High prices for cancer drugs are affecting patient care in the U.S. but there are no magic buttons to push to make that go away. Development takes longer than ever and is under more government rules than ever, while the patent window remains small and lawsuit judgments if things go wrong are unlimited.

Writing in Mayo Clinic Proceedings, a group of oncologists say they have answers. Unfortunately, their simplistic take on economics would mean pharmaceutical development will become the modern generation's version of the steel industry and leave the country and never come back. 

"Americans with cancer pay 50 percent to 100 percent more for the same patented drug than patients in other countries," says S. Vincent Rajkumar, M.D., of Mayo Clinic Cancer Center, who is one of the authors. "As oncologists we have a moral obligation to advocate for affordable cancer drugs for our patients."

But cherry picking economic data does not help. Rajkumar and Hagop Kantarjian, M.D., of MD Anderson Cancer Center, note that the average price of cancer drugs for about a year of therapy increased from $5,000 to $10,000 before 2000 to more than $100,000 by 2012 while household income in the U.S. decreased by about 8 percent.

They also deny that the expense of conducting research and drug development is real or that price controls on cancer drugs will stifle innovation despite the fact that the former is well-established and the latter has never not happened when price controls were implemented.

"One of the facts that people do not realize is that cancer drugs for the most part are not operating under a free market economy," says Rajkumar. "The fact that there are five approved drugs to treat an incurable cancer does not mean there is competition. Typically, the standard of care is that each drug is used sequentially or in combination, so that each new drug represents a monopoly with exclusivity granted by patent protection for many years."

Not all that many, or generic companies would not be the most profitable businesses in the industry while development for real companies takes 12 years and costs $2 billion. Their solution is the worst possible idea for innovation - let the government decide what it wants to pay after the expense is incurred. Currently, the federal government cannot dictate prices to drug companies the way they now can doctors - as a result of those new policies on costs, doctors are leaving Medicare patients behind completely and there is a shortage of general practitioners, not a great way to help future generations get quality medical care.

Some of the other recommendations are equally unworkable. Generic companies already have no costs and provide so no value so splitting the profit earlier in return for eliminating a generic competitor would mean dictating a generic competitor by force of government. Allowing importation of drugs from abroad would simply mean that drug companies will no longer allow cheaper pricing to poor countries.

What will work, though it will do nothing to reduce cost, is:

  • Develop cancer treatment pathways/guidelines that incorporate the cost and benefit of cancer drugs.
  • Allow the Patient-Centered Outcomes Research Institute and other cancer advocacy groups to consider cost in their recommendations.
Mandating that the government be allowed to choose the price of new drugs means the government would be picking winners and losers in the marketplace. As we have seen with tens of billion of dollars wasted in solar panel and wind subsidies, they do that for political donors well, but not technology.