Those suffering from breast or lung cancer have something new to anguish over. In addition to dealing with chemotherapy, weakness and mortality, they now must worry if they have the resources necessary to pay for extremely expensive medicine. Not the $50,000 price tag associated with current therapies, but $100,000-for just one year's treatment.
That is what many cancer patients will have to pay for a course of Genentech's Avastin, a drug shown in clinical trials to extend the lives of late-stage breast and lung cancer patients by several months when combined with existing therapies.
Avastin is currently used to treat colon cancer, at a price of about $50,000 a year. But since it will be used at higher doses for lung and breast cancer the cost will double, to about $8,800 a month. Even though the additional cost of producing a higher dose is minimal, Genentech does not plan to reduce the unit price.
With a price this high, some cancer patients will be priced out of the treatment; namely, those without insurance and those with high deductibles. But even some patients with insurance are thinking hard before agreeing to treatment, as out-of-pocket co-payments for Avastin could easily run $10,000 to $20,000 a year.
Genentech is currently seeking FDA approval to sell the drug specifically for the treatment of breast and lung cancer. Until the FDA gives the okay to sell Avastin as treatment for these diseases, insurance companies will not pay for it and patients must sign a waiver agreeing to reimburse the hospital for the price of treatment.
Avastin went on sale during the first quarter of 2004 and had 2005 sales of $1.1 billion. With this new application it has a potential patient pool of hundreds of thousands of people, meaning its United States sales could grow nearly sevenfold-$7 billion by 2009. Genentech's profits are forecast to triple to $4 billion in 2009, as sales climb to $18 billion.
Herein lays the moral-ethical question: When is a profit enough?
In the past, drug manufacturers said high drug prices were necessary to recoup the large research and development costs associated with new drug development. For every successful drug that comes to market, dozens of other drugs in development could not be sold, for a variety of reasons: the drug did not perform as anticipated or perhaps could not gain FDA approval.
Genentech's reasoning for the high cost of an Avastin treatment for lung or breast cancer is decidedly different. The company and its majority owner, Roche, say the inherent value of life-sustaining therapies is the justification for a high price. With 2005 sales of more than $6 billion, pure profit also seems to be a motivator for the South San Francisco, CA-based firm.
"As we look at Avastin pricing, right now the health economics hold up, and therefore I don't see any reason to be touching them," said William M. Burns, the chief executive of Roche's pharmaceutical division and a member of Genentech's board.
Genentech's president of product development, Dr. Susan Desmond-Hellmann, said that Genentech set Avastin's price based on "the value of innovation, and the value of new therapies." To assist those who cannot afford treatment, Genentech has patient programs and last year contributed $21 million to charities that help patients with their insurance co-payments, she said.
Because of Genentech's status as a leading developer of cancer therapies, some doctors fear that the company's pricing plans for Avastin may encourage other companies to charge more for their own oncology drugs. If this happens, the overall costs of cancer treatments may rise to unsustainable levels.
Many medical professionals are opposed to the ever-rising costs of pharmaceuticals, but few are willing to discuss it. Efforts were made to reach local medical professional for comments. No pharmaceutical sales representatives were able to comment, as all major drug companies require employees to sign strict non-disclosure agreements. Pharmacists at chain pharmacies such as CVS and Walgreens are also not permitted to comment either on or off the record, and pharmacists at the local independent pharmacies contacted were hesitant to comment.
Robyn Gleason, MSN, MPH, ARNP, PhD(c) and Bethune-Cookman Nursing professor, was willing to comment. "They'll charge what the market will bear," she said in an interview. "I don't think the drug companies are justified in charging $100,000 a year for cancer treatment. But look at the cost of HIV drugs. It's no different."
"I'm sure it cost them a lot to develop this drug. But I'm not so sure it costs them enough to justify the $100,000 price," she added.
So why do drugs cost so much? Is it because of the huge R&D costs, or something else? A report by the U.S. consumer group Families USA refutes the long-standing pharmaceutical industry's claim that high prices are needed to sustain research and development-an argument not only advanced by industry, but by major industrial countries, the World Trade Organization, and even parts of the World Health Organization.
The report, "Off the Charts: Pay, Profits and Spending by Drug Companies," documents that drug companies spend more than twice as much on marketing, advertising, and administration than they do on R&D. It also purports that company profits, which are higher than those of all other industries, far exceed R&D expenditures, and that drug companies provide lavish compensation packages for their top executives. These expenses have to be recouped, and as of late the method for that has been to charge more and more for drugs.
An outspoken critic of exorbitant prices is Dr. Marcia Angell, author of the book The Truth About Drug Companies: How They Deceive Us and What to Do About It. In her book Dr. Angell argues against the pharmaceutical industry's reputation as an "engine of innovation." According to Dr. Angell's research, the top U.S. drug makers spend 2.5 times as much on marketing and administration as they do on research.
She also found that a third of the drugs marketed by industry leaders were discovered by universities or small biotech companies and sold to the public at inflated prices. She cites cancer drug Taxol, which was discovered by the National Institutes of Health and then sold by Bristol-Myers Squibb at a treatment cost of $20,000 a year-20 times the manufacturing cost. Interestingly, Bristol-Myers Squibb pays the NIH only 0.5% in royalties.
The real test of legitimacy for extremely high prices is, how much profit are pharmaceutical companies making?
A PricewaterhouseCoopers study cataloged the profit per dollar of the largest, economy-driving industries. In the third quarter of 2005 the overall average was 18.5 cents of profit for every dollar of sales. The oil and gas industry earned 8.2 cents; banking, 18 cents; transportation a paltry 0.2 cents; and software, 9 cents. The pharmaceutical industry, however, earned 18.5 cents of profit for every dollar of sales-the highest of any industry.
Angell reports in her book that the top ten pharmaceutical companies make more in profits than the rest of the Fortune 500 companies combined. For many, this is evidence enough that too much is being charged for drugs.
Mandy Minor is the marketing director for St. Petersburg web design firm J Allan Studios.
