Ethics and the $1000 a Day Drug

Yesterday, The New York Times  informed us that a small drug company called Allos is charging $30,000 a month for a cancer drug, Folotyn, that treats a rare and usually fatal form of cancer that strikes fewer that 6,000 American a year. It doesn’t cure the cancer, but merely slows it down; even with that, victims seldom survive more than a few months. “This drug is not a home run. It’s not even a double. It’s a single,” the Times quotes Dr. Brad S. Kahl, a lymphoma specialist at the University of Wisconsin, as saying.

Can it be ethical to charge a thousand dollars a day for a drug that isn’t even a cure?

The opponents of rationing resources in health care need to think about this. The only way Allos can charge such an outrageous price is that almost all of it will be paid by insurance or Medicare, meaning that the drug’s use increases deficits, raises premiums, and takes a wildly inefficiently chunk of money out of the system that could be helping many thousands of sick people more than this drug is able to help a handful.

I don’t argue with the economics of the pricing, up to a point. Drug prices reflect research and development costs of the many drugs that never make it to market, and drugs for so-called “orphan” maladies like the cancer treated by Folotyn have so few potential customers that a pharmaceutical company’s  choices are to either charge a great deal for them, raise the prices of all the other drugs to subsidize them, or not to develop and sell them at all.

There can be a point, however, at which  even a price arrived at by fair and sound calculations is unethical. I don’t know what the ethical limit is or should be regarding drug pricing, but I know this: $1,000 a day for a drug that has only a modest effect is well beyond it.

In a rational system, the greatest product ever devised will still never make it to market if it costs so much to produce that nobody will want or be able to pay for it. Such a product is, therefore, not viable or useful, despite its positive qualities. The response of the manufacturer, in such cases, should be, “Back to the drawing board!” The current health care insurance system, however, is not a rational system. It doesn’t force drug companies, among others, to recognize that a price that may be a fair reflection of a product’s cost (to the company developing and manufacturing it) is nonetheless excessive and unconscionable considering the product’s value (to the person using it and society generally).

We know the next refrain: “You can’t put a dollar value on a life.”  That sounds nice and humanistic, but it is a sentimental rather than a logical assertion. We have to put dollar values on lives because there are a lot of lives and a finite amount of money to take care of them. If we’re using Monopoly money, sure: spend a thousand dollars a day for hangnail pain relief. Who cares? There’s plenty more blue and yellow money in the kitty. With real money, however, there have to be hard questions. Would it be rational, sensible and ethical to expend all the resources of the United States to save the life of one citizen? That’s not even a hard question…of course not. So there is a dollar limit on saving a life. And that limit, whatever it is, is a lot less than all the money in the nation.

Now let’s consider the $1000 a day drug. It is true that if my daughter has the cancer that this drug treats, even imperfectly and ultimately unsuccessfully, I’m likely to be willing to pay anything to make her feel even a little better, unless, of course, paying “anything” jeopardizes the health and welfare of the rest of my family. I’m definitely going to be willing to let third-party payers pay “anything”—-like $1000 a day—despite the fact that such inefficient use of funds embodies a principle that would destroy the health care system and the economy if it were widely applied. I have a conflict of interest, though, because of my relationship to the individual who is suffering. My point of view is no longer a useful one for making an ethical analysis. Rationing decisions cannot be made solely from the viewpoint of the stakeholders whose options must be limited, for they are biased.

Looked at objectively, no drug, especially one that is a “single” rather than a home run, is worth $1000 a day to society or even the person taking it, except in a system where there is an unlimited pool of money. Even though the drug company can justify the price from the perspective of its cost to produce, the value of the drug doesn’t measure up. The ethical course is to conclude that the drug is a failure according to cost-benefit analysis, and to look for a better drug.

Or not to  waste scarce resources looking for drugs that will cost too much to use. It may be that the only way to find treatments for “orphan” diseases is through non-profit or government-funded research and development, and even that may be an inefficient use of limited funds. Researchers may have to accept lower salaries. Pharmaceutical executives may have to as well. The costs have to come down, because the $1000 a day is too much to charge.

If saving fewer than 6000 cancer victims takes resources that could have saved 100,000, that’s an unethical course too. Ultimately, the primary value of Folotyn may be as a tool of enlightenment, to help the public understand how third-party payers distort the real costs of health care, and encourage misuse of resources. Without cost-benefit analysis and intelligent rationing, we all end up paying, in various ways, for $1000 a day drugs that don’t even work very well. In the long run, this is certain to do more harm than good,

Finding the right balance is  difficult, but making the ethics call on a so-so drug that costs $30,000 a month isn’t.

3 thoughts on “Ethics and the $1000 a Day Drug

  1. It sounds like the company is selling the drug to end users for perpetual use, not to serve a greater purpose. I think certain heart medications are used in the same way, though they have a more effective use when they are used in relation to a surgery and have a defined start-end usage.

    Folotyn sounds like it has an effect but no purpose. If you were supposed to take it for 1 week prior to a difficult procedure in order to build your strength – it would have a purpose.

    To use it on symptoms without treating the disease resembles addiction and an unethical act, especially when other things like Heroin might work just as well on the symptoms.

    Now, maybe they want this to be an “end stage” drug. That’s a purpose. If you know your life expectancy with this specific disease is 4 days and with this drug, those 4 days will ease your suffering, now we have a defined timeline and an objective.

    Unfortunately, the scope of the administration of the drug will expand and people want it more than the last 4 days. It’s a rough road this medicine business.

    I’ve got another take that I’m going to post separately.

  2. What goes into price? I think we all would say “R&D”. But the further analysis would include factors such as “ingredients” (a rare ingredient such as “moon rock”, might be more scarce or require phenomenal resources to acquire.)

    Another factor might be (and this is especially true for prescription drugs) intended use. If the FDA says that your drug that treats 6,000 people a year can only be used by each person 10 times, then you now need to make all of your money based on 60,000 potential uses.

    But what if you saw your drug as a tool to accompany other existing procedures and at the same time recognized the potential for abuse of your drug by over-prescription? Would you over-price it to control how people use it, to ensure that people weren’t taking it daily for an unlimited amount of time?

    But certainly I agree that developing a daily drug at $1,000 a pill that doesn’t do anything but treat symptoms is a complete waste of resources.

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