I came across this article in my sociological classical theory class and I was shocked as to see how people are able to treat so loosely such a sensitive matter. According to Ezekiel J. Emanuel curable cancer drugs are in short supply in the United States. These cancer drugs are the ones that can be used to cure leukemia, lymphoma and testicular cancer. The drugs that are available are these brand new cancer drugs that do not cure, but rather extend life for a couple of months. Now when I was reading over this I was unsure as to why such a thing would happen. I mean these new cancer drugs can cost up to $90 thousand per patient, while the old curable drugs just cost up to $3 per dosage. The explanation to all of this lay in a matter of profit or no profit for the manufacturers that are producing these cancer drugs.

Before 2003 there existed the “buy and bill” system for buying cancer drugs and it was profitable. After George W. Bush passed the Medicare Prescription Drug, Improvement and Modernization act of 2003 this changed. Instead of the drug companies billing Medicare, Medicare began to pay the physicians who prescribed cancer drugs based on a drug’s average selling price, plus six percent for handling. Because of the duration of time it takes to come up with these average selling prices, prices are limited to increase. According to the article within the first or two years of a cancer drug coming out, it becomes genetic. When it becomes genetic its price decreases sufficiently. When a shortage occurs, because of the act of 2003, the price is unable to increase. Since the price does not increase it does not attract manufacturers.  Manufacturers can either not profit from producing the older curable drugs, or produce these newer profitable cancer drugs that do not cure people.

In my classical theory course we related this article to Karl Marx and his understanding of profit in a capitalist society, how a capitalist society could not exist without profit. This article really did surprise me, not just because of the immense significance of profit, but also because of how recent the article is and the fact that it has not been solved yet. As Ezekiel J. Emanuel mentioned the solution is obvious, it just requires legislation to act upon it, the question is how long will it take legislation to actually act upon it? I believe that it is important to understand the foundations of a society, because this way we are able to understand situations such as this one. The importance of something such as profit might not be as significant in another society such as it is in ours. I would like to know other peoples reactions to this whole situation, because to me it is just so amazing how in our society profit is of more importance than the well being of other human beings.

August 6, 2011

Shortchanging Cancer Patients


Ezekiel J. Emanuel is an oncologist and former White House adviser who will be a professor of medical ethics and health policy at the University of Pennsylvania beginning in September. He will be contributing regularly to Op-Ed.

RIGHT now cancer care is being rationed in the United States.

Probably to their great disappointment, President Obama’s critics cannot blame this rationing on death panels or health care reform. Rather, it is caused by a severe shortage of important cancer drugs.

Of the 34 generic cancer drugs on the market, as of this month, 14 were in short supply. They include drugs that are the mainstay of treatment regimens used to cure leukemia, lymphoma and testicular cancer. As Dr. Michael Link, the president of the American Society of Clinical Oncology, recently told me, “If you are a pediatric oncologist, you know how to cure 70 to 80 percent of patients. But without these drugs you are out of business.”

This shortage is even inhibiting research studies that can lead to higher cure rates: enrollment of patients in many clinical trials has been delayed or stopped because the drugs that are in short supply make up the standard regimens to which new treatments are added or compared.

The sad fact is, there are plenty of newer brand-name cancer drugs that do not cure anyone, but just extend life for a few months, at costs of up to $90,000 per patient. Only the older but curative cancer drugs — drugs that can cost as little as $3 per dose — have become unavailable. Most of these drugs have no substitutes, but, crazy as it seems, in some cases these shortages are forcing doctors to use brand-name drugs at more than 100 times the cost.

Only about 10 percent of the shortages can be attributed to a lack of raw materials and essential ingredients to manufacture the drugs. Most shortages appear instead to be the consequence of corporate decisions to cease production, or interruptions in production caused by money or quality problems, which manufacturers do not appear to be in a rush to fix.

