SECOND OPINION: NUMBER OF CANCER DRUGS IN DEVELOPMENT CLIMBS DESPITE PHRMA CLAIM DRUG PRICING SOLUTIONS WOULD UNDERMINE ONCOLOGY INNOVATION

PhRMA Undercuts Own Rhetoric by Showing the Cancer Drug Pipeline is Growing Larger

Oops. Big Pharma accidentally helped debunk one of the myths perpetuated by the pharmaceutical industry this week about the impact of drug pricing solutions on the innovation pipeline.

In June, PhRMA distributed a press release on an industry-commissioned analysis claiming that drug pricing provisions passed by Congress, and signed into law by the president, last year would undermine the ability of drug makers to develop cancer medicines.

On Thursday, The Pharmaceutical Research and Manufacturers of America (PhRMA) released a report stating that there are currently 1,600 cancer treatments and vaccines in development. The new report shows there are now 300 more cancer medicines in development after the passage of that law than the industry reported were in development (1,300) in December 2020, before the law was passed.

This is yet another reminder that Big Pharma’s oft-repeated refrain that solutions to lower drug prices will undermine innovation are bogus.

The root causes of the affordability crisis for cancer drugs are the egregious pricing practices of brand name drug companies, including repeated price hikes on existing treatments and sky-high launch prices on new medications being introduced to the market.

Prices on 54 Cancer Drugs Increased 40 Percent Over Eight Years: “The affordability problem is worsened by soaring list prices for many specialty drugs used to treat cancer and other serious diseases… For instance, prices for 54 orally administered cancer drugs shot up 40 percent from 2010 to 2018, averaging $167,904 for one year of treatment, according to a 2019 JAMA study. Bristol Myers Squibb, the manufacturer of Clark’s drug, Pomalyst, has raised the price 75 percent since it was approved in 2013, to about $237,000 a year.” (“Seniors Face Crushing Drug Costs as Congress Stalls on Capping Medicare Out-Of-Pockets,” Kaiser Health News, January 4, 2021, Harris Meyer)

Cancer Drug Price Hikes Outpace Inflation: “The cost of oral cancer drugs increased by almost six percent over inflation from 2010 to 2018, leading to increases in out-of-pocket costs for Medicare patients despite reductions in the Part D coverage gap, according to an analysis of formulary and pricing data.” (“Costs of Oral Cancer Drugs Rising Faster than Inflation,” MDedge, May 28, 2019, Richard Franki)

List Prices for New Cancer Drugs Rose More Than 50 Percent in Five Years: “It wasn’t all that long ago that a six-figure price on a debut cancer drug was big news. Now, it would be more surprising if an oncology launch didn’t carry a price tag of $100,000 or more—and the high cost of those new rollouts is helping drive cancer treatment costs toward $100 billion annually in the U.S. alone. According to a new IQVIA report, U.S. cancer drug spending climbed to almost $50 billion last year, about twice the $24.8 billion spent in 2012. Along the way, median U.S prices for new therapies climbed above $160,000 last year, more than double the median $79,000 launch price in 2013.” (“Super-Pricey New Cancer Drugs Drive Mega Increases in Treatment Spending,” FiercePharma, May 24, 2018, Eric Sagonowsky)

Every New Cancer Drug Brought To Market In 2017 Cost $100,000 Or More: “Spending on cancer drugs has doubled over the past five years, and little wonder: Every new cancer drug brought to market last year cost $100,000 or more, according to a new report. The average cost of a new drug released in 2017 was $150,000, according to the report from The IQVIA Institute for Human Data Science, formerly IMS Health and Quintiles. Those drug costs are expected to double again by 2022, the report finds. That compares to the average $79,000 cost of new cancer drugs that hit the market in 2013.” (“Cancer Drug Spending Doubled In Last 5 Years, Report Says,” NBC News, May 24, 2018, Maggie Fox)

Drug Companies’ Price Hikes Costing Patients and Taxpayers: “Drugmakers raised prices on more than 400 drugs in the early days of 2020, including two blockbuster cancer treatments that have been top-expenditure drugs in Medicare Part B, according to healthcare analysts and CMS data… Two of the 10 physician-administered drugs that Medicare spent the most money on in 2018 have seen price increases this January, healthcare research firm 3 Axis Advisors found… Merck instituted a price increase of 1.5 percent for Keytruda, the second-highest expenditure Medicare Part B drug in 2018. Bristol-Myers Squibb increased the price for Opdivo, a drug used to treat small cell lung cancer, by 1.5 percent. Opdivo was the third-highest Part B expenditure drug in 2018.” (“Two Blockbuster Cancer Drugs see New Year Price Hikes,” Modern Healthcare, January 3, 2020, Rachel Cohrs)

Big Pharma has also consistently used the excuse that research and development (R&D) costs justify out-of-control prescription drug prices and that solutions to lower prices threaten innovation into new breakthroughs. These tired arguments, which Big Pharma wields like a shield to protect the industry’s anti-competitive and price-hiking practices, simply don’t hold up to scrutiny.

