IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/63405.html
   My bibliography  Save this paper

Restraining High and Rising Cancer Drug Prices: Need for Accelerating R&D Productivity and Aligning Prices with Value

Author

Listed:
  • Bhardwaj, Ramesh

Abstract

ABSTRACT The high price of cancer drugs has become a world-wide phenomenon. In recent decades, studies have produced ample evidence of rising research and clinical testing costs underlying pharmaceutical innovations. There is a general concurrence that the current model of drug development needs a thorough streamlining. It is also alleged that the prices of new anticancer agents seem to be decided by pharmaceutical companies, according to what the market will bear, in a producer-dominated market. Studies have noted with concern that there is a little correlation between the actual efficacy of a new drug (in terms of prolonging a patient’s life in years, or quality-adjusted life-years (QALYs) and its price. The present study is an attempt to address some major challenges which are: (i) how to increase the overall pace of innovation (R&D productivity); (ii) how to control the costs and prices of new innovative drugs; (iii) how to direct more innovation to areas where social returns are highest; and (iv) how to improve patients’ timely access to innovative medicines while balancing ‘safety’ concerns. Primary proposals suggested in recent literature to deal with the above challenges include, among others, (a) modernization of the drug development process through ‘open models’ of strategic partnerships (between government, academia, and industry), (b) adoption of a value-based pricing system, (c) promotion of ‘Personalized/targeted Medicine’, (d) introduction of evidence-based decision making by stakeholders based upon ‘comparative effectiveness research’(CER) analysis, and (e) implantation of regulatory reforms in drugs’ evaluation and approval practices. The present study makes an attempt to shed light on the above challenges and proposals.

