A major new study published this week in Nature Reviews states that a global revolution in new cancer drug pricing must occur if the world is to cope with rapidly increasing instances of the disease.
The paper, titled ‘Sustainability and affordability of cancer drugs: a novel pricing model’ and written by Professor Carin Uyl-de Groot and Professor Bob Lӧwenberg from prestigious Erasmus University Rotterdam in the Netherlands, believe that pharmaceutical companies are over-charging for life saving drugs, hindering recoveries and impacting on the economic cost of cancer.
New algorithm calculates ‘fair’ profit margin, accounting for R&D
The professors proposed the use of an algorithm that would determine innovative drug prices with ‘a maximum level of transparency’.
Nobody expects drug companies to operate like a charity, but the algorithm proposed takes into account the drug companies’ actual costs of R&D, manufacturing, sales, marketing and calculates a fair profit margin based on the clinical benefit to arrive at a reasonable price for each anticancer drug.
Pharmaceutical Companies ‘Charge too Much’
Using the algorithm would indicate that, at present, drug companies are not playing fair and are making large profits while costs are restricting access to life saving drugs.
For example, while the algorithm recommends a price of $3,094 for each treatment of the anti-prostate cancer drug enzalutamide, the current market price is almost 12 times that figure in the UK ($36,288) and more than 28 times higher in the US ($88,704).
For the more specialist myelofibrosis drug Ruxolitnib, the algorithm finds that the fair price would be $17,251 per treatment. The price for this drug is currently $59,760 in the UK and a staggering $90,000 per treatment in the US.
Professor Uyl-de Groot, from Erasmus School of Health Policy & Management, says:
“Looking at these figures it is very clear that pharmaceutical companies charge far too much, often blaming their shareholders for pressure to maximise profits. And many governments, despite some making efforts to change the status quo, are letting it happen. We understand the need to make a profit – but this can be achieved by making the drugs they produce more widely affordable.
Governments need legislation to facilitate a fairer model
Uyl-de Groot adds:
Using the algorithm, we now know what the correct price for these drugs is – the missing link is legislation. Governments should be facilitated to adopt the model via new EU legislation, with the same going for the US market. For that reason I aim to start a petition to really put the pressure on those able to make a difference.”
“It is abundantly clear that the existing free-market model is not suitable for innovative cancer drugs – and is in fact detrimental to cancer patients globally. With a 68% increase in cancer incidence forecasted by 2030 a revolution in new cancer drug prices is needed.
Fairer pricing will improve outcomes and reduce the economic burden of cancer
Uyl-de Groot believes that a new pricing system would vastly improve outcomes for cancer patients, but as free healthcare resources become increasingly stretched, and there are worldwide labour shortages, it’s more than a ‘human crisis’. Put simply, Governments cannot afford the economic cost of rising levels of cancer. He concludes:
“If we adopt this new pricing system we can improve cancer outcomes, provide access to treatments more widely, and lessen the economic burden to cancer in one fell swoop – not just in poorer countries, but also in Western Europe and the US.”