http://thecenturyfoundation.typepad.com/.a/6a00d8341d843653ef01156f2d9de8970c-800wi

Figure 1. Monthly and Median Costs of Cancer Drugs at the Time of Approval by the Food and Drug Administration (FDA), from 1965 through 2008.

Note that the chart tracks the monthly cost of cancer drugs (vertical axis) from 1960 to 2009 (horizontal axis). What is extraordinary is how the price of the most expensive bleeding edge treatments has jumped, since 1990, from $2,000 a month to $5,000, $10,000 and finally $25,000 a month. Meanwhile, the fine red line traces the rise in the median price of cancer drugs—from well under $1,000 a month in the late 1960s to $6,000 to $7,000 a month today.

Note that the chart tracks the monthly cost of cancer drugs (vertical axis) from 1960 to 2009 (horizontal axis). What is extraordinary is how the price of the most expensive bleeding edge treatments has jumped, since 1990, from $2,000 a month to $5,000, $10,000 and finally $25,000 a month. Meanwhile, the fine red line traces the rise in the median price of cancer drugs—from well under $1,000 a month in the late 1960s to $6,000 to $7,000 a month today.

<snip>

Had the pool of patients suffering from these diseases expanded? No, But companies like Novartis were beginning to discover that there is virtually no limit to how much you can charge when you are peddling pills to dying patients. “Some patients will tolerate prices of tens of thousands of dollars a year, making drugs for even rare cancers into big moneymakers,” the Times observed.


http://www.healthbeatblog.com/2009/04/why-medicare-has-not-been-able-rein-in-the-cost-of-cancer-drugs.html

[Celebration]

1. Don't the oncologists also make money off the drugs?

I think I read that somewhere. That is even more bizarre-- Monopoly pricing is what we have to expect when we allow it to happen. But I really don't think doctors should make money on the drugs they prescribe. Possibly I am wrong about that. I'm sure someone here knows.

If I went to an internal medicine doctor I wouldn't want them making money off of Zantac or Prozac that they prescribed. Why should it be any different with cancer drugs.

[Why Syzygy]

2. I seem to remember reading

that Obama plans to change the laws prohibiting Medicare from negotiating prices. Couldn't tell you when/where, sometime after he took office.