Your Money or Your Life? The High Cost of Life-Saving Drugs
By Caroline Santoro
If a drug existed that could save your life, would you give up everything you had to get it? Most people diagnosed with a life-threatening illness would jump at any cure, regardless of the cost. However, the financial impact of these life-saving drugs can be devastating for many. For example, the Chronic Myeloid Leukemia drug Dasatinib costs $110,000 a year and can be taken for the rest of the patient’s life. With the average household income at $51,939 in the United States, the cost of this drug is completely out of reach for most Americans, and Dasatinib is not alone in its exorbitant price. The high cost of drugs contributes to the high cost of health insurance, and expensive health insurance means fewer people can afford to have it. With 28.2 million people under the age of 65 uninsured, the price of these drugs epitomizes the dilemma of what constitutes a fair price and whether to deny people treatment because of cost.
Cancer drugs are expensive for a variety of reasons. Pharmaceutical companies spend over $50 billion a year on research and development. However, 95% of the researched drugs fail the rigorous approval process, so the nearly $1.3 billion spent does not entirely improve patient outcomes. Companies charge a lot because they spend a lot, and they want to defray their research expenditures so that they do not lose money for their shareholders. While this seems fair on the surface, not all of their reasons are so easily justified.
When patients have a cold, physicians have myriad drugs that they can prescribe, allowing their patients to choose the most affordable one. In this way, cancer is not like the common cold; in many cases it is incurable and few treatment options exist for each diagnosis. This lack of options creates a monopoly in which manufacturers have no incentive to compete on the basis of affordability. Instead, pharmaceutical companies justify these high prices by emphasizing results such as “extended survival” and by comparing the costs of traditional treatments such as chemotherapy, surgery, and transplants.
Patents on effective cancer drugs eliminate competition among manufacturers and can cause prices to remain high for many years. These high prices generate high profits that ensure that pharmaceutical companies have ample opportunity to make a return on their investment. If cancer drugs became less lucrative, companies might lose their incentive to continue the research that saves lives. The companies use the high costs of successful drugs to absorb the costs of the many that fail. With a 95% failure rate for drugs that enter clinical trials, the few that succeed cover the cost of those that do not. Daniel Seaton, a spokesperson for the Biotechnology Innovation Organization, explained this when he noted, “The small handful of successful drugs…must be profitable enough to finance all of the many failures.” For this reason, high prices may seem unacceptable, but prices that are too low may be lethal to terminally ill patients waiting for a cure.
Companies are entitled to a fair profit, but in our society we expect the government to regulate monopolies when necessary. Electricity is regulated because people cannot survive in modern society without it. Are life-saving drugs not essential? Drug companies should be able to make money, but they should not be permitted to exploit their customers for profit. The patients taking these drugs are vulnerable, desperate people, and the government needs to protect them from having to choose between life and poverty.
The hallmark of our capitalist economy is self-interest, and granting pharmaceutical companies a temporary monopoly via a patent is necessary for them to succeed. However, in the case of life-saving drugs, the government must balance the profit from selling these drugs against the cost borne by taxpayers unwilling to say no to a dying fellow American.
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Schattner, E. (2016, December 16). We Need To Tame The Price Of New Cancer Drugs. Retrieved September 05, 2017, from https://www.forbes.com/sites/elaineschattner/2016/12/13/we-need-to-tame-the-prices-of-new-cancer-drugs/#5bd312aa16d0