The Ash Twins Blog

The fear of death and the evils of monopoly are in full bloom in the NYTimes article published today about Britain’s polices for buying proprietary prescription medications:

When Bruce Hardy’s kidney cancer spread to his lung, his doctor recommended an expensive new pill from Pfizer… A clinical trial showed that the pill, called Sutent, delays cancer progression for six months at an estimated treatment cost of $54,000.

But at that price, Mr. Hardy’s life is not worth prolonging, according to a British government agency, the National Institute for Health and Clinical Excellence. The institute, known as NICE, has decided that Britain, except in rare cases, can afford only £15,000, or about $22,750, to save six months of a citizen’s life…

Even in the United States, rising costs have led some in Congress to propose an institute that would compare the effectiveness of new medical technologies, although the proposals so far would not allow for price considerations. At the present rate of growth, medical costs will increase to 25 percent of the nation’s gross domestic product in 2025 from 16 percent, with half of the increase coming from new drugs and devices, according to the Congressional Budget Office…

The British government created NICE a decade ago to ensure that every pound spent buys as many years of good-quality life as possible, but the agency is increasingly rejecting expensive treatments. The denials have led to debate over what is to blame: company prices or the health institute’s math.

Dr. Michael Rawlins, chairman of NICE, blames the industry, saying that some companies raise prices “to get profits up so their executives can get better bonuses.”…

Robert Goldberg, vice president of the Center for Medicine in the Public Interest, an advocacy group financed by drug makers, likened Dr. Rawlins and his institute to terrorists and said their decisionswere morally indefensible…

Dr. Rawlins said he was frustrated that his institute had been censured instead of the drug company executives who set sky-high prices. Take the case of Celgene, the maker of Revlimid, a drug for multiple myeloma, a bone-marrow cancer, that in a preliminary ruling on Oct. 28 the institute said was too costly.

Celgene’s first big seller was thalidomide, a decades-old medicine now used as a cancer treatment, which is so cheap to manufacture that a company in Brazil sells it for pennies a pill.

Celgene initially spent very little on research and priced each pill in 1998 at $6. As the drug’s popularity against cancer grew, the company raised the price 30-fold to about $180 per pill, or $66,000 per year. The price increases reflected the medicine’s value, company executives said.

In 2005, the company introduced Revlimid, a derivative of thalidomide that is supposed to be less toxic, but may be no more effective. Celgene priced it at about $260 per pill, or $94,000 per year…

Private and public insurers in the United States must pay whatever Celgene and other makers of unique cancer medicines decide to charge, so prices are soaring. Spending on cancer drugs and other such specialty medicines rose 9 percent last year and now represents 24 percent of the nation’s drug bill…

But the most pressing question for the industry is what influence the British institute will have in the United States. The United States already spends more than twice as much per capita on health care as the average of other industrialized nations, while getting generally poorer health outcomes.