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Why Do Our Medications Cost So Much?

Drug questions

Drug questions (Photo credit: Ano Lobb. @healthyrx)

Why do some Doctors choose the more costly medications when there are others available that are equally good?

Here’s a thought from an article in MotherJones.

Curing Blindness the Cheap Way vs. the Very, Very Expensive Way

| Sun Dec. 8, 2013 9:56 AM GMT

The Washington Post has a long piece today titled “An effective eye drug is available for $50. But many doctors choose a $2,000 alternative.”

It’s the story of Avastin vs. Lucentis, and it’s been making the rounds

for years. Oddly, despite the length of the story, the writers never

clearly explain precisely what’s going on.

You may recall the name Avastin because it’s been the subject of

numerous unflattering news stories. It was introduced in 2004 as a

cancer treatment, but it turns out to be mega-expensive even though it

usually provides only a few months of extra life. For an average-size

person, a single injection runs about 500 mg or so, and injections are required

every two weeks. Genentech sells Avastin in vials of 100 and 400 mg

priced at around $6 per mg, so a single dose costs around $3,000 and a

full treatment can end up costing anywhere from $30,000 to $50,000 or


It turns out, however, that the Avastin molecule seemed like it might

also be promising for treating Wet Age-Related Macular Degeneration

(AMD), which can cause blindness in older patients. So Genentech created

a modfied version of the drug and started testing it. While that was

going on, however, a few opthamologists got impatient a decided to just

give Avastin a try. AMD treatment requires only slightly more than 1 mg

of Avastin, so they’d buy a 100 mg vial and then have it reformulated

into smaller doses. It seemed to worked great, but the evidence of a few

one-off treatments wasn’t as convincing as a full round of FDA clinical

testing. So when Genetech brought its modified drug to market under the

name Lucentis, it quickly became the treatment of choice for AMD. And

even though the required dosage was even smaller than the equivalent

Avastin dose, Genentech priced it at about $2,000.

Genentech, for obvious reasons, was very aggressively not

interested in testing Avastin for AMD. But others were, and over the

next few years several clinical trials were run. The results were pretty

clear: Avastin worked great. Genentech claimed that the clinical trials

showed that it was less safe than Lucentis, but virtually nobody bought

that. In some of the smaller trials, Avastin showed a slighly higher

incidence of adverse effects, but they were things that seemed

completely unrelated to the drugs themselves. It was most likely just a

statistical artifact. The opinion of the medical community is almost

unanimous that Avastin works just as well as Lucentis.

Last year, Medicare’s inspector general released a report on this subject

and concluded that the average physician cost for Lucentis ran to about

$1,928 vs. $26 per dose of Avastin (including drug and compounding

costs). Needless to say, since Medicare is prohibited from negotiating

prices or turning down treatments, there was nothing much they could do

about this. If Genentech wanted to sell Lucentis for $2,000, it could do

it. If doctors wanted to prescribe it, they could. And even though

Avastin worked just as well, Medicare couldn’t insist that it be used


You can draw your own conclusions from all this. In one sense, you

can sympathize with Genentech: they spent a bunch of money on clinical

trials for Lucentis, and they want to see a return on that investment.

The fact that AMD requires only a tiny dose doesn’t do anything to lower

their research and testing costs. On the other hand, they could have

done those trials a whole lot more cheaply using Avastin, but chose not

to since that would make it clear that Avastin worked just fine—and

Avastin, unfortunately, was already on the market at a price that was

very low in the small doses needed for AMD. Likewise, doctors could have

rebeled and refused to prescribe Lucentis, which would have benefited

their patients since Medicare beneficiaries pay 20 percent of the cost

of pharmaceuticals. But why would they? Lucentis is more convenient;

doctors don’t bear any of the higher cost themselves; and, in fact,

since Medicare reimburses them at cost plus 6 percent, prescribing

Lucentis earns them about $100 more per dose than prescribing Avastin.

Quite the pretty picture, isn’t it? And here’s the most ironic part:

Avastin continues to be widely used for cancer treatment, where it’s

extraordinarily costly and of only modest benefit, but isn’t used for

AMD, where it’s quite cheap and works well. This is lovely for

Genentech, but not so much for the rest of us. Isn’t American health

care great?

Here’s the link to longer article referred to in the Washington Post.


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