Shortage of cancer drugs tied to simple economics, experts say

Imagine that you had a type of cancer that could be cured with chemotherapy – but supplies of the drug were limited, and you might not get it.

This is the scenario facing an unknown number of patients who normally would depend on drugs like paclitaxel (Taxol), doxorubicin (Doxil), vincristine (Oncovin), methotrexate(Trexall, Rheumatrex), leucovorin and bleomycin (Blenoxane). On Monday, President Obama signed an executive order directing the Food and Drug Administration to take steps to help resolve such shortages. Among them: speed up reviews of new drug-manufacturing facilities and get companies to report shortages earlier, when regulators can do more to manage limited supplies.

Obama also “directed the FDA to work with the Justice Department to step up investigation of price gouging in the pharmaceuticals market,” Noam Levey reported for the Los Angeles Times.

Economics are no small part of the problem, according to a Perspective published online this week in the New England Journal of Medicine. In this eye-opening report, a pharmacist and a physician explain why so many cancer drugs are in short supply and offer some prescriptions for how to fix things.


For starters, oncologistshave a strong incentive to prescribe expensive brand-name drugs instead of cheaper (though just as effective) generic ones. This is due to a quirk in the system: Instead of buying chemo drugs from a pharmacy, cancer patients buy them directly from their doctors. This practice “originated 40 years ago, when only oncologists would handle such toxic substances and the drugs were relatively cheap,” write Dr. Mandy L. Gatesman (the pharmacist) and Dr. Thomas J. Smith (the oncologist).

Fast-forward to 2011. Oncologists now rely on drug sales for half their revenue. Until 2003, when Medicare changed the way it paid for these drugs, the doctors pocketed $1.6 billion a year on the sales, according to a report in the Journal of the National Cancer Institute. Then the government got wise and said it would only pay a 6% premium over the wholesale drug price to help oncology practices cover their costs.

Seems a reasonable way to preserve taxpayer dollars, right? But it also gives doctors an incentive to prescribe expensive drugs instead of cheap ones. As Gatesman and Smith put it: “Why use paclitaxel (and receive 6% of $312) when you can use Abraxane (for 6% of $5,824)?” Abraxane is a modified version of paclitaxel that is no more effective but costs 19 times as much, they write.

That’s just the first step of the problem. With doctors writing prescriptions for brand-name drugs instead of their generic equivalents, demand for generics plummeted. So companies stopped making them. Now these very same doctors “are struggling to treat their patients because of the unavailability of drugs,” Gatesman and Smith write.


The toll is significant. A report in the American Journal of Health-System Pharmacy estimates that the time it takes to manage these drug shortages has added $216 million to the nation’s healthcare labor costs. Having to switch to less-familiar alternatives caused errors to be made in 25% of clinical practices, according to a survey the authors cite from the Institute for Safe Medication Practices. 

“We’re unware of any documented death of a patient with cancer,” Gatesman and Smith write. “However, it is only a matter of time.”

The pair offer some suggestions for reversing the problem. One is to change the way oncologists are paid so that they no longer rely on commissions from selling chemo drugs. Similar proposals – to pay doctors more for talking to their patients and thinking about their treatment instead of reserving the big bucks for those who do expensive procedures – have been floated as a way to help bring medical spending under control.

Another solution would be to regulate the price of cancer drugs as in Europe, where shortages are less frequent. “Prices are set higher for generics so that companies will make them, but prices of brand-name drugs are often much lower than U.S. prices,” Gatesman and Smith write.

It remains to be seen whether that’s a realistic suggestion, but maintaining the status quo isn’t all that realistic either, they write: “The current system not only is unsustainable but also puts oncologists in potential ethical conflicts with patients.”

The full Perspective is available online here.

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