The
NY Times this week has an article about the
skyrocketing prices of cancer treatment drugs. They profile a new drug called Abraxane that costs $4,200 per dose, and is considered to be only a marginal improvement (if at all) over the older, much cheaper drug. The article also highlights the reasons why the prices of cancer drugs are increasing so much:
The rise in cancer-drug prices is a microcosm of broader trends pushing up health care costs nationally. Despite decades of efforts by governments and insurers to restrain costs, patients continue to want the newest — and most expensive — drugs and medical devices. And doctors and the health care industry have little reason to keep costs in check, because insurers rarely deny coverage for new treatments on the basis of price.
Drug industry experts say Abraxane’s price reflects the fact that makers of cancer drugs can charge high prices for new medicines even if they are only marginally better than their older counterparts. That pricing dynamic is enabled by insurance, which shields patients from the full price of drugs. Without pressure from their insurers, patients have little reason to choose older treatments over expensive new therapies.
And the insurance companies are not the only ones that face the higher price:
Even if they have insurance, many patients face co-payments of 20 percent for their cancer drugs, an expense that can become ruinous for patients receiving combination therapy with several new drugs. For example, Abraxane is being tested along with Avastin, a treatment from Genentech that costs $8,000 a month for some patients.
Drug costs are rising so fast that some patients cannot afford the newest treatments, and access to some therapies “is beginning to be eroded,” Ms. Hinestrosa said.
Here are some questions that go along with the article from Sarah:
What are the problems of this current system and what can be done to limit the prices of these not even miracle drugs? What are the long term effects of this trend and is it caused only by increased demand by consumers?
(Question posed by Sarah O.)
6 comments:
It seems like the cause of this rising trend is the fact that, although the true price of the drugs are extremely high, consumers rarely have to pay even half of the cost because of their insurance. It's as if the market price of the drug is only the average cost to consumers, sort of like a price ceiling I guess. The demand for the drugs is at the point it would be at for a much lower price, and insurance companies just pay to make up for the difference. I think that the problem could be solved if insurance companies (like some already do) instead offered customers allowance-based coverage. Consumers could have a fixed amount to spend on approved medical expenses, and, after that point, would be forced to bear the entire cost themselves. This would force consumers to shop around and maybe settle for cheaper medicines in some cases. This reallocation of funds would in turn force the medicine producers to lower the price in response to the decreased demand. Allowing consumers to experience the burden of the entire price could probably resolve the issue.
By the way, the first post was mine.
-Jordan Croom
If this trend continues, prices are going to become so ridiculous that the producer will end up losing money and have to cut back on prices due to the outrageous co-pay. But I don't think that people should have to settle for the lesser drug especially when it comes to matters of life and death. In comparison to the cheaper drug, there should be a limit set so that the price of new drugs increases according to its effectiveness.
-Lauren Henderson
If people have a family member with cancer, the problem is, how far will you go to help get rid of the disease? Many people will do whatever it takes and will pay any price for a drug that may only help a little bit? To many, every little thing helps. It is harder for cancer patients who can't afford these expensive drugs. Insurance pays for the drugs but the co-payments are so high it is still too expensive. If this trend continues and the prices increase more and more, insurance companies are going to have to start denying people the funds for the drugs. Less people will be able to afford them, and the prices will have to be lowered.
-Hope
i think the reason that prices have risen so much and so quickly is because demand for cancer drugs is pretty close to perfectly inelastic. If you have cancer, you are going to buy the same amount of cancer treatment no matter how much the price goes up or down. If price goes down, people are not going to start stocking up on cancer treatments. By the same token even if prices increase, people will continue to buy the same exact amount of treatment. Also since, any drug that is less effective (even marginally so) will seem like a poor substitute when your life is at stake. The perceived lack of substitutes, contributes to the inelasticity of the cancer drug's demand.
-jacob hormes
We actually debated the moral ethics behind charging very high amounts for certain drugs which could potentially make a significant difference in recovery or survival in psychology today. Although I agree with Croom in the fact that a fixed amount would force customers to choose which drugs they want and settle for less expensive drugs sometimes, it is health we are talking about. People can not usually help the medical condition they are in (unless its like lung or liver cancer). Price ceilings and limits should be set by the government to stop the problem of rising medical drugs. It seems as if it the only way, considering the fact that it is life and death we are dealing with.
-veronica
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