Oh, The Prices We Pay: Thalidomide for Cancer

The New York Times recently reported on the high prices paid for drugs to treat cancer, notably the newer "targeted therapies." Some examples included:

• $54,000 per year for Avastatin, made by Genentech,
• $31,000 per year for Terceva, made by Genentech, and
• $25,000 for Thalidomid, made by Celgene.

The article shows how the prices of these drugs drastically ratcheted upwards in the 1990's, starting with Taxol, made by Bristol-Myers-Squibb, at $4,000 per year, starting in 1992, through Herceptin, made by Genentech, at $20,000 per year, in 1998, to Erbitux, at $100,000 per year, made by Bristol and ImClone Systems.
The article stated that these prices are unrelated to manufacturing costs, and simply based on what the market will bear. A biotechnology analyst, Geoffrey Porges, said, "it's sort of one of those things where everyone looks over their shoulder at everyone else, says, 'he started it, it wasn't me,' and it builds."
Of course, this raises the question of why those organizations whose goal is to control health care costs, particularly federal payers represented by the Commission for Medicare and Medicaid Services (CMS), and managed care organizations haven't been able to address this price inflation.
A notable example is Thalidomid, whose price is listed above. Thalidomid is thalidomide, a drug whose adverse effects in the 1960's lead to major reform of the US drug approval process. (For a background article on the history of thalidomide go here: Rouhi M. Thalidomide. Chemical and Engineering News, June 20, 2005. ) "Chemie Grünenthal introduced thalidomide--under the brand name Contergan--to the German market on Oct. 1, 1957, as a sedative to treat insomnia as well as to reduce nausea associated with pregnancy." Richardson-Merrell had applied to introduce thalidomide, under the trade name Kevadon, to the US in 1960, but the application was held up by a diligent officer of the US Food and Drug Administration, because of inadequate documentation of drug safety. The drug never made it to the US market, because by 1961, there were widespread reports in Europe of babies born with severe deformities to mothers who had taken thalidomide. (For more background on the history of thalidomide, see the materials from the NIH here, and from the March of Dimes here.) Later, discoveries that thalidomide had anti-inflammatory properties lead to studies of its use in several severe diseases, including multiple myeloma.
Now, what can the possible rationale for charging $25,000 per year for the nearly 50 year old drug thalidomide for multiple myeloma, other than it is considered a new "targeted therapy?" The drug is a relatively simple molecule first sold, again firs sold almost 50 years ago. Its manufacture does not involve high technology. Celgene raised the price of thalidomide from $6.00 to $29.00 per 50 mg capsule from 1998 to 2004. The price of a 100 mg capsule in Brazil is $0.07.
So thalidomide becomes another poster child, not only for the production of serious birth defects that lead to reform of the drug approval process 40 years ago, but also for how those organizations who claim to control health care costs are willing to pay amazingly high prices for "high tech" health care interventions, even if they are just re-named low-tech interventions from the last century.