Why Are Innovative Cancer Drugs So Expensive?

Innovative cancer treatments can cost tens of thousands of dollars per year—and those prices continue to rise. Worse, this mean some patients are losing out on medication that can improve their quality of life and give them the gift of much-needed time. To solve a problem, you have to understand the causes—but the reasons behind the dramatic increase in cost are complicated. So, we went to the major players in the drug pricing process in Canada to tell us what factors they believe contribute to innovative drugs’ high prices, and what we can do to bring those prices down. Here’s what they had to say.

The Government Expert: Dr. Brian O’Rourke, President & CEO of The Canadian Agency for Drugs and Technologies in Health

“I think it’s important to understand that everyone in the business of approving drugs, from industry to government, is concerned about price. We want to make sure that there is good access to promising treatments for patients. We hope that those drugs are going to be used appropriately, and we want it to be affordable for patients and for government. Those three things—access, appropriate use and affordability—are our priorities, but affordability is one of the toughest issues for us to solve.

I read an article in 2011 that listed the top 10 best-selling drugs; most of them were the old chemically synthesized “blockbuster” drugs—they could be used by a large patient population (the anti-cholesterol drug Lipitor was the top-selling drug ever) and companies often set reasonable prices that government or patients could afford. None of the top 10 were cancer drugs.

In 2016,  it was a very, very different list of drugs. Instead of “blockbuster” drugs, there were lots of what many people are referring to as “niche-busters”—billion-dollar drugs used on diseases that don’t impact a lot of the population. Herceptin is on the list, as are drugs for multiple myeloma, lung and renal cancer. But while the pharmaceutical industry might say part of the reason for high drug costs comes down to the development process, researchers aren’t so sure about that. A 2014 Tufts University study priced out the cost of bringing a single cancer drug to market at $2.6 billion, but a follow-up study published in JAMA Internal Medicine earlier this year fact-checked those results and concluded the cost was closer to $648 million. That’s very different from $2.6 billion.

That’s why we need to push back on pharmaceutical companies to give us a better understanding of the drug development process, what drugs we need and what people can pay. A lot of times patient groups will criticize the government for high drug costs. But we need to push back on the pharmaceutical companies, too. And this is a great role for patient groups.”

The Industry Expert: John Helou, President, Pfizer Canada Inc. and Member of the Board of Directors of Innovative Medicines Canada

“When pricing our medicines, we strive to maintain a balance between value to patients and society and our ability to invest in research that will lead to further innovations. So when setting the price of a new medicine in Canada, we consider several factors, including:

[Overall,] medicines are one of the most powerful tools for treating and preventing illness and Canadians get very good value from their investments in medications. And it is important to note that the cost of medicines is only a small portion of the overall cost of health care in Canada. Innovative medicines account for 6.4% of overall health care spending, but this investment has resulted in significantly improved health care outcomes for patients across the country.”

That said, providing access to medicines is a health care system issue—the innovation cycle is not complete until patients get access to the innovation. Good public policy will support the best outcome for patients. However, today’s current medication review process means that Canadian patients must wait longer than patients in other countries to access many new treatment options.
This does not have to be the case—Canadian patients deserve better. Advocating for the reform of the path to patient access (with less duplication and redundancy in the review process) is needed. This will not only improve patient outcomes, it will also save the overall health care system money.”

The Physician: Dr. Karen Gelmon, Medical Oncologist and Head of the Investigational Drug Program, Experimental Therapeutics, Department of Medical Oncology, BC Cancer Agency

“There’s a lot of discovery that goes into developing a new drug, and that costs money. One can question whether the discovery costs as much money as the drugs themselves end up costing, but it is expensive. Increasingly, we want to know more about how drugs work before those drugs get to market, so the amount of work that gets done in the lab is far greater than it was. And although genomics and sequencing is getting less expensive, it still costs an awful lot. There are also chemistry costs, animal costs… in some situations, there’s even the cost to acquire a drug.

Plus, there are attrition costs. Say a lab is exploring 100 drugs, and maybe 10 of them go from the petri dish into animals. And of those 10, maybe five of them go into some sort of clinical trial, and of those five, maybe one gets to market. That’s a pretty poor result. So, companies need to recoup their investment into failed drugs—but it’s not like there are good guys and bad guys. Pharmaceutical companies aren’t out there just gouging people; they’re businesses, but it’s not a black-and-white situation.

There are also a lot of drugs developed in duplication. What happens is, different companies have the same idea—because there are only so many ideas out there—and they start developing the same drug at the same time.  For example, right now there are three CDK4/6 inhibitors on the market: palbociclib (Ibrance), abemaciclib (Verzenio) and ribociclib (Kisqali). Abemaciclib is maybe a little bit different than the other two, but do we need both ribo and palbo—especially since palbociclib is furthest along? Wouldn’t it be more cost-effective for a company to put all of the money they’re investing in a duplicate behind a new drug? Yes. But that new drug might not get to market; if you’re pretty sure that your duplicate will get to market, it makes sense to pursue it, from a business perspective.

But unless there’s no ability to sell a lookalike drug, companies are going to keep doing that because they think their business strategy is better.”

Women with metastatic breast cancer are waiting longer for new treatments to be available in Canada compared to other countries, and the cost of these new treatments continue to rise. That’s why we’ve launched a petition to make sure women with MBC are heard by all the stakeholders in the drug approval—and pricing—process. Sign here.