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Truth Behind Rising Cancer Drug Cost

by Dr. Navapriya S on Jan 22 2025 1:14 PM
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Cancer drug prices are soaring, but they don't reflect improvements in patient survival. Instead, prices are often based on market size, not therapeutic value.

Truth Behind Rising Cancer Drug Cost
The cost of cancer drugs paid by Medicare has been soaring in recent years, yet these rising prices do not seem to reflect any improvements in patient survival or overall health.
Instead, drug prices are often set based on the number of people who will need the treatment, suggesting that pharmaceutical companies are more focused on market size than on the actual benefits the drugs offer to patients (1 Trusted Source
Spending on anticancer drugs among Medicare beneficiaries: Analyzing predictors of drug expenditures

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).

Rising Costs of Cancer Drugs

Between 2012 and 2021, the average amount Medicare paid annually for cancer drugs per patient increased from $114,000 to $256,000. This represents a compounded annual growth rate of 9.4%.

Several factors contribute to the high cost of cancer treatments:
  • Biomarker testing: Drugs that require specialized tests to determine if a patient can benefit from them tend to be more expensive.
  • Rare diseases: Treatments for cancers that affect fewer people are often priced higher.
  • Later-stage treatments: Drugs approved for use in later stages of cancer treatment are typically priced higher as well.
  • Smaller clinical trials: Drugs tested in smaller clinical trials with fewer participants also tend to have higher price tags.
On the other hand, drugs used to treat more common forms of cancer, such as lung or breast cancer, and those that took longer to develop, generally have lower prices.

Despite the high costs, there is little evidence that cancer drugs are priced based on how much they help patients live longer or delay the progression of the disease. The price seems to be more closely tied to the number of people expected to need the drug rather than its actual effectiveness in treating cancer.

Market-Driven Pricing Strategy

Pharmaceutical companies often set higher prices to offset the smaller market for certain cancer treatments, rather than basing prices on how much the drugs improve patients' health. This pricing strategy suggests that drug prices are driven more by profit considerations than by the therapeutic value provided to patients.

The higher costs of cancer treatments have placed a heavy financial burden on patients, even those with insurance coverage. To ensure that patients have access to affordable and effective treatments, policymakers may need to rethink how drug prices are set. One solution could be to link the price of a drug more closely to its actual benefits for patients, rather than the size of its potential market.

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The rising cost of cancer treatments underscores the need for a more balanced and patient-centred approach to drug pricing that ensures fairness and access for everyone who needs these life-saving therapies.

Reference:
  1. Spending on anticancer drugs among Medicare beneficiaries: Analyzing predictors of drug expenditures - (https://www.sciencedirect.com/science/article/abs/pii/S2213538324000432)


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