The Sky-High Price of Chemotherapy: Why Do Cancer Drugs Cost So Much?

Just one month of a cancer medication could run you $10,000—or more. We look at the absurd economics driving cancer patients to pay astronomical prices when they can least afford it.

More states are fighting back against astronomical and random pricing policies for cancer drugs. Twenty-two states and the District of Columbia have passed legislation that requires health insurance companies to cover oral chemotherapy treatment the same way they do IV treatment. (Getty Images/Miodrag Gajic)


May 9, 2013· 3 MIN READ
Alison Rose Levy covers health, food, and the environment.

As if it’s not bad enough to find out you have cancer, nearly all cancer patients have to also contend with how to pay for treatment, including somehow managing the sky-high cost of drugs (chemotherapy). It seems like insult to injury (quite literally), right?

Overall, cancer drug prices are skyrocketing. Of the 12 drugs approved by the Food and Drug Administration for various cancer conditions in 2012, 11 were priced above $100,000 for a year of treatment. Writing in an op-ed in the New York Times in October 2012, three physicians at New York City’s Memorial Sloan Kettering Cancer Center noted that “the typical new cancer drug coming on the market a decade ago cost $4,500 per month (in 2012 dollars); since 2010 the median price has been around $10,000.”

These and other injustices led an international group of doctors to band together and call for lowering the cost of chemotherapy drugs. In the medical journal Blood the physicians—all of whom specialize in treating a form of leukemia, or cancer of the blood—wrote that cancer drug costs are “too high, unsustainable, may compromise access of needy patients to highly effective therapy, and are harmful to the sustainability of our national healthcare systems.”

The doctors went so far as to say that charging high prices for drugs that are needed to save lives or improve health is a form of profiteering, like jacking up the price of necessities like food and water after a natural disaster. Thanks, too, to a puzzling price-fixing equation used by pharmaceutical companies, the longer that a given chemotherapeutic treatment prolongs life, the more it costs. Certain forms of a treatment for leukemia can cost each patient as much as $138,000 per year—and that’s not uncommon for drugs to get rid of cancer and keep it away.

One group of doctors went so far as to say that charging very high prices for cancer drugs that people need to live is a form of profiteering.

Needless to say, many patients cannot afford prices like these. They—and their families—too often go broke and die trying to pay for this and other treatments, which can include surgery and radiation. In one bizarre policy, in many U.S. states health insurance companies will refuse to reimburse cancer patients if they take the drug in a pill form versus an intravenous (IV) treatment at a clinic. Thankfully, more states are finally fighting back on harmful policies like this: Following legislation passed in 22 other states and the District of Columbia, the Cancer Treatment Fairness Act recently passed both the Florida Senate and House; if approved by the state’s governor it would require insurers to cover oral chemo treatment the same way they cover IV treatment done in a clinic (what’s called an “oral chemotherapy parity law”).

But the bigger question is, of course: Why do these drug prices have to be so high in the first place? What makes them so expensive? First comes the cost of researching the drugs. The average cancer drug costs an estimated $60 to $90 million to research.

A 2012 review published in Nature found that 89 percent of studies on possible cancer drugs published findings that other scientists couldn’t replicate, meaning they weren’t the solid, definitive findings that move us closer to safer, more effective medications. Put another way, after all this research, the scientists had pretty much hit a dead end. Professor B.M. Hegde, M.D., Ph.D., says that the competitive publish-or-perish climate in cancer research prompts scientists to sometimes omit unfavorable data or manipulate their results in order to assure that their grants continue.

But research is not even the biggest expense. The U.S. pharmaceutical industry spent 24.4 percent of each dollar of sales on promoting the drug, as compared to 13.4 percent spent on research and development, according to a 2008 study in PLOS Medicine by York University researchers who collected data from the pharmaceutical industry and physicians.

Since the dollars spent on marketing are part of the drugs’ high tab, what does that marketing budget buy? In addition to advertising to physicians, pharmaceutical companies market to us, the folks they hope will become consumers of the medication. When they sponsor telethons, races, walks, and events that raise money for research, they also spread a key message: “Early detection is your best protection.”

Early detection is often valuable. But detecting cancer (which can then be treated, at a profit for big pharma and health insurers) and preventing cancer in the first place are two different things. And when it comes to prevention, we are largely failing as a country. A recent President’s Cancer Panel report targeted harmful toxins as one of this country’s least-studied contributors to the number of new cases of cancer. “Prevention consists of finding out what causes cancer and minimizing those risks. But there’s no business model for doing that,” says Bill Couzens, the founder of LessCancer, a nonprofit organization that focuses on prevention. “We now have more cancer than ever before. But we never ask why…We need to ask those questions.”

Preventing cancer may not be so profitable, but treating it clearly is. Even accounting for the research and marketing costs spent to develop and promote cancer drugs doesn’t explain the astronomical drug prices, say the physicians writing in Blood. “Once a company sells about a billion dollars of a drug, most of the rest is profit,” they wrote in their article. For one such leukemia drug released in 2001, that benchmark was passed in 2003, leaving nearly a decade—and counting—of pure profit for its manufacturer. “Prices get jacked up when the need is great,” says Couzens. “It’s a much-needed industry. It’s the business to be in, unfortunately.” Now we just need to find a way to make prevention as profitable, or moreso.

Have you experienced the high cost of chemo drugs yourself? What was your experience like?

Alison Rose Levy has covered health, food, and the environment on Huffington Post, AlterNet, PsychologyToday, and The writer of two best-selling health books, Alison talks to health and eco leaders on her weekly radio program, Connect the Dots, on the Progressive Radio Network. @alisonroselevy |