Today’s Managing Health Care Costs Number is $120,000
Monthly Cost of Gleevec
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Gleevec (imatinib) is one of the miracles of modern medicine. Pre-Gleevec, any adult with chronic myelogenous leukemia (CML) had a death sentence, often within 18 months. The drug was the first to exploit a genetic mutation in a cancer cell (the Philadelphia Chromosome). Those with CML who take this daily pill have few side effects and live nearly normal life expectancies.
The Washington Post last week reported on the success of Gleevec, and its substantial price increases since its introduction. The drug was introduced at $26,400 a year in 2001– and its wholesale price has soared to over $120,000 in 2016. Two new drugs have become available that are similar – each is priced even higher. Instead of the troika of drugs leading to lower prices – the new higher priced drugs have allowed Gleevec to increase its unit cost through shadow pricing. Last year, Gleevec took in $4.7 billion in revenue for Novartis.
Sidharta Mukherjee described in Emperor of Maladies how Novartis almost didn’t market this medication – because the market size was just so small. There were fewer than 5000 new cases each year, and average life expectancy was short. Of course, a drug that is as effective at staving off death as Gleevec leads to a much larger “total addressable market.” The number of people living with CML is over 90,000 now, and is projected to double by 2050. What was once an “orphan drug” market isn’t any longer.
Gleevec is a cautionary tale. The actual “value” of Gleevec is highly likely over $100,000 per year – as it alone allows patients to continue to live. There are many other medical interventions that cost more than $100,000 per quality adjusted life year (QALY); why shouldn’t Novartis be paid for the actual value of its drug, which truly changed medical history. On the other hand, Novartis’ decision to charge such a high price puts the drug out of reach for many, and contributes to the rising price of health care.
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Some have advocated capping patient cost sharing for such valuable medications; the Washington Post chronicled patients cutting the dose so that they did not face financial ruin. But patient cost sharing is one of the few levers that help keep pharmaceutical companies from raising prices even higher. Most developed countries regulate drug prices – and thus the cost of Gleevec in UK is under $32,000 per year, and in France is under $29,000 per year. But there is not much chance of price regulation in the US.
There is significant interest in paying for medications based on their value, although little agreement about how to operationalize and administer such a system. If we paid for value, it’s quite possible that the cost of Gleevec would not go down – although the cost of many other new drugs, especially oncology drugs, would be likely to fall.