Suggested Citation

  • Bhardwaj, Ramesh, 2015. "Restraining High and Rising Cancer Drug Prices: Need for Accelerating R&D Productivity and Aligning Prices with Value," MPRA Paper 63405, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:63405
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/63405/1/MPRA_paper_63405.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Xenia Scheil‐Adlung & Florence Bonnet, 2011. "Beyond legal coverage: Assessing the performance of social health protection," International Social Security Review, John Wiley & Sons, vol. 64(3), pages 21-38, July.
    2. P Grootendorst, 1999. "Beneficiary Cost Sharing Under Canadian Provincial Prescription Drug Benefit Programs: History and Assessment," Centre for Health Economics and Policy Analysis Working Paper Series 1999-10, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
    3. Amitabh Chandra & Anupam B. Jena & Jonathan S. Skinner, 2011. "The Pragmatist's Guide to Comparative Effectiveness Research," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 27-46, Spring.
    4. Jonathan Gruber, 2011. "Massachusetts points the way to successful health care reform," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(1), pages 184-192, December.
    5. Karl Claxton & Mark Sculpher & Stuart Carroll, 2011. "Value-based pricing for pharmaceuticals: Its role, specification and prospects in a newly devolved NHS," Working Papers 060cherp, Centre for Health Economics, University of York.
    6. Hanley, Gillian E. & Morgan, Steve, 2009. "Chronic catastrophes: Exploring the concentration and sustained nature of ambulatory prescription drug expenditures in the population of British Columbia, Canada," Social Science & Medicine, Elsevier, vol. 68(5), pages 919-924, March.
    7. Michael Eisenstein, 2014. "Clinical trials: More trials, fewer tribulations," Nature, Nature, vol. 509(7502), pages 55-57, May.
    8. Carlson, Josh J. & Sullivan, Sean D. & Garrison, Louis P. & Neumann, Peter J. & Veenstra, David L., 2010. "Linking payment to health outcomes: A taxonomy and examination of performance-based reimbursement schemes between healthcare payers and manufacturers," Health Policy, Elsevier, vol. 96(3), pages 179-190, August.
    9. Valérie Paris & Elizabeth Docteur, 2006. "Pharmaceutical Pricing and Reimbursement Policies in Canada," OECD Health Working Papers 24, OECD Publishing.
    10. Jonathan Gruber, 2011. "The Impacts of the Affordable Care Act: How Reasonable Are the Projections?," NBER Working Papers 17168, National Bureau of Economic Research, Inc.
    11. Gruber, Jonathan, 2011. "The Impacts of the Affordable Care Act: How Reasonable Are the Projections?," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(3), pages 893-908, September.
    12. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    13. Jonathan Gruber, 2008. "Incremental Universalism for the United States: The States Move First?," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 51-68, Fall.
    14. Rodrigo Moreno-Serra & Christopher Millett & Peter C Smith, 2011. "Towards Improved Measurement of Financial Protection in Health," PLOS Medicine, Public Library of Science, vol. 8(9), pages 1-6, September.
    15. DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G., 2003. "The price of innovation: new estimates of drug development costs," Journal of Health Economics, Elsevier, vol. 22(2), pages 151-185, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laura J. Owen, 2017. "Part-time Employment and Health Insurance Reform: What Can Massachusetts Tell Us about the Affordable Care Act?," Review of Social Sciences, LAR Center Press, vol. 2(3), pages 1-8, March.
    2. Randy Albelda & Diana Salas Coronado, 2014. "Expanding Women's Healthcare Access in the United States: The Patchwork “Universalism†of the Affordable Care Act," Working Papers 2014_02, University of Massachusetts Boston, Economics Department.
    3. Dunn, Abe & Shapiro, Adam Hale, 2015. "Physician payments under health care reform," Journal of Health Economics, Elsevier, vol. 39(C), pages 89-105.
    4. Padmaja Ayyagari, 2019. "Health Insurance and Early Retirement Plans: Evidence from the Affordable Care Act," American Journal of Health Economics, University of Chicago Press, vol. 5(4), pages 533-560, Fall.
    5. Burney, Shaheer & Boehm, Rebecca & Lopez, Rigoberto, 2021. "The impact of the ACA Medicaid expansion on SNAP participation," Food Policy, Elsevier, vol. 101(C).
    6. Stavrunova, Olena & Yerokhin, Oleg, 2014. "Tax incentives and the demand for private health insurance," Journal of Health Economics, Elsevier, vol. 34(C), pages 121-130.
    7. Barbaresco, Silvia & Courtemanche, Charles J. & Qi, Yanling, 2015. "Impacts of the Affordable Care Act dependent coverage provision on health-related outcomes of young adults," Journal of Health Economics, Elsevier, vol. 40(C), pages 54-68.
    8. Ye, Wei & Rodriguez, Javier M., 2021. "Highly vulnerable communities and the Affordable Care Act: Health insurance coverage effects, 2010–2018," Social Science & Medicine, Elsevier, vol. 270(C).
    9. Tianxu Chen, 2019. "Health Insurance Coverage and Marriage Behavior: Is There Evidence of Marriage Lock?," Working papers 2019-09, University of Connecticut, Department of Economics.
    10. Levaggi, Rosella, 2014. "Pricing schemes for new drugs: A welfare analysis," Social Science & Medicine, Elsevier, vol. 102(C), pages 69-73.
    11. Frean, Molly & Gruber, Jonathan & Sommers, Benjamin D., 2017. "Premium subsidies, the mandate, and Medicaid expansion: Coverage effects of the Affordable Care Act," Journal of Health Economics, Elsevier, vol. 53(C), pages 72-86.
    12. Adam Hale Shapiro, 2015. "Did Massachusetts health-care reform affect prices?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    13. Morgan, Steven G. & Thomson, Paige A. & Daw, Jamie R. & Friesen, Melissa K., 2013. "Canadian policy makers’ views on pharmaceutical reimbursement contracts involving confidential discounts from drug manufacturers," Health Policy, Elsevier, vol. 112(3), pages 248-254.
    14. repec:sip:wpaper:12-028 is not listed on IDEAS
    15. Richard V. Burkhauser & Sean Lyons & Kosali I. Simon, 2011. "The Importance of the Meaning and Measurement of "Affordable" in the Affordable Care Act," NBER Working Papers 17279, National Bureau of Economic Research, Inc.
    16. Burney, Shaheer & Boehm, Rebecca L. & Lopez, Rigoberto A., 2018. "Impact of the 2014 Medicaid Expansion on SNAP Participation," 2018 Annual Meeting, August 5-7, Washington, D.C. 273847, Agricultural and Applied Economics Association.
    17. Katerina Sherstyuka & Dolgorsuren Dorjb & Gerard Russo, 2014. "Health Insurance and the Labor Market with Wage Rigidities: Insights from a Laboratory Experiment," Working Papers 201427, University of Hawaii at Manoa, Department of Economics.
    18. Vitry, Agnes & Roughead, Elizabeth, 2014. "Managed entry agreements for pharmaceuticals in Australia," Health Policy, Elsevier, vol. 117(3), pages 345-352.
    19. Charles J. Courtemanche & Daniela Zapata, 2014. "Does Universal Coverage Improve Health? The Massachusetts Experience," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 33(1), pages 36-69, January.
    20. Gilad Sorek & David Benjamin, 2016. "Health insurance mandates in a model with consumer bankruptcy," Journal of Regulatory Economics, Springer, vol. 50(2), pages 233-250, October.
    21. Patricia Foo & Wichsinee Wibulpolprasert, 2013. "Who bears the burden of the U.S. health reform? An Event Study Incidence Analysis," Discussion Papers 12-035, Stanford Institute for Economic Policy Research.

    More about this item

    Keywords

    Cancer Drugs Prices; R&D Productivity; Oncology; Drugs Development; Comparative Effectiveness Research; Personalized/targeted Medicine’; Evidence-based Decision Making; Regulatory Reforms; Drugs Approval; Adaptive licensing; R&D Effectiveness; Attrition Rates; Clinical Trial Designs; Value Based Pricing;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I19 - Health, Education, and Welfare - - Health - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:63405. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.