60 Minutes exposes the high cost of cancer drugs

This week Leslie Stahl and 60 Minutes produced a terrific expose on cancer drug pricing, which can cost $250,000 to $500,000 per year, and how doctors at Memorial Sloan Kettering set a huge precedent by standing up to the drug industry and refusing to prescribe a new overpriced drug called Zaltrap, which cost $10,000 per month, was more toxic, and didn’t work any better than its competitor Avastin, which cost about 50% less.

As a result, drug maker Sanofi cut Zaltrap’s price in half, proving it was overpriced to begin with.

It’s refreshing to see a major media outlet drop the truth bomb that oncologists make a 6% commission on chemo drugs, which gives them incentive to prescribe the most expensive drugs, not necessarily the most effective.

Another fun fact: Americans pay 2-3 times more for the same drugs as other countries.
Why do the drug companies price them higher here? Because they can.

In this companion piece, Lesley Stahl talks with 60 Minutes Overtime about her motivation to do this story and gets into it with a dodgy drug industry lobbyist.

For those unable to watch the video, here is the transcript of “The Cost of Cancer Drugs” which aired on Oct. 5, 2014.

Cancer is so pervasive that it touches virtually every family in this country. More than one out of three Americans will be diagnosed with some form of it in their lifetime. And as anyone who’s been through it knows, the shock and anxiety of the diagnosis is followed by a second jolt: the high price of cancer drugs.

They are so astronomical that a growing number of patients can’t afford their co-pay, the percentage of their drug bill they have to pay out-of-pocket. This has led to a revolt against the drug companies led by some of the most prominent cancer doctors in the country.

Dr. Leonard Saltz: We’re in a situation where a cancer diagnosis is one of the leading causes of personal bankruptcy.

Dr. Leonard Saltz is chief of gastrointestinal oncology at Memorial Sloan Kettering, one of the nation’s premier cancer centers, and he’s a leading expert on colon cancer.

Lesley Stahl: So, are you saying in effect, that we have to start treating the cost of these drugs almost like a side effect from cancer?

Dr. Leonard Saltz: I think that’s a fair way of looking at it. We’re starting to see the term “financial toxicity” being used in the literature. Individual patients are going into bankruptcy trying to deal with these prices.

“I do worry that people’s fear and anxiety’s are being taken advantage of.”
Lesley Stahl: The general price for a new drug is what?

Dr. Leonard Saltz: They’re priced at well over $100,000 a year.

Lesley Stahl: Wow.

Dr. Leonard Saltz: And remember that many of these drugs, most of them, don’t replace everything else. They get added to it. And if you figure one drug costs $120,000 and the next drug’s not going to cost less, you’re at a quarter-million dollars in drug costs just to get started.

Lesley Stahl: I mean, you’re dealing with people who are desperate.

Dr. Leonard Saltz: I do worry that people’s fear and anxiety are being taken advantage of. And yes, it costs money to develop these drugs, but I do think the price is too high.

The drug companies say it costs over a billion dollars to bring a new drug to market, so the prices reflect the cost of innovation.

The companies do provide financial assistance to some patients, but most people aren’t eligible. So many in the middle class struggle to meet the cost of their co-payments. Sometimes they take half-doses of the drug to save money. Or delay getting their prescriptions refilled.

Dr. Saltz’s battle against the cost of cancer drugs started in 2012 when the FDA approved Zaltrap for treating advanced colon cancer. Saltz compared the clinical trial results of Zaltrap to those of another drug already on the market, Avastin. He says both target the same patient population, work essentially in the same way. And, when given as part of chemotherapy, deliver the identical result: extending median survival by 1.4 months, or 42 days.

Dr. Leonard Saltz: They looked to be about the same. To me, it looked like a Coke and Pepsi sort of thing.

Then Saltz, as head of the hospital’s pharmacy committee, discovered how much it would cost: roughly $11,000 per month, more than twice that of Avastin.

Lesley Stahl: So $5,000 versus $11,000. That’s quite a jump. Did it have fewer side effects? Was it less toxic? Did it have…

Dr. Leonard Saltz: No…

Lesley Stahl: …Something that would have explained this double price?

Dr. Leonard Saltz: If anything, it looked like there might be a little more toxicity in the Zaltrap study.

He contacted Dr. Peter Bach, Sloan