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How State And Federal Policies As Well As Advances In Genome Science Contribute To The High Cost Of Cancer Drugs

Author: Scott D. Ramsey
$15.00

During a time when cancer drug prices are increasing at an unprecedented rate, a debate has emerged as to whether these drugs continue to provide good value. In this article I argue that this debate is irrelevant because under today’s highly distorted market, prices will not be set with value considerations in mind. As an alternative, I suggest considering the “value” of three policy changes—Medicare’s “average sales price plus 6 percent” payment program, laws that require insurance coverage of all new cancer drugs, and the Affordable Care Act—that are fueling manufacturers’ willingness to set higher prices. More important than these issues, however, is the revolution that is occurring in molecular biology and its impact on scientists’ ability to detect changes in the cancer genome. The lowered cost of discovery is driving more competitors into the market, which under distorted pricing paradoxically encourages drug makers to charge ever higher prices for their products.

During a time when cancer drug prices are increasing at an unprecedented rate, a debate has emerged as to whether these drugs continue to provide good value. In this article I argue that this debate is irrelevant because under today’s highly distorted market, prices will not be set with value considerations in mind. As an alternative, I suggest considering the “value” of three policy changes—Medicare’s “average sales price plus 6 percent” payment program, laws that require insurance coverage of all new cancer drugs, and the Affordable Care Act—that are fueling manufacturers’ willingness to set higher prices. More important than these issues, however, is the revolution that is occurring in molecular biology and its impact on scientists’ ability to detect changes in the cancer genome. The lowered cost of discovery is driving more competitors into the market, which under distorted pricing paradoxically encourages drug makers to charge ever higher prices for their products.

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