Patent Pending: Why the Pipeline of Future Cancer Treatments Will Be Grinding to a Halt

Rodney Warner
Rodney Warner

Expecting a future miracle cure for cancer? It may very well come some day, but there are several issues that will be blocking its way. Our current system of developing drugs is unsustainable and unless changes are made, fewer of us will have access to new treatments and there will be fewer new treatments to go around.

1. More Demand
Because the population is aging and most cancers occur in older people, the number of cancer survivors is expected to increase from 13.7 million as of 2012 to about 18 million by 2020. As cancer treatments become more effective, many people who in the past would’ve died relatively quickly after diagnosis may live for many more years. Many of those long term survivors will be on maintenance drugs, constantly taking one drug or another to stay alive.

Cancer isn’t the only disease in town competing for research money and treatments.

2. Less supply
The number of drugs overall may decrease over time. That may be a function of the fact the pharmaceutical industry is consolidating with fewer drugs produced by fewer companies.

3. Higher prices
New cancer drugs are incredibly expensive. According to a Bloomberg News article, of the twelve cancer medications approved by the Food and Drug Administration last year, eleven cost more than $100,000 annually. The average annual income in the U.S. is about $48,000.

These costs are driven by the classic economics of more demand and less supply but also the market incentives for the pharmaceutical industry to invest its money in developing very expensive treatments while ignoring potential low cost treatment alternatives. This is very well illustrated in a recent ProPublica article.

It can cost many, many millions of dollars to research and develop an effective treatment. To make that investment back, companies will patent such a treatment, giving it a monopoly in making and selling that drug for a period of time, maximizing the potential price.

If a drug is not patentable, or its patent protection has expired and any company can make and sell such a drug, there could be fierce competition in selling it, lowering prices. If the prices are low, so are the profits so there is little or no incentive to invest research dollars to see if existing, low cost drugs may be successful in treating cancer.

Once there’s a monopoly on making and selling a cancer treatment, there’s no incentive to control the price. Pharmaceutical companies will set the price at whatever the market will bear. Those of us who will literally die without a cancer treatment will often go through financial destruction in order to delay as long as possible physical destruction due to cancer. As pointed out in another recent Bloomberg News piece, prices of cancer treatments can sharply increase over time for any or no reason if there’s only one source of the treatment.

4. An Increasing Need to Control Health Care Spending

The economy is not expected to grow fast enough in order to support the current level of healthcare spending on the rapidly increasing number of people who will need more and more increasingly expensive treatment. It’s been estimated that in the U.S. there was $2.6 trillion spent on healthcare in 2010, with that number nearly doubling to $4.6 trillion by 2020. Will we, as a society, be willing and able to spend almost twice as much on healthcare in 2020, compared to 2010?

If trends continue, governments and insurance companies will be unwilling or unable to keep payments up to the rate of medical inflation. Fewer drugs will be covered, co-pays for individuals will be higher.

5. The Death Spiral for the Development of New Cancer Drugs

With fewer drugs, more demand for them, increasingly higher prices and less willingness to pay for these drugs, what will happen? If the current system stays as is, those drugs that will be developed in the future will be awesomely expensive. Governments and insurance companies, if they cover any costs, will cover just a fraction of them. That leaves more of a financial burden on consumers.

As that burden increases, fewer people will be able to afford to buy them, so prices will go up even faster while companies seek to get their investment back from a decreasing pool of customers. With every price increase, there will be fewer buyers, resulting in even higher prices, with fewer buyers…

As the pool of potential customers decreases as prices increase, there will be fewer and fewer new treatments as there’s less incentive to develop new drugs because recouping costs and making a profit will become harder and harder as the years pass. The pharmaceutical industry is addicted to selling increasingly expensive treatments which fewer people will be able to afford.

The ProPublica article quotes Allen Lichter, chief executive officer of the American Society of Clinical Oncology, as saying,

“There is a point at which the equation breaks down and you can’t support the whole treatment process anymore… We need to have an environment where we can have new drugs at a price that allows us to use those drugs and still allows these companies that have invested in them to reap a profit. But how we get from here to there is not clear.”

We all imagine, and dearly hope for, a day when there’s a cure for all cancers. But it looks increasingly unlikely such a cure will be created by our current system of creating and selling cancer treatments. Given the fact it takes years for a drug to go from research to reaching a patient, the longer we maintain the current system and the longer we postpone making drastic but necessary changes, the fewer new drug treatments will be available in the future and they may only be used by the very wealthy.

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