News Reporter: Wonkbook: Bernie Sanders wants to know why this cancer drug costs nearly $200,000 a year

Friday, 21 October 2016

Wonkbook: Bernie Sanders wants to know why this cancer drug costs nearly $200,000 a year

The latest economic and domestic policy from Wonkblog

(Rachel Orr/The Washington Post)

By Carolyn Y. Johnson

A tweet by Sen. Bernie Sanders of Vermont decrying the price of a cancer medicine made by Ariad Pharmaceuticals sent the drugmaker's stock tumbling last week.

On Thursday, Sanders and Rep. Elijah E. Cummings (D-Md.) sent a joint letter to the company's chief executive requesting more information about the rapid price hike of Iclusig, a drug used to treat rare chronic myeloid leukemia. What rankles the politicians is that those hikes went into turbo mode after it was shown that the drug had safety problems and should be used only on a much smaller subset of patients.

Ariad released a statement, detailing the expenditures the company has made in order to bring Iclusig, its first drug, to market:

"We recognize oncology drugs are expensive, but we believe in the importance and efficacy of our products. Importantly, to achieve its mission, Ariad has invested more than $1.3 billion in R&D [research and development] and accumulated losses of approximately $1.4 billion since the Company was founded, which have not been recovered," the statement said.

The lawmakers were spurred on by an article in the Street, which described how the drug's price had skyrocketed, particularly over the past two years. Iclusig was initially priced at $9,580 a month in 2012, when it was approved for patients with the rare leukemia. It was pulled from the market for safety concerns, but regulators eventually allowed the drug to be sold again in 2013 — this time approved with a much narrower label, only for patients who met specific criteria. Through subsequent price hikes, the drug has ended up at $16,561 a month or nearly $199,000 a year — though the drug is less safe than it once appeared to be and is now useful only for a much smaller group of patients.

The Street reported that Ariad's spokeswoman justified Iclusig's price by highlighting the tiny group of patients the drugs can treat — an "ultra-orphan patient population of around 1,000-2,000 patients per year."

An orphan disease is one that affects fewer than 200,000 patients in the country, and a common justification for the high list prices of these drugs is that they serve a small market. An ultra-orphan drug treats an even rarer disease, and the market is thus an even smaller slice of the population. Under this logic, the drugs can theoretically support even higher prices. An analysis by LifeSci Capital of the orphan-drug market found that the scarcer the patients, the greater the pricing power of the drug company. The analysis found that most drugs targeted at diseases that afflict fewer than 10,000 patients carry price tags of $200,000 or more per year.

But Iclusig's price also shows how the rationale for a drug's price can be contradictory.

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