Physicians call for the “just price” of lifesaving drugs

A group of over 100 physicians who specialize in the treatment of chronic myelogenous leukemia (CML) have published a commentary in the journal Blood, decrying the high price of highly effective drugs, like Gleevec, for the treatment of CML.   The article was spearheaded by Dr. Hagop Kantarjian of M.D. Anderson Cancer Center, an oncologist who has become an articulate and authoritative voice in matters related to drug availability.  (He was prominent in discussions of the drug scarcity problems encountered in 2012.)  Their argument demands serious consideration by anyone—especially economic conservatives and pharmaceutical industry workers like me—concerned about the affordability of modern medicine.

Before 2001, the average survival of someone with CML was 5-6 years, and only about 20% lived for 10 years.  Long-term survival was possible for the subset of patients who were able to undergo a bone marrow transplant.  Otherwise, standard treatment was interferon (the protein drug that disappointed as the putative “cure for cancer” after its introduction in the 1980’s).  But CML has a specific molecular abnormality that can be targeted with a drug, and since 2001, several drugs have been approved.   With these drugs, 10-year survival is over 80%, and people with the disease generally live normal life spans—if they take these pills continuously.

And that’s where the problem arises.  In the US, the price of each of these drugs is about $100,000 or more every year, year in and year out.  Because of the way we pay for drugs supplied by a pharmacist, the patient—who needs these highly effective drugs to live—is on the hook for 20-30% of that.  That’s more than most people can afford, so they may skip doses or not take the drug altogether, greatly reducing the chance of benefit.  Actual survival results for CML in the U.S. are less than they might be, indicating that patients are not all getting the full benefit of treatment.  The CML doctors estimate that only about a quarter of all people with CML are getting these new drugs at all, and that only about 1 in 6 of those benefit from financial support programs, from foundations or the drug companies that make the drugs, to defray the costs.  In other countries, the drugs’ prices are about one-half of the U.S. prices (grossly approximating for the sake of brevity here), lower in countries with stronger government price controls or better competition in the marketplace.

Ah, yes, “competition.”  Regular readers of this blog know that I am an outspoken advocate of more “market-oriented” approaches to medical costs, on the grounds that top-down rigid controls will tend to create scarcity and limit options for individual patients and their physicians, and that insulating people from the costs of their medical care—i.e., socializing every dollar—would inflate those costs (the “skin in the game” argument).  But this last argument clearly does not apply in this case, and as for competition—well.  When it was introduced in 2001, the annual price of Gleevec was $30,000, compared to $22,000 for interferon—seemingly reasonable, given the huge leap in effectiveness.  But newer—and similar—drugs come for the more astronomical prices cited, and in that time, the price of Gleevec has tripled, rather than decrease.  So we have the exact opposite of the normal price competition that we are used to with just about everything else we buy.  Nobody can claim that this state of affairs is acceptable.

How on earth did we get here?  The etiology is multifactorial, as it were:  a process driven by insurers and industry; a “pass-through” mentality by which every new drug gets priced based on the prior similar drugs plus a mark-up; many details and issues related to patents, patent life, and the timing and requirements for generic competition; limits (at least in the U.S.) on price negotiation by payers (out of concern that the 800-pound gorilla, Medicare, will effectively dictate prices, an approach that generally fails for goods and services overall).   After discussing all of these, the CML doctors actually soften their concluding statements to an invitation to “dialogue” about all the factors involved.

This is a problem of justice.  I submit that it is not so much a matter of bioethics or medical ethics than of the intersection between those areas and business ethics.  I do not think that one can wedge the matter of drug pricing into Belmont principalism (except peripherally as a matter of justice), nor can one apply the ethical demands on physicians to pharmaceutical companies as entities, or to their employees.  But we can claim that the industry properly serves the proper ends of medicine, meaning that it takes its signals from what doctors need to help sick people.  And certainly it is basic business ethics to provide high quality products at fair prices.  And it is naturally incumbent on drug companies to adhere to ethical treatment of human research subjects (a non-controversial point).

But the CML doctors—quite understandably, I suppose—call for a (neo-medieval?) search for the “just price” of these drugs.  This seems misguided to me.  They claim that market prices really apply only to luxuries, but “when a commodity affects the lives or health of individuals, the just price should prevail because of moral considerations.”  But food, clothing, housing, automobiles, even computers affect our lives and/or our health, yet we don’t search for the just price for those.  The CML doctors’ claim has clear heuristic value but, if applied generally, runs into the issue of how big an umbrella to unfurl.  Also, I understand the search for the just price to have failed because value does not inhere in a product or service.  Rather, the value is in the judgment of the informed buyer.  Now, for a fair transaction to occur, the buyer must be on fairly equal footing with the seller.  That’s relatively easy when buying a shirt or a loaf of bread or even an iPhone, harder when buying a car or a house, and daunting or impossible when buying medicine.

In this case, however, the buyer is the payer—Medicare, or Aetna, or Anthem Blue Cross, or UnitedHealth, or some other insurer.  And so it seems to me that a somehow-improved improved approach to price negotiation between those entities and the sellers (industry) is in order.   That, in turn, means affecting how the buyers value drugs like the new CML drugs.  And that, further, means that this is an exercise in what costs we are willing to socialize (distribute across a large population), and what outcomes do we—most of whom do not have the disease in question—value on behalf of people who do have that disease?  As I have argued in this space, we should be willing to pay for somebody else’s life-saving drug when that drug is the real deal, as in this case.  While we’re at it, we should not make someone come up with 20-30% of that cost, but reduce those copays.  In the process, we might all accept that we have to pay a bit larger fraction of the costs of our own routine checkups and generic drugs and blood tests and maybe even our birth control pills.  If that means higher insurance premiums to cover truly effective drugs (not marginally effective ones), so be it.  If the whole process creates substantial downward pressure on new drug prices, will that stifle innovation?  I imagine it will reduce the number of new drug candidates in development.  I am not sure that it will reduce the number of safe and effective new drugs.  And I’m less sure that the overall public health or commonweal will be harmed.  Maybe we have to give it a try.

Finally, the CML doctors are right to advocate, aggressively, for their patients in this matter.  Doctors should not have the only “vote” in this discussion, but their collective professional opinion should carry great weight.  This is one of the proper “ends” of medicine, I think.

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Susan Haack

As I read your post the other day, I was reminded of a question that haunted my reflections as I wrote a prior blog entitled “Re-imagining the Ends of Medicine.” In it, I was speaking about health care as a social good rather than a right, and one which we, as a prosperous nation had a responsibility to provide, at a basic level, to all citiens. But as I wrote it I struggled with the question of whether, in fact, medicine differs from other social goods, like food, clothing, housing, and if so, how it differs. In that light, I… Read more »

Jon Holmlund
Jon Holmlund

Thanks for this–and see my follow up post of June 13. I think better price discovery should be possible, and we should socialize (insure) the reasonable cost of truly effective drugs. I am not authoritative on these matters–say, compared to someone like Dr. Scott Ramsey at the U. of Washington–but in my limited reading, it seems to me that nobody can really predict where the critical price points needed to support R+D really fall. They may need to be felt out themselves. And while I would not press the point too aggressively, my impression is that the notion that advertising… Read more »