If the laws of supply and demand were working properly, a drug shortage would cause a price rise that would induce other manufacturers to fill the gap. But such laws do not really apply to cancer drugs.

The underlying reason for this is that cancer patients do not buy chemotherapy drugs from their local pharmacies the way they buy asthma inhalers or insulin. Instead, it is their oncologists who buy the drugs, administer them and then bill Medicare and insurance companies for the costs.

Historically, this “buy and bill” system was quite lucrative; drug companies charged Medicare and insurance companies inflated, essentially made-up “average wholesale prices.” The Medicare Prescription Drug, Improvement and Modernization Act of 2003, signed by President George W. Bush, put an end to this arrangement. It required Medicare to pay the physicians who prescribed the drugs based on a drug’s actual average selling price, plus 6 percent for handling. And indirectly — because of the time it takes drug companies to compile actual sales data and the government to revise the average selling price — it restricted the price from increasing by more than 6 percent every six months.

The act had an unintended consequence. In the first two or three years after a cancer drug goes generic, its price can drop by as much as 90 percent as manufacturers compete for market share. But if a shortage develops, the drug’s price should be able to increase again to attract more manufacturers. Because the 2003 act effectively limits drug price increases, it prevents this from happening. The low profit margins mean that manufacturers face a hard choice: lose money producing a lifesaving drug or switch limited production capacity to a more lucrative drug.

The result is clear: in 2004 there were 58 new drug shortages, but by 2010 the number had steadily increased to 211. (These numbers include noncancer drugs as well. )

Unfortunately, there is no quick fix, because all solutions require legislation. A bill introduced in February by Senator Amy Klobuchar, Democrat of Minnesota, and Senator Bob Casey, Democrat of Pennsylvania, would require generic manufacturers to notify the Food and Drug Administration if they expected a supply problem or planned to stop manufacturing a drug. But the F.D.A. isn’t able to force manufacturers to produce a drug, and learning about impending shortages with little authority to alleviate them is of limited benefit. Indeed, early warning could exacerbate the problem: the moment oncologists or cancer centers hear there is going to be a shortage of a critical drug, their response could well be to start hoarding.

You don’t have to be a cynical capitalist to see that the long-term solution is to make the production of generic cancer drugs more profitable. Most of Europe, where brand-name drugs are cheaper than in the United States, while generics are slightly more expensive, has no shortage of these cancer drugs.

One solution would be to amend the 2003 act to increase the amount Medicare pays for generic cancer drugs to the average selling price plus, say, 30 percent, after the drugs have been generic for three years. This would encourage the initial rapid price drop that makes generics affordable, but would allow for an increase in price and profits to attract more generic producers and the fixing of any manufacturing problems that subsequently arose.

Increasing the price for generic oncology drugs would have a negligible impact on overall health care costs. Total spending on generic injectable cancer drugs was $400 million last year — just 2 percent of cancer drug costs, and less than 0.5 percent of the total cost of cancer care. If we are worried about costs, we could follow Europe and pay for the higher prices by lowering what Medicare pays for the brand-name drugs that extend life by only a few months.

A more radical approach would be to take Medicare out of the generic cancer drug business entirely. Once a drug becomes generic, Medicare should stop paying, and it should be covered by a private pharmacy plan. That way prices can better reflect the market, and market incentives can work to prevent shortages.

Scare-mongering about death panels and health care reform has diverted attention from real issues in our health care system. Shortages in curative cancer treatments are completely unacceptable. We need to stop the political demagoguery and fix the real rationing problem.


One response

  1. audreyzap says:

    It is such a shame that capitalism is what people are into instead of being compassionate and genuine profit is being made on other people’s suffering. We were discussing in another class how in ancient Greece people lived by a code where anyone who were needy or helpless had the right to assistance. Their society had the responsibility to help one another as human beings. This gave way to the Poor Law System in the new world colonies where only certain people were entitled to help such as the “worthy poor” (widows). I just thought that was interesting and reminded me of that discussion.