I've said it before and I'll say it again: few, if any, diagnoses are scarier than being told you have cancer.
While this is not something I have myself faced, I was by my mother's side when she received her diagnosis for stage 3b adenocarcinoma of the lung right after New Year's Day in 2010. Acting as her caretaker throughout this process, and never missing an appointment, I can fully understand how taxing cancer can be from a physical, emotional, and spiritual perspective.
Along with all of that, cancer is also a monstrous financial burden.
Cancer patients' unfortunate concern
It's no secret that medical cost inflation has steadily risen for the past five decades, although that increase has arguably slowed over the last couple years. Nonetheless, it would be difficult to persuade a cancer patient that medical cost inflation is under control when his or her medication costs $10,000 per month.
According to an abstract published last year in The Oncologist, the financial burden of paying for cancer treatments can result in poorer quality of life for patients -- even those cured of the disease.
The study was based on 254 cancer patients. Researchers discovered that "financial toxicity," their term to describe the overwhelming cost of paying for cancer treatments, can impact patients from all income and employment statuses.
Nearly half (42%) of all participants cited a "significant or catastrophic subjective financial burden." Sixty-eight percent cut costs by reducing leisure activities, while 46% reduced spending on food and clothing. If that's not already worrisome enough, 20% took less than their prescribed amount of medication, 19% only partially filled prescriptions, and 24% avoided filling their prescriptions altogether. In other words, even being insured is no guarantee that a cancer diagnosis won't become a financial burden on a patient or family.
What's behind monstrous cancer drug costs?
Although cable companies might be Americans' most hated industry, the pharmaceutical sector isn't exactly revered considering the high prices charged for branded drugs that essentially price uninsured and underinsured consumers out of receiving medical care.
What's is behind high cancer drug prescription costs?
In July, I offered 10 reasons why prescription prices in America are so painfully high, and many of those apply to cancer drugs.
For starters, cancer research is extremely costly. Pharmaceutical companies want to develop game-changing cures, but they must cover their expenses first. Considerably more drugs fail in development or testing than get approved, so companies often must charge a high price for drugs to recoup their development costs.
Cancer drugs are also very specialized. For example, recently approved advanced melanoma drug Keytruda, a cancer immunotherapy product developed by Merck (NYSE:MRK), costs $12,500 per month. While this drug would not be taken for years on end, as its current indication is as a last line therapy for advanced melanoma patients, this is still a staggering cost. An expense made viable by its specialized status as a uniquely effective last line of defense.
Finally, you have to consider that pharmaceutical companies will use the U.S. as something of a subsidizer for the remainder of the world. Price caps in nations such as India would prevent many cancer drug developers from entering foreign markets. Ultimately, the U.S. market, which is the world leader in pharmaceutical product demand, offsets low drug prices in emerging and underdeveloped markets.
Can costs be lowered?
The real question here is how to lower cancer drug costs and improve cancer patients' quality of life, at least in the point that they aren't constantly worrying about the financial cost of treatment.
The Affordable Care Act, better known as Obamacare, could play a role in tempering long-term cancer drug inflation, but I doubt it will be the only contributing factor.
Obamacare's individual mandate and the 28-state Medicaid expansion are designed to get as many people insured as possible. The idea is to reduce insurance premium inflation by spreading the cost of medical care over a greater swath of the American public. Over considerable time, this could equate to more money in consumers' pockets and the ability to purchase higher-quality coverage, such as a gold or platinum plan, that would result in relatively smaller out-of-pocket costs.
A 2012 study published in the Mayo Clinic Proceedings had a different suggestion for lowering long-term cancer drug costs. Authors Mustaqeem Siddiqui and Vincent Rajkumar argued that a value-based reimbursement model is necessary to prevent pharmaceutical companies from setting exorbitant prices. Such a model would have some measurable formula allowing us to gauge how much of an improvement in quality of life a cancer drug brings to patients. The greater the improvement, the higher the price point.
In addition, the authors suggested that this quality of life calculation weigh to some extent in a drug's approval process by the Food and Drug Administration. This data, both during clinical trials and following approval, would allow physicians and cancer patients to make better-informed decisions about which cancer drugs to use and which to avoid.
Finally, Congress could interject with some form of pricing controls such as those seen in India or Switzerland, but I'd deem this pathway highly unlikely as it could be viewed as anti-innovation. Capping drug prices could persuade pharmaceutical companies to look beyond the U.S. to more price-favorable countries.
Will this work?
Truthfully, no one knows with any certainty whether the current rise in prices for cancer drugs is sustainable, or if any of the aforementioned solutions would make things easier for cancer patients. Even if one or more of these cost controls were implemented, it would likely be some time before we saw tangible results trickling down to the patients themselves.
In the meantime, it looks as if pharmaceutical innovation will reign supreme, as will high margins and hefty cancer drug price tags. My hope is that cancer patients will ultimately grow to have improved access to cancer drugs under Obamacare, but it remains to be seen if there's a viable long-term solution to removing this financial burden from their shoulders so they can focus solely on getting better.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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