In an article in May AARP Bulletin, two professors detail the overpricing of cancer drugs (11 of 12 new drugs approved in 2012 costing over $100,000 annually) and debunk specious claims made by drug companies to justify the cost. According to the authors [see below for their names and bios],
“Why are companies charging so much? In one breath they say high prices reflect high research costs, and in the next they say prices reflect the added benefits of curing or controlling cancer.”
As to added benefits, the article notes that only 1 of the 12 drugs helps patients survive more than two months longer. The writers go on to painstakingly slice and dice the research cost claims ($1.3 billion to develop a new drug and get it approved) winding up with the conclusion,
“Removing that inflated estimate for basic research costs brings the net, median corporate research costs down to just $125 million developing drugs.”
Given that this reduced estimate is less than 10% of the inflated cost claim that the pharmaceutical industry claims, it seems obvious, if the article writer’s analysis is sound, patients, insurers (including Medicare) are being vastly overcharged. Which the authors point out is an overwhelming justification to permit Medicare to negotiate prices for drugs–rather than the industry protecting prohibition that Congress has imposed.
The article writers are: Donald Light, network fellow at Harvard University’s E.J. Safra Center for Ethics and a professor at Rowan University School of Osteopathic Medicine and Hagop Kantarjian, professor and chair of the Department of Leukemia at MD Anderson Cancer Center.