A recent article in the peer reviewed journal Mayo Clinic Proceedings has brought attention to the fact that the cost of cancer care in the U.S. differs dramatically to the cost of cancer therapies in other countries.

The authors of the article—Dr. S. Vincent Rajkumar, MD at the Mayo Clinic and Dr. Hagop Kantarjian, MD at Anderson Cancer Centre, both oncologists—have suggested various reasons for the high cost of cancer therapies in the U.S. and are attempting to create solutions to the problem.

The manner in which costs are set for cancer treatment in the U.S. is different to those in other countries. Dr. Rajkumar claims that the average cost of treatment has increased from between $5,000-$10,000 in 2000 to in excess of $100,000 in 2012. In the same time frame average U.S. household income has decreased by 8%. They estimate that cancer therapies are between 50% and 100% more expensive in the U.S. than other developed countries.

By contrast in the European countries the cost of cancer treatments has been harnessed by tough price negotiations between health care providers and Pharma companies. In England the Cancer Drug Fund (CDF) was re-appraised in late 2014 with drug availability being announced in early 2015. The CDF was set up in 2011 in an attempt to provide a ‘money pot’ in order to allow patient access to cancer treatments that were deemed too expensive by NICE (the National Institute of Clinical Excellence), but which was only meant as a short-term solution prior to a value-based pricing (VBP) scheme on cancer drugs being introduced. The VBP scheme has never materialized, but as the amount of spend from the CDF had mushroomed to a whopping £200 million in 2014; this resulted in an additional £80 million being allocated to the budget by the government prior to the budget for 2015 being announced at £340 million. However, in order to try and stem the money hemorrhage, NHS England announced a 3-month consultation period in October 2014, which resulted in the ‘de-listing’ of 16 drugs that had previously been available. This has made many Pharma companies incredibly unhappy and resulted in many inflammatory responses, but this suggests a central effort to contain drug costs.

Although the CDF hasn’t stopped the price of drugs rising, and it’s almost an open secret that Pharma companies negotiate the price of their therapies in order to maintain patient access to treatments it is at least an influencing factor in pricing strategies. The PPRS drug pricing agreement introduced in 2014 is set to limit the increase in medicine costs over a 5-year period of time and yet the NHS spending on medicines in 2013-2014 was still £14.4 billion. According to HSCIC (Health & Social Care Information Centre) the actual cost of medicines rose overall by 7.6% over the previous year, however in hospitals this increase was 15.1% compared to 2012-2013. Although the costs of these therapies have risen over the past decade they do seem to be at a lesser extent to those claimed by Dr. Rajkumar and Dr. Kantarjian in the U.S. However, England operates a different healthcare system where cancer treatment is predominantly NHS-based and price negotiations can take place on a national, regional and local level dependent on NICE or CDF approval.

So why does the U.S. differ? Dr. Rajkumar argues that although there may be more than one drug licensed to treat any malignant condition, there is no free-market competition as this is protected by U.S. law, and drugs are also protected by patents that last for many years. Furthermore the Medicare Prescription Drug, Improvement, and Modernization Act in 2003 meant that Medicare is not allowed to negotiate prices of drugs by law, and other healthcare insurance companies don’t negotiate either.


In many countries the use of therapies, especially high value cancer treatments are regulated by governments and prices capped or strictly negotiated. In the U.S. the prices are neither negotiated, nor capped and Pharma companies are allowed to alter prices every year. Aside from the rights or wrongs or the Pharma companies pricing strategy, the inability of companies to negotiate the price they pay means that higher pricing policies are untouchable.

The other factor that seems to affect the price of drugs in the U.S. is the spiraling costs applied as patent end approaches. In recent years this has seen the price of some products rise by almost 50% in the final years of patent protection. In other countries the same drug is available at a fraction of the cost, but is this not a failure of the legislative system to protect the patient?

The situation that the health system in the U.S. is predominantly private and provided for by health insurance will always be dragged in to discussion. The mere fact that drug therapies are paid for by insurance coverage with related premiums will always mean there are the ‘haves’ and ‘have-nots’. The countries that have nationalized healthcare systems seem also to have much tighter control of what they are prepared to pay for high value treatments. The costs applied by Pharma companies will have a direct impact on patient outcomes as to whether or not they can afford the protection against disease, but this can only be underpinned by the insurance funded care system that is in place. Of course there is a moral issue here that needs to be constrained, but that comes back to negotiation.

Pharma companies justify the costs of their drugs on various levels. The biggest outlay is the cost or R&D, which include not only the successful drug candidates, but also the ones that fall away on the pathway of development and clinical trials prior to reaching the pharmacy. Some companies have argued that the elevated cost of cancer drugs in the U.S. is partly due to the fact they cannot recover their costs elsewhere, but this being the case, should legislation not protect the people who bear the brunt of paying for it?
There are of course various other spending avenues in bringing a drug to market, but many argue that the pricing strategy of Pharma companies’ cancer drugs are misaligned with their R&D costs. The truth of the matter is that Pharma is a business, and although there are moral aspects attached to the pricing of drugs, if governments are not prepared to protect citizens by putting legislation into place, it is difficult to blame commercial entities for their pricing tariffs, which they will strongly defend. The fact that the U.S. seems to be targeted by Pharma companies with over-inflated drug costs must suggest that it is an easy target due to lack of regulation and the hand-ties that have been applied to insurance companies in a private healthcare system and an unregulated pricing policy. In fact while other countries seem to be working with Pharma companies to restrict drug costs, it seems that the Medicare Acts of 2003 and 2006 have triggered the increase and allowed it to spiral. Arguably these Acts came into being as a result of healthcare and pharmaceutical lobbyists, however the outcome of this legislation has now been observed and maybe it’s time to rethink?

Many of the suggestions that Dr. Rajkumar and Dr. Kantarjian present seem sensible and follow-on from practices in other countries that have been less exposed to the price hikes that have been observed in the U.S. Reinforce the power of Medicare and other providers to negotiate, ensure cancer guidelines incorporate cost versus benefit analysis, allow patients to determine which country supplies their drug, etc. But most of all, it seems that legislation is needed to protect the patients who pay into the healthcare system and ensure that negotiation power, government controls and moral behaviors from Pharma companies mean that cancer sufferers have access to therapies evaluated on potential outcomes, not simply whether or not they can afford drugs which are priced out of their reach.