Rising cancer costs pit doctors against drugmakers

Spending on cancer drugs is skyrocketing and shows no signs of slowing.

IMS Health, which tracks the market, estimates that spending on these medications hit $100 billion worldwide in 2014, an increase of 10.3 percent, bringing the compound annual growth rate to 6.5 percent over the past five years. That's expected to rise to 6 percent to 8 percent through 2018, when total global spending is forecast to hit between $114 billion to $147 billion.

Experts are divided about what should be done about the rising prices. An editorial signed by 128 oncologists published Thursday in the Mayo Clinic Proceedings noted that the average price for new cancer drugs increased 5- to 10-fold to more than $100,000 annually by 2012. Prices are unaffordable for many patients and need to be reined in, said the doctors.

One of the signers of the editorial, Dr. Richard Stone, director of the Adult Leukemia Program at Dana-Farber Cancer Institute in Boston, sees the impact of high cancer drug prices in his practice. He told CBS MoneyWatch he often experiences a "roadblock" in getting an insurance company to cover an expensive drug.

When that happens, Stone will inquire if the patient is eligible for the financial assistance program provided by drug companies, but that "requires a lot of work" by both him and his patients. If that doesn't pan out, Stone then devises an "alternative therapy plan, which obviously isn't ideal."

The doctors are also calling for allowing Medicare to negotiate drug prices and letting patients import drugs from lower-costs countries such as Canada. In addition, they're calling for reforms to the patent process to prevent drug companies from delaying access to low-cost generics.

They also want to create a process separate from the Food and Drug Administration review to determine a fair price for new treatments based on their effectiveness.

"Drug companies, insurance companies, pharmaceutical distributors, many hospitals and physicians, and perhaps some patient advocacy groups can be financially conflicted when it comes to discussing rational drug prices," the Mayo Clinic Proceedings article said. "The individuals most harmed and least engaged in these discussions are cancer patients because they are exhausting their energy, resources, and time fighting for their lives."

Not surprisingly, the doctors' proposal isn't sitting well with the pharmaceutical industry, which argued that it would stifle innovation as scientists continue to make inroads against cancer. The industry also has long opposed allowing patients to import drugs from overseas for safety reasons and has resisted efforts to weaken patent protections.

In a blog post on the website of the Pharmaceutical Research and Manufacturers of America (PhRMA), trade group spokesman Robert Zirkelbach faulted an editorial published in the "Mayo Clinical Proceedings" for unfairly singling out drug prices even though they represent just one-fifth of total spending on cancer treatment.

"The policy proposals they recommend would, if adopted, send a chilling signal to the marketplace that risk-taking will no longer be rewarded, stopping innovation in its tracks and halting decades of progress in cancer care," Zirkelbach wrote.

Cancer death rates have tumbled in recent years, according to the National Cancer Institute.

Dr. Stone is sympathetic to the drug company's arguments to a point, but like other doctors he questions how drugs are priced, noting that pharmaceutical companies will charge whatever the market will tolerate.

"I understand that they have fiduciary responsibilities to shareholders," he said. "To charge such high drug pries, at some point along the way, they are going to kill the goose that has laid the golden egg for them. I don't want to overregulate the industry, but clearly some degree of oversight has to be taken."

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    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.