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The Economics of Cancer Care: Who Pays for Progress?
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Released: January 24, 2025

Expiration: January 23, 2026

John Marshall
John Marshall, MD
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The Economics of Cancer Care: Who Pays for Progress?

John Marshall, MD: What do you guys think? What do you think I'm looking like today here in Washington D.C. In January 2025? Well, What I'm trying to look like is the new administration, which is moving in just down the street from me there.

There is an unfortunate casket, a hundred-year-old man inside, draped in the American flag. What I think of as a sort of heroic politician. And in a couple of weeks, we're going to have a parade here for next wave of politicians. So, we're all getting ready here in Washington, D.C. For the 2025 ahead. I hope you are out there as well.

Welcome back to Oncology Unscripted. My name is John Marshall shooting to you live from Georgetown University here in Washington, D.C.

And as you know, those of you who are following this, we have been trying to drill down on a government thing called the Inflation Reduction Act, and we've had a couple of episodes on that already and interviewed some important smart people in the space, and we've got another important smart person coming to you in this episode, as well. But I want to talk a little bit more about the specifics of how we got here and the problem at large.

So, let's just look at the cost of the product that we in oncology are putting out day in and day out. So, 95% of new cancer drugs in the US cost $100,000 per year, on average, more than that. And the median annual cost was almost $200,000 just for cancer drugs for one individual. And most of that's being driven by, of course, this new cooler stuff, the gene therapies and viral therapies leading the way. But very interestingly, based on an interesting paper, it didn't cost more if your therapy worked better or had some novel mechanism of action. That didn't matter. So, magnitude of benefit was not connected to cost. It's just going up and up and up.

And, oh, by the way, if you ever watch television or have a phone or have an email, you know that all of these new medicines are being advertised no matter how esoteric the disease is, or the problem is. We have national campaigns, often in the middle of Jeopardy, which makes me think that Jeopardy viewers are having the most illnesses. I know I'm a big Jeopardy viewer. My wife was a Jeopardy champion a long time ago, so I never win at Jeopardy, but I do like watching. But these ads are running all the time. What do you think an ad on national television costs? And every time I see one of those, I'm thinking, well, how many new prescriptions do they have to fill an order to pay for that ad? Based on what I just told you, maybe only one, you know, if you get one new patient at those kinds of prices, maybe it pays for the ad itself. Now, you also know that there is a new group coming to town, and one of the members of this new group, we think, is going to be this guy named RFK Jr., who is compelled to make our nation healthier. So, the first thing he's going to do is get rid of all vaccines that that'll do the trick. But I don't know if you know this one of his big pet peeves is that he would like to get rid of ads. So quit spending all of that money. And by the way, they spend close to 30 billion in 2024 on ads. So, take that 30 billion and quit spending it in direct-to-consumer marketing.

This is what RFK Jr. wants. But he also wants equal pricing. You know we've talked about this before. You're already aware of it. We here in the United States pay more for all of our drugs than anyone else in the world. And sometimes that delta can be a huge difference. And the argument has been, well, we can afford it. And that reinvestment that delta that we're providing the world is going into reinvestment for new drug development. And that's really what the IRA, the Inflation Reduction Act is all about is to try and close that gap. And so, if you thought that might go away under the new administration, it's I think maybe the opposite. They may double down on it if RFK Jr. has his way by taking away ads and leveling the playing field for new payment. And of course, this has got everybody on their heels a bit because they don't know what budgets will look like if they don't have this margin from post marketing, if you will. So, it really put a big wrench in cancer drug development as we've talked about before.

I want to just sort of close this discussion about us. talked about the health care system and the troubles it's having. We talked about the Inflation Reduction Act and the impact on pharma, legislation that may come forward about ads and all of that. So, we talked about that, but what about us, the health care consumer? And you know, it really starts with us here in the United States with this concept of insurance. Now, probably everybody listening out there has car insurance, you have house insurance. That model is you put in five bucks a month and if your house burns down, everybody chips in and builds you a new house. And that works because most people's houses don't burn down that often. You don't have too many car wrecks. So, the insurance model, shared risk, works in that setting.

When health insurance first came along, it was, the only thing that was covered was sort of catastrophic health. You needed an operation. You were in a car wreck. You had something that required being in the hospital. Didn't happen all that often. We all chipped in. And you can pay your five bucks a month and that would cover it. it has evolved to managing hypertension, hypercholesterolemia, erectile dysfunction, and all the other things, you know, obesity, weight loss drugs, etc. All the other things that have become maintenance. We don't have mow-your-grass insurance, right? Where we all agree to chip in, unless you live in a big complex, you all agree to chip in to mow your grass. Then it's everybody's grass, right? So, in healthcare, we're all chipping in to pay for everybody's maintenance. So not catastrophic stuff, maintenance. But then with this health insurance model, we've been removed from the actual costs of what it is to get healthcare. It sometimes feels free. My Medicare-taking father at 90 years of age talks about, well, that won't cost me anything, but wait a second. Yes, it does. pay taxes, my salary here for my healthcare policy, I'm paying. Georgetown who pays the insurance company, right? And they're paying and they would have been paying me. So, what if I instead said, forget it. You're not getting health insurance through work. We'll just increase your salary by whatever you're paying. What we're paying now, you're on your own. To deal with health care costs. Let's go back to cancer drugs. It's $100,000 a year for a cancer drug, and that's a cheap one. If I gave you $10,000 back into your salary and said, okay, instead of health insurance, here's the cash, spend it as you would, you've got to imagine there'd be some competitive pricing. So, this whole price structure we live in in the United States As you know, is a false economy. And it's coming out of our individual pockets to create a bigger pocket, which increases the national debt, by the way, fund our health care and our health care system. So, while I'm very nervous about the upcoming administration, I do think of our health care system as a balloon is continuing to be blown up. And that one day, one day it's going to pop. And so can we be smart enough before it pops to let the air out slowly? All need to talk about this. We need to bring these issues forward. We need to develop a real economy for health care. And we need to think again about the Inflation Reduction Act, the cost of medicines and cancer care and other places as well. Our insurance model and think about how could we reshape that so that it continue to exist to provide excellent health care, but at the same time reduce that cost. And don't let that balloon pop.

[00:09:46]

This transcript has been edited for clarity.