the high cost of prescription drugs

The high cost of cancer drugs recently prompted top oncologist Dr. Leonard Saltz to publicly call for limits. "These drugs cost too much," he told thousands of his colleagues at the American Society of Clinical Oncology annual meeting. Many cancer drugs debut with a price tag of $10,000 a month according to an analysis from staff at Memorial Sloan Kettering Cancer Center.

The country’s largest pharmacy benefits manager, Express Scripts, estimates 576,000 Americans had prescription drug costs above $50,000 last year, up 63% from the year before. The number of patients with costs of $100,000 or more nearly tripled.

Express Scripts put the impact of these costs on payers in the U.S. at $52 billion a year, a number they call unsustainable. They find insurers foot most of the bill but say the costs pressure health insurance premiums and taxpayer-funded government healthcare programs like Medicaid.

Two-thirds of spending for patients with six-figure drug bills went to medications for cancer, hepatitis C and compounded therapies.

So what exactly goes into determining a drug’s price, leading to a price tag in the tens or even hundreds of thousands of dollars? 

“First you need to look at the time and cost it takes to develop a medicine, test it, get it approved by regulators, and ultimately bring it to patients," Robert Zirkelbach tells us. Zirkelbach is a senior vice president at the organization, PhRMA, which represents U.S. biotech companies. "You also have to look at the value these medicines provide to patients, the healthcare system and to society broadly."

Developing and winning approval for a new prescription drug is estimated to take more than a decade and cost nearly $2.6 billion dollars, according to Tufts Center for the Study of Drug Development. That figure factors in the money and time spent on drug development. It also factors in the failures: Data show only 12 percent of medicines that go to clinical trials ever make it to patients.