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The Cost of Living

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He drafted a letter protesting the high prices of certain leukemia drugs and began showing it to colleagues, including Richard T. Silver of New York ­Presbyterian–Weill Cornell Medical Center. The issue clearly touched a nerve with other doctors. “At first the group was kind of small,” Silver says, “and then everybody wanted to be on the bandwagon.” By the time the letter appeared last April in Blood, the field’s primary journal, Kantarjian had collected 119 signatories on six continents, including doctors at Massachusetts General Hospital, the Mayo Clinic, and the Fred Hutchinson Cancer Research Center in Seattle.

The doctors confined their argument to drugs for chronic myelogenous leukemia (CML), a cancer of the blood that strikes roughly 5,000 Americans each year. But they suggested that the pricing of CML drugs bordered on profiteering, because patients now have to take these very expensive drugs continuously, for years, if they want to stay alive. When Gleevec, the first successful CML drug, came out in 2001, the annual sticker price was $30,000, they noted; by 2012, it had risen to $92,000 a year. Moreover, Kantarjian said, three new second-generation CML drugs, approved in 2012, all have list prices around $100,000 a year. (The Sloan-Kettering analysts price these drugs at less than the Blood editorialists, although Bach agrees that the prices for CML drugs are exceptionally high.) “The financial picture is completely different from ten years ago,” Kantarjian says.

Unlike the drugs with “modest” colon-cancer benefits, Gleevec is arguably the biggest success story in cancer therapy in the last fifteen years. Practically overnight, it changed chronic myelogenous leukemia from a devastatingly fatal disease in which less than 20 percent of patients were still alive ten years after diagnosis to essentially a chronic illness in which more than 80 percent of those diagnosed are alive ten years later. “A hugely successful drug,” says Ellin Berman, a CML expert at Sloan-Kettering. “Really a home run.”

So why would more than 100 international leukemia experts, including Berman, sign the Blood editorial and take the pharmaceutical industry to task about such a marvelous class of drugs? One reason, of course, was the sheer financial burden of having to take a $100,000-a-year drug for the rest of one’s suddenly extended life. But the biography of Gleevec also undermines two key arguments used by the drug industry to justify high prices: that those revenues justifiably reward innovation and that the free market ultimately establishes a fair price.

The compound now known as Gleevec was originally designed by chemists at the Swiss company Ciba-Geigy (which later merged with another company to form Novartis). But Ciba-Geigy balked at developing the drug because it considered the CML market too small, even though enterprising research by physician Brian Druker, first at Harvard and then at the Oregon Health & Science University, showed the drug to be remarkably effective against human leukemia cells. “To me, this was the innovation, and this was the risk,” Druker told me recently, “and I was dealing with one of the most risk-averse companies in the world.” For nearly five years, Druker relentlessly pressured Ciba-Geigy, and then Novartis, to allow him to test the drug in human patients. For five years, the companies refused.

Finally, in 1998, after Druker essentially challenged Novartis to test the drug or license it to a company that would, the company relented, fully expecting the drug to fail, according to Druker and others. But even the early Phase I results, usually limited to establishing safe dosages, produced spectacular results: Higher doses of the drug sent 53 of 54 patients with a previously incurable form of cancer into remission. Last year alone, Gleevec racked up sales of about $4.7 billion for Novartis, and the success of the drug opened the door to the development of five second-generation CML drugs—all with a sticker price around $100,000.

This early history is one of the reasons Druker is so frustrated by the current pricing situation and why he, too, signed the Blood editorial. “I would have thought more drugs would have meant more competition, and that more competition would have meant prices coming down. But here, prices keep going up.” If you want to see how a free market operates for Gleevec-like drugs, Kantarjian suggests looking at South Korea. That’s because a South Korean drug company independently patented and developed a second-generation CML drug and priced it at about $21,500 a year, according to Kantarjian. As a result, all the competing CML drugs are priced between $21,000 and $28,000—a quarter of what the same drugs cost for American cancer patients.

And these high prices in the U.S. may now be having negative consequences, both financial and medical. Patients with cancer are 2.5 times as likely to declare bankruptcy as the general population, according to a recent study led by Scott Ramsey of the Fred Hutchinson Cancer Research Center. Monthly co-pays for an $8,000-a-month drug can be financially onerous, especially for people known as “naked patients”—those who aren’t wealthy enough to have supplemental health insurance and not poor enough to qualify for Medicaid. Kantarjian said a disturbing new trend has emerged; some middle-class patients saddled with these continuing co-­payments—up to 10 percent of CML patients, by his estimation—are beginning to discontinue a lifesaving treatment because of the out-of-pocket cost, after which the cancer develops resistance to the drug and they can no longer be treated.


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