Big Pharma versus the Insurance Companies

A game of "Chicken"

Photo by Jeffrey Coolidge - Getty Images
Photo by Jeffrey Coolidge - Getty Images. Photo by Jeffrey Coolidge - Getty Images

The cost of new medications is rapidly spiraling upward and I don’t know where it’s going to end. I feel like the pharmaceutical companies, who need to turn a profit, and the insurance companies, who need to limit costs, are playing a dangerous game of “Chicken.”  For those of you who don’t know what I am talking about, “Chicken” is where two cars race head on toward each other to see who will swerve first, i.e., who is the “chicken?”  

In one car are the pharmaceutical companies that are charging mind-boggling prices for their new cancer drugs. Getting FDA approved for a new medicine is like hitting the lottery because the insurance companies are legally obligated to pay the asking price for the drug. Certainly pharmaceutical companies need to recoup the immense cost of developing a new drug.  In fact, they also need to recover the cost of all the drugs that were tested and ultimately proved ineffective, those that never achieved FDA approval.

In addition, there is an even worse scenario where a drug achieves FDA approval but has to be taken off the market when an unanticipated side effect surfaces that was not detected prior to FDA approval process. Vioxx, an effective “Motrin-type” drug is a good example.  It was very popular until its use was associated with rare but serious cardiac problems.  Not only did Merck have to pay all the development costs, they also had to pay additional billions of dollars in damages to the patients who were harmed.


So putting a high price tag on an effective medication that prolongs life can certainly be justified.  Even so, the raw costs of these new medications can be literally stunning:  Just in the last few years four new medications have been approved to treat prostate cancer.  Provenge, an immune therapy, costs $93,000 in total.

 Zytiga and Xtandi, two new hormonal therapies, cost $5,000 and $7,500 per month, respectively.  Xofigo, an injectable radiomimetic of calcium cost, 11,000 per month.  Believe me, these drugs are truly revolutionary.  What is frustrating, is that due to their high cost, insurance companies restrict access only to men with advanced disease. 

The other car in this game of chicken are the insurance companies, who, to control costs, impose restrictions, insisting that men must have metastases visible on scans before these medications can be prescribed. The insurance company’s argument for restricting these medications is based on the original trial design used in the FDA approval process.  In the case of prostate cancer that almost always means men who have metastatic disease. 

By restricting access only to men with metastases, insurance companies are getting involved in making decisions about treatment that historically have been left to the doctor. The insurance company’s rationale is that since the studies that led to FDA approval were performed in men with metastases, it is only safe to treat a similar category of men.

 According to them, “we don’t know if the drug will work in men without metastases.”  What a joke!  Any cancer expert—for that matter, anyone with common sense—can tell you that starting an effective  treatment works better when it is started earlier in the disease process.  How can waiting until the disease becomes more advanced before starting therapy improve the outcome?  

I really don’t know how this scary game of escalating costs is going to end.  Obviously insurance companies don’t have endless resources. Yet, thanks to effective research being performed by the pharmaceutical companies, many new (and expensive) drugs are coming on the market. Presently in my daily practice, people who meet the criteria—men who have metastases—and have adequate pharmaceutical insurance are getting coverage. Also, many manufacturers run generous programs for drug access for people who can’t afford the drug.  Even so, at some point the costs to society are going to become unsustainable. Just like the game of chicken, if both parties wait too long to take corrective action, we can anticipate a crash. 

Continue Reading