Skip to content, or skip to search.

Skip to content, or skip to search.

The Cost of Living

Richard Larson, an oncologist at the University of Chicago Hospital, says the Zaltrap episode was “a shot across the bow” of the health-care community, “making people start to think that there needs to be some sort of limit on costs,” especially for drugs with “such a marginal benefit.” But the problem, according to Saltz, is much bigger than one drug. “Zaltrap is simply a little piece of the puzzle,” he says. “The prices of cancer drugs in general, I believe, are inappropriately high.”

Explaining how cancer-drug prices have become “inappropriately high” is complicated, and there is more than one explanation. To a colon-cancer expert like Saltz, it is the story of drugs that cost too much and do too little. To a leukemia expert like Hagop Kantarjian, of MD Anderson Cancer Center in Houston, it is conversely the story of drugs that are spectacularly effective but cost so much that they threaten to bankrupt the patients whose lives they have miraculously prolonged. To a health-care-policy analyst like Peter Bach, it is the story of a market so jerry-rigged with regulations that, as a graduate-school professor once told him, “the beautiful thing about health care is that it has every market failure you’ve ever heard of—plus two or three more.”

To an oncologist like Deborah Schrag, of the Dana-Farber Cancer Institute in Boston, who first warned nine years ago in a New England Journal of Medicine editorial that increases in prices of colon-cancer drugs were far outstripping increases in clinical benefit, it is the story of a kind of reimbursement shell game, where most patients are buffered from the high cost of drugs (and health care in general) by third-party payers. As the Affordable Care Act begins its fitful rollout, some health-care experts are expressing concern about a crazy quilt of plans on health-insurance exchanges where patients enrolled in some state plans may pay modest amounts for drugs (New York plans call for a $70 co-pay on cancer drugs), while patients in other states might pay considerably higher rates.

And because the economics of cancer drugs have always been colored by emotion, where patients facing a grim prognosis are desperate to try anything (as are their doctors), it is also a story of misunderstanding what many of these drugs can and can’t do. Last year, Schrag published a stunning study in the New England Journal of Medicine reporting that 81 percent of patients with advanced colon cancer (and 69 percent of patients with advanced lung cancer) did not understand that the drugs used in their treatment would not cure them. “People really anchor on cancer as a disease that causes so much suffering that patients are willing to bankrupt themselves to try something,” says Rena Conti, a health-care economist at the University of Chicago. “There is an irrationality about it, which is quite natural but feeds into this willingness to pay for anything.”

For those reasons and others, the average price of cancer drugs has gone “through the roof,” according to George W. Sledge Jr., former president of the American Society of Clinical Oncology. “What predicts the price of the next cancer drug is the price of the last cancer drug,” says Bach. “The only check on the system is corporate chutzpah.”

In 1957, a chemotherapy drug named 5-fluorouracil was patented, and by the sixties “5-FU,” as the drug is commonly called, had quickly become the first choice of oncologists in treating colon cancers and related gastrointestinal malignancies. It usually didn’t cure the disease once the cancer had spread; it temporarily blunted the disease’s progression. Over the ensuing decades, massive amounts of 5-FU have been used to treat colon cancer, which strikes about 145,000 Americans each year.

The same year 5-FU was patented, Saltz was born in New York. He grew up in Westchester County, went to Horace Mann, attended Stanford, got his medical degree at Yale, began to specialize in oncology, and since 1989, has treated colon-cancer patients at Memorial Sloan-Kettering. And 5-FU, Saltz admits, is “a drug that’s very embarrassing to people like me.”

Now 56 years old, just like Saltz, the drug continues to be “the best and most important drug we have to treat colorectal cancer,” he says. “Every drug that has come along since was designed to replace it and failed and wound up finding a niche by adding to it.” The newer medications—including Avastin and Zaltrap—have become part of combination therapies, but, as Saltz says, drug cocktail has come to mean “a combination of drugs that don’t work well enough to do the job by themselves.”

That didn’t stop pharmaceutical companies from charging top dollar for new colon-cancer drugs that did not live up to expectations. The FDA approved Camptosar in 1996; until it went generic, the Pfizer drug cost about $5,300 a month, and it extends median overall survival by, at best, 90 days, according to Saltz. Avastin was approved in 2004; the Genentech drug now costs about $5,000 a month (based on Sloan-Kettering’s analysis), and it extends average survival by, at best, 141 days as a first-line treatment and by about 42 days as a second-line treatment. ImClone, a biotech company, won approval for Erbitux in 2004; Bristol-Myers Squibb and Eli Lilly, which acquired ImClone, now market the drug for about $8,400 a month; the best-case study, according to Saltz, extends median survival by 120 days. Some follow-up studies, he adds, show less of an overall survival benefit. Moreover, virtually none of the newer drugs extends survival without being used with other chemotherapy, usually 5-FU, which currently costs about $30 per treatment. The IV apparatus, Saltz says, is probably more expensive than the drug.