{"id":3392,"date":"2015-03-18T07:00:50","date_gmt":"2015-03-18T07:00:50","guid":{"rendered":"http:\/\/revoscience.com\/en\/?p=3392"},"modified":"2015-03-18T07:00:50","modified_gmt":"2015-03-18T07:00:50","slug":"study-prices-of-cancer-drugs-have-soared-since-1995","status":"publish","type":"post","link":"https:\/\/www.revoscience.com\/en\/study-prices-of-cancer-drugs-have-soared-since-1995\/","title":{"rendered":"Study: Prices of cancer drugs have soared since 1995"},"content":{"rendered":"

Researchers find a 10 percent annual increase, after inflation.<\/strong><\/em><\/span><\/p>\n

\"download<\/a>CAMBRIDGE, Mass. —\u00a0The prices of leading cancer drugs have risen at rates far outstripping inflation over the last two decades, according to a new study co-authored by an MIT economist \u2014 but the exact reasons for the cost increases are unclear.<\/span><\/p>\n

Since 1995, a group of 58 leading cancer drugs has increased in price by 10 percent annually, even when adjusted for inflation and incremental health benefits, the study finds. More specifically, in 1995, cancer drugs in this group cost about $54,100 for each year of life they were estimated to add; by 2013, such drugs cost about $207,000 per each additional year of life.<\/span><\/p>\n

Those increases have sparked criticism in recent years from doctors, among other groups, who have questioned the pricing of major drugs. But the empirical results may also show, the researchers say, that rising price levels reflect a greater social tolerance for significant health-care costs.<\/span><\/p>\n

\u201cI think the value of good health has really increased enormously over the last few decades,\u201d says Ernst Berndt, the Louis E. Seley Professor in Applied Economics at the MIT Sloan School of Management, and co-author of a new paper detailing the study\u2019s findings. \u201cWe treasure it and are willing to pay a fair bit for that.\u201d<\/span><\/p>\n

The paper notes that there have been some cases of political backlash in recent years \u2014 in Oregon, for instance \u2014 in response to proposed policies that would limit the ability of public insurance programs to buy expensive, life-extending cancer drugs. On the other hand, as the authors observe, patient cost-sharing in medical plans has also increased since 1995, limiting the extent to which demand can explain the changes.<\/span><\/p>\n

Patients do seem to be paying for improved quality, to an extent: The study found a positive correlation between the effectiveness of drugs and their prices. Cancer drug prices rise about 120 percent for each additional year of life gained by a patient, in aggregate.<\/span><\/p>\n

\u201cWe found that the greater the improvement of the drug over the existing therapies, the higher the price,\u201d Berndt explains. \u201cSo price was related to quality \u2014 but price increased more than did quality.\u201d<\/span><\/p>\n

So what else is driving prices?<\/strong><\/span><\/p>\n

The paper, \u201cPricing in the Market for Anticancer Drugs,\u201d is published in the latest issue of the\u00a0Journal of Economic Perspectives<\/em>. In addition to Berndt, the co-authors are Peter B. Bach, a physician at Memorial Sloan Kettering Cancer Center in New York; Rena M. Conti, an assistant professor of health policy at the University of Chicago; and David H. Howard, an associate professor at Emory University\u2019s Rollins School of Public Health.<\/span><\/p>\n

Globally, cancer drugs are the class of pharmaceuticals with the highest sales, at $91 billion in 2013; $37 billion of that spending was in the U.S. As in many major global markets, there is contention about what price levels are justified. The paper notes that in 2013, a group of 100 prominent oncologists claimed that drug companies\u2019 pricing policies involved a \u201csimple formula: start with the price of the most recent similar drug on the market and price the new one within 10-20 percent of that price (usually higher).\u201d<\/span><\/p>\n

The paper notes that such assertions are at least consistent with \u201creference price models of demand,\u201d in which consumers\u2019 decisions to pay involve existing prices, rather than a measurement of intrinsic value. Berndt says such challenges are \u201cprobably credible,\u201d but notes that it is hard to assess how much money pharmaceutical companies have spent developing specific drugs.<\/span><\/p>\n

\u201cTypically drug companies and biotech companies simultaneously study all sorts of medicines,\u201d Berndt notes. Therefore, he adds, \u201cIt\u2019s extremely difficult to allocate historical costs of drug development to specific new drugs.\u201d<\/span><\/p>\n

There may be some additional factors entering into the cost of cancer therapeutics today. The \u201c340B\u201d pricing program enacted by Congress in 1992, the paper notes, requires discounts for some hospitals and clinics, which may incentivize companies to raise prices to compensate.<\/span><\/p>\n

Overall, the authors conclude, \u201cWe believe the direction of causation runs from prices to research and development costs \u2014 as prices increase, manufacturers are willing to spend more to discover new drugs \u2014 rather than the other way around.\u201d<\/span><\/p>\n

Experts in the field say the authors have shed welcome light on an important trend in medicine.<\/span><\/p>\n

The study was partially funded by a grant from the National Cancer Institute.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Researchers find a 10 percent annual increase, after inflation. CAMBRIDGE, Mass. —\u00a0The prices of leading cancer drugs have risen at rates far outstripping inflation over the last two decades, according to a new study co-authored by an MIT economist \u2014 but the exact reasons for the cost increases are unclear. Since 1995, a group of […]<\/p>\n","protected":false},"author":6,"featured_media":3393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34,26],"tags":[],"class_list":["post-3392","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","category-medicine"],"featured_image_urls":{"full":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"thumbnail":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6-150x150.jpg",150,150,true],"medium":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"medium_large":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"large":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"1536x1536":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"2048x2048":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"ultp_layout_landscape_large":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"ultp_layout_landscape":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"ultp_layout_portrait":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"ultp_layout_square":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"newspaper-x-single-post":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"newspaper-x-recent-post-big":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"newspaper-x-recent-post-list-image":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",95,63,false],"web-stories-poster-portrait":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",275,183,false],"web-stories-publisher-logo":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",96,64,false],"web-stories-thumbnail":["https:\/\/www.revoscience.com\/en\/wp-content\/uploads\/2015\/03\/download-6.jpg",150,100,false]},"author_info":{"info":["Amrita Tuladhar"]},"category_info":"Economics<\/a> Medicine<\/a>","tag_info":"Medicine","comment_count":"0","_links":{"self":[{"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/posts\/3392","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/comments?post=3392"}],"version-history":[{"count":0,"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/posts\/3392\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/media\/3393"}],"wp:attachment":[{"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/media?parent=3392"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/categories?post=3392"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.revoscience.com\/en\/wp-json\/wp\/v2\/tags?post=3392"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}