high drug prices robbery

No, this is not a story about a holdup. Or maybe it is.

A group of about 120 leading hematology-oncology specialists from 15 countries in 5 continents published an article in the journal Blood on April 15, 2013. It is titled “Price of drugs for chronic myeloid leukemia (CML), reflections of the unsustainable cancer drug prices: the perspective of CML experts.”

As Andrew Pollack reports in the NYT (April 25, 2013):

“The doctors and researchers, who specialize in the potentially deadly blood cancer known as chronic myeloid leukemia, contend in a commentary published online by a medical journal Thursday that the prices of drugs used to treat that disease are astronomical, unsustainable and perhaps even immoral. They suggested that charging high prices for a medicine needed to keep someone alive is profiteering, akin to jacking up the prices of essential goods after a natural disaster”

Strong words indeed, coming from physicians and researchers not known for inflammatory statements, who are in the trenches, daily bearing witness to the tragedy of patients pushed to bankruptcy in order to buy the medicine that will keep them alive.


What is Gleevec?

Gleevec is a drug used to treat a blood cancer, Chronic Myelogenous Leukemia or CML. Its history of discovery is instructive.

White cells in CML have an extra long chromosome, called the Philadelphia chromosome, which is a result of translocation of a piece of DNA from one chromosome to another. This event turns out to be fateful: an enzyme (a tyrosine kinase called BCR-Abl) that participates in the cascade of signals that instructs a cell to divide becomes permanently switched to the ‘on’ position. The result is uncontrolled cell division, which is the definition of cancer.

Dr. Brian Druker of Oregon Health & Science University toiled in his lab for many years studying this key enzyme in the pathogenesis of CML. His work, funded by grants from NIH, NCI, and the Leukemia Society, resulted in the synthesis of a molecule that inhibited the “switched on” enzyme and cured mice which served as a model for CML.

Armed with these data, he approached Nicholas Lydon, a biochemist at Novartis and persuaded him to test molecules from his company’s library of compounds. After several iterations imatinib was born. The compound was eventually given the brand name of Gleevec. Results

The results of small phase 1 and phase 2 trials were astounding: in over 80% of patients cells, with Philadelphia chromosome completely disappeared. Gleevec was promptly put on the cover of Time magazine with the moniker ‘miracle drug’. Indeed, Gleevec is the first example of a rational drug design, where the target’s structure is known and a drug is then designed to inhibit its activity by binding to it.


It’s a miracle, so what’s the problem?

So what is the good doctors’ problem? They couched their paper in economic terms: the drug is outrageously expensive.  Gleevac, and drugs like it, are going to bankrupt us all, not just the patients because, in the last analysis, we are all paying. But there is another aspect to the oncologists’ rage. They call it profiteering. This term connotes economic wrongdoing, which it is, but really doesn’t capture the abject immorality of such predatory pricing.

Novartis argues that few patients actually pay the full cost of the drug and that prices reflect the high cost of research and the value of a drug to patients. But, as we noted above, Druker’s research was funded mainly by government and non-profit organizations.

The initial clinical trials were minuscule (about 100 patients) because of the excellent results the drug showed. The drug was approved by the FDA within a few months, a record time. If we allow the high estimate of $30,000 per patient, we arrive at the relatively measly sum of $3 million, a far cry from the $1 billion and 20 years that the industry claims a typical drug costs to develop.

And what is the company making on this drug? In 2012 the company had sales of $4.8 billion out of a total market of $7 billion for CML. How did Novartis manage to make so much money despite increasing competition from new drugs? By jacking up the annual cost of the drug from $30,000 when it was introduced in 2001 to over $100,000 today.


The morality of predatory pricing

How could that be? Isn’t competition supposed to lower prices? I leave this to the health economists, but here is an interesting tidbit to chew on: the new drugs are priced even higher! Aren’t they supposed to compete? Is there a tacit, if not overt, “understanding” to keep prices up? Again, I am straying into fields beyond my pay grade.

But you don’t have to get a degree in ethics or moral philosophy to realize that there is something profoundly wrong charging whatever the traffic will bear with the understanding that the alternative is certain death. Such a stark choice happens in armed holdups or with Mafia-like offers you can’t refuse.

In reality, do people really die because they can’t afford the drug? Mortality from CML in the U.S is higher than expected if Gleevec were taken in the recommended doses. The suspicion is that patients are skipping doses to save money. In third world countries, where patients couldn’t dream of buying this drug, physicians are performing bone marrow transplants as a substitute, with mortality rates from the procedure approaching 50%.

Free -market- ideologues never tire of quoting Adam Smith and the invisible hand. What they are missing is that Adam Smith was not an economist; he was a moral philosopher and was grappling with the dilemma of harnessing economics in the service of humanity, not vice versa. This moral person would probably turn in his grave had he seen the extreme perversion of his writings

Dov Michaeli, MD, PhD
Dov Michaeli, MD, PhD loves to write about the brain and human behavior as well as translate complicated basic science concepts into entertainment for the rest of us. He was a professor at the University of California San Francisco before leaving to enter the world of biotech. He served as the Chief Medical Officer of biotech companies, including Aphton Corporation. He also founded and served as the CEO of Madah Medica, an early stage biotech company developing products to improve post-surgical pain control. He is now retired and enjoys working out, following the stock market, travelling the world, and, of course, writing for TDWI.


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