PRICE HIKES UNCONNECTED TO CLINICAL IMPROVEMENTS

Multiple studies have found Big Pharma’s price hikes have little to no connection to the cost of its development or improvements in drugs’ efficacy. In other words, brand name drug companies set launch prices and hike prices to maximize profits — not because there is any connection to innovation.

• “No Association” Between Drug Company’s Prices and Investments In Research & Development. A September 2022 paper in The Journal of American Medical Association (JAMA) Network Open examined a subset of 63 drugs approved by the U.S. Food and Drug Administration (FDA) between 2009 to 2018, representing around one-fifth of the drugs approved by the FDA during this time span. The researchers found that for this subset of drugs, “there was no association between estimated research and development investments and treatment costs based on list prices at the launch of the product or based on net prices a year after launch.” (“Association of Research and Development Investments With Treatment Costs for New Drugs Approved From 2009 to 2018,” JAMA Network Open, September 26, 2022)
• No “Meaningful Association Between Cancer Drug Prices And The Magnitude Of Benefit For Any End Points.” An October 2022 study in JAMA Internal Medicine found a lack of correlation between the prices set by Big Pharma on cancer drugs and their effectiveness for patients. “We did not detect a meaningful association between cancer drug prices and the magnitude of benefit for any of the end points,” the researchers wrote. “This suggests that cancer drugs are priced based predominantly on what the market will bear.” In other words, Big Pharma sets prices to maximize profits, not based on clinical value or outcomes for patients. (“Association Between US Drug Price and Measures of Efficacy for Oncology Drugs Approved by the US Food and Drug Administration From 2015 to 2020,” JAMA Internal Medicine, October 31, 2022)
• “A Drug’s Sunk R&D Costs Do Not Influence Its Price.” A 2021 report from the Congressional Budget Office (CBO) found that pharmaceutical R&D costs do not have a relationship to the prices drug companies set on their products. The report concluded, “Importantly, when drug companies set the prices of a new drug, they do so to maximize future revenues net of manufacturing and distribution costs. A drug’s sunk R&D costs—that is, the costs already incurred in developing that drug—do not influence its price.” (“Research And Development In The Pharmaceutical Industry,” Congressional Budget Office, April 2021)
• Big Pharma’s Unjustified Price Hikes On Just Seven Popular Drugs Cost American Taxpayers $805 Million In Increased Costs. An analysis conducted by the Institute for Clinical and Economic Review (ICER) found Big Pharma hiked prices on seven of the top 10 most popular drugs in 2021 with no accompanying increase in clinical value — increasing overall drug spending by $805 million. The price of the costliest drug, Horizon Therapeutics’ gout treatment Krystexxa, increased by 12 percent, raising out-of-pocket spending by $3,210 on average per patient. The second and third most widely used drugs among Medicare Part B beneficiaries, Seagen’s cancer drug Adcetris and Ipsen’s injection Somatuline Depot both increased costs by $1,000 per patient. (“ICER Identifies Most Significant 2021 US Drug-Price Hikes Unsupported by New Clinical Evidence,” ICER, December 6, 2022)
• Price Hikes On AbbVie’s Blockbuster Drug Humira Were Not Supported By Clinical Evidence And Led To A More Than $1.8 Billion Increase In Unnecessary U.S. Drug Spending.Price hikes on AbbVie’s Humira were not supported by new clinical evidence and accounted for an unnecessary increase in U.S. drug spending of more than $1.8 billion from 2017-2018 according to ICER. (“AbbVie’s Humira, Roche’s Rituxan top ICER’s list of worst price-hike offenders,” FierceHealthcare, October 8, 2019)

TAXPAYERS CARRY A SUBSTANTIAL AMOUNT OF THE R&D LOAD

And while Big Pharma tries to obfuscate their out-of-control list prices by invoking “innovation,” the industry has gotten a huge boost in recent years from taxpayer dollars in the form of taxpayer-funded research at the National Institute of Health (NIH).

• “The U.S. taxpayer has funded research for every single one of the 210 new drugs that the FDA approved between 2010-16. Yet the companies that have access to this research are increasingly viewing pharmaceuticals in the same way that banks view their financial product — opportunities for short-term returns.” (Mariana Mazzucato, “Big Pharma Is Hurting Drug Innovation,” The Washington Post, 10/17/18)
• “More than $100 billion in NIH funding went toward research that contributed, either directly or indirectly, to the 210 drugs approved between 2010 and 2016. That’s roughly 20 percent of NIH spending since 2000.” (Megan Thielking, “NIH funding contributed to 210 approved drugs in recent years, study says,” STAT News, 2/12/18)

The crisis of affordability around cancer drugs is yet another example of why lawmakers must continue to pursue solutions to lower prescription drug prices and hold the pharmaceutical industry accountable.

Read more about Big Pharma’s bogus innovation rhetoric HERE.

And learn more about how Big Pharma’s pricing practices have driven a crisis of affordability for America’s cancer patients HERE.

Read more on solutions to hold Big Pharma accountable and lower prescription drug prices HERE.