TMC PULSE

t m c » p u l s e | m a r c h 2 0 1 8 28 How High Will Drug Prices Climb? Experts explain how to reduce soaring costs B y R y a n H o l e y w e l l H agop Kantarjian, M.D. has been practicing medicine for decades. But it was just five years ago that he began his crusade against the soaring cost of cancer drugs. Kantarjian, who chairs the leuke- mia department at The University of Texas MD Anderson Cancer Center, noticed promising, new drugs to fight leukemia had price tags in excess of $140,000 per patient. Even older drugs, once considerably more affordable, were approaching six-figures, as well. Since then, Kantarjian has writ- ten a petition, become a frequent media voice and authored more than 20 op-eds and journal articles decrying the high price of cancer drugs and arguing for ways to push costs down. His efforts are not paying off. "The progress," Kantarjian said, "has been zero." He's right. The average annual price of new cancer drugs per patient increased from less than $10,000 before 2000 to $145,000 in 2015, according to Rice University's Baker Institute for Public Policy, although patients are not neces- sarily responsible for covering the full cost of these drugs. Kantarjian estimates 40 percent of his leukemia patients are getting less than opti- mal care because they are unable to afford the leukemia drugs they need. "They just disappear, and don't take the drug, and they die," Kantarjian said. "That's the reality of my clinic—every day." The cost of drugs has emerged as a leading political issue. In recent years, extreme price hikes for drugs, including EpiPen and Daraprim, have become national, high-profile scandals. More than 75 percent of Americans say the cost of prescription drugs today is unreasonable. How did we get here? Drugs represent a rapidly growing share of total health care costs, with retail prescriptions (those obtained at a pharmacy) now exceeding 10 percent of the $3.3 trillion the U.S. spends annually on health care. If you add in chemo- therapy and other drugs adminis- tered by doctors, that rate is even higher. It hasn't always been this way. Until the mid-1990s, the U.S. spent about the same amount on drugs, per capita, as the rest of the developed world. Today, the U.S. is an outlier. U.S. per capita spending on retail pharmaceuticals is about $1,000 annually. That's more than double United Kingdom spending and about 50 percent more than spending in Canada and Germany, according to the Commonwealth Fund. President Donald Trump, along with Health and Human Services Secretary Alex Azar and Food and Drug Administration Commissioner Scott Gottlieb, all say reducing drug costs is a major goal. Experts say a pair of plans the administration released in February attack the issue at the periphery but don't tackle the "list price" of drugs head on. Meanwhile, any serious effort to reduce drug prices will almost cer- tainly face opposition from a drug manufacturing industry that spends massive sums on lobbying—more than $170 million last year alone. So how can the country reduce the soaring price of drugs? Health policy experts agree on several key strategies. Let Medicare negotiate In 2003, Congress passed a law that prevents Medicare from negoti- ating drug prices with manufactur- ers. Removing this provision, health policy experts say, could help reduce drug prices, given the negotiating power such a vast program would have. Giving Medicare negotiating power could have reverberations across the health care sector, experts say, since private insurers often peg their reimbursement rates to those of Medicare. And there's precedent for such a move. The U.S. Department of Veterans Affairs, which does have negotiating power, has brought down drug prices in its programs. Allow the government to consider cost-effectiveness When reviewing new drugs, the U.S. Food and Drug Administration must determine whether they are safe and effective. But many policy experts prefer the United Kingdom's model. There, drugs must also be deemed cost-effective to gain approval. The U.K.'s health agency measures "value" by examining how much a drug costs and how well it works. Unless a new drug provides greater value than existing drugs, it doesn't win approval. Kantarjian suggests drug prices in the U.S. could be pegged to objec- tive measures, like how many extra years of life they provide a patient, or to what extent they shrink a tumor. Many drugs entering the U.S. today provide questionable benefits, given their cost, and drug compa- nies simply charge what the market will bear. I look at these cancer drugs that add a few weeks or months of life, that cost hundreds of thousands of dollars, and I don't think it's worth it. — OSAMA MIKHAIL, PH.D. Professor of management, policy and community health at the UTHealth School of Public Health

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