New Meaning to the Term Price Gouging
Well I pity the poor cancer patient without stellar health insurance. This has to be one of the most astoundingly shocking stories of the year.
Abraxane, a new version of an old cancer drug, is now being re-packaged in a new and pricey form. It doesn’t help patients live any longer than the old treatment, and in fact, there is nothing new about it except the price. Get ready, hold on, buckle your seat elt….
It cost $4,200 a dose.
Roughly 20,000 people have been treated with Abraxane, and this year’s sales should approach $200 million. Annual sales may reach $1 billion by 2010. The older version, Taxol, has similar effects, and costs 25 times less.
However, Abraxane has been marketed as a last-ditch drug for those who have not had success on other treatments, prompting many to try it in desperation despite the price. Taxol itself was initially considered expensive, and its price of $986 a dose led to Congressional hearings.
From the Wilmington Star:
CHARGING $4,200 a dose for a new version of an old cancer drug has helped make Dr. Patrick Soon-Shiong a billionaire.
The drug, Abraxane, does not help patients live longer than the older treatment, though it does shrink tumors in more patients, according to clinical trials. And the old and new medicines have similar side effects. An independent review of Abraxane published in December in a cancer research journal concluded that the drug was old wine in a new bottle.
Still, Dr. Soon-Shiongs company, Abraxis BioScience, has promoted Abraxane as a major advance in treating late-stage breast cancer that is, for patients who have not responded to other treatments and are now close to death and is seeking approval for patients to use it earlier in their treatment. And, in at least one way, Abraxane is a breakthrough: it costs about 25 times as much as a generic version of the older medicine, which is best known by its brand name, Taxol.
That’s sort of like someone repackaging aspirin and selling each tablet for $10 a pop. Are doctors really that dumb to be prescribing this to their patients, when the older version of Taxol will do the same thing? Then again, doctors are also oblivious to the cost of drugs. Some sales rep comes by the office and tells them about this “exciting new breakthrough,” and they go ahead and prescribe it to a desperate patient. Even though it is not more effective.
Dr. Soon-Shiong also noted that although Abraxane has not been proved to prolong survival, it does appear to cause tumors to shrink more often than does Taxol. In the clinical trial that led to Abraxanes approval, about 24 percent of patients showed some response to Abraxane, compared with 11 percent for Taxol.
Independent oncologists agree that reducing the risk of allergic reactions is an advantage and perhaps reason enough for doctors to choose Abraxane, costs aside. Still, in clinical trials, Abraxanes overall side-effect profile was similar to that of paclitaxel, which was approved as a chemotherapy treatment in 1992 and is still widely used. Both Abraxane and Taxol can kill white blood cells, leaving patients open to infection, as well as damage nerves in the hands and feet. Taxol causes more damage to white blood cells, while Abraxane causes more nerve damage.
Drug industry experts say Abraxanes 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.
Doctors, who ultimately decide what drugs to prescribe, also do not have to worry about paying for the treatments they choose.
Basically, the company can charge whatever they want for the drug. There are no price controls. And because cancer patients are so desperate, they will pay anything for it. The same goes for HIV drugs. When AZT first came on the market about 1986, it was the most expensive drug being sold. There was a huge public outcry and was one of the things that stimulated the HIV militant advocacy groups.
So why are these drugs so expensive? The company will tell you that it’s because it’s expensive to develop, test and market the drugs. But independent research shows that pharma spends more money on marketing and advertising than on research and development. And in this case, this is an old drug in a new package.