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Mayo Clinic Identifies Reasons for High Costs of Cancer Drugs

Company monopolies are part of the problem (Sept. 30)

A virtual monopoly held by some drug manufacturers — partly because of the way treatment protocols work — is among the reasons cancer drugs cost so much in the U.S., according to a September 30 announcement from the Mayo Clinic in Rochester, Minn. Value-based pricing is one potential solution, researchers say.

The findings were published in the October issue of the Mayo Clinic Proceedings.

"Cancer care is not representative of a free-market system, and the traditional checks and balances that make the free-market system work so efficiently in all other areas are absent when it comes to most cancer treatment," said authors Mustaqeem Siddiqui, MD, an oncologist, and Vincent Rajkumar, MD, a hematologist.

For example, when it comes to antibiotics to treat a given infection or over-the-counter painkillers, a physician or patient can choose between multiple drugs that do the same thing. But cancer drugs are administered to patients sequentially or in combination, creating a virtual monopoly for each drug. This is one of the principal reasons for the high cost of cancer therapy.

Other factors include the expense of drug development; the high price that patients and insurers are willing to pay for even modest improvement in outcomes; and a lack of regulations, such as a cost-effectiveness analysis, to account for economic and value-based considerations in the drug approval and pricing process, the physicians write.

Solutions the authors recommend include:

  • Value-based pricing that includes discrete metrics, such as an incremental cost-effectiveness ratio per quality-adjusted life-years (QALYs) gained, as a result of a particular treatment. QALYs are an estimate of the number of years added to a patient's life by a specific drug intervention, adjusted for quality of life.
  • An FDA mandate requiring drug companies to submit a value dossier when seeking drug approval. This information would give patients and physicians the ability to make better-informed decisions about treatment.
  • Centers for Medicare and Medicade Services (CMMS) powers to negotiate payments for cancer drugs.
  • Improved national cancer guidelines providing evidence-based analysis of quality of life, mortality data, benefits, risks, and cost for all possible treatment options.
  • Monopoly rules to determine whether a particular drug will operate in a monopoly situation. Such drugs would be subject to legally mandated or voluntary price controls in exchange for expedited approval or other remedies.
  • Nonprofit generic drug companies to manufacture and distribute generic cancer drugs at a low cost.

For more information, visit the Mayo Clinic Web site.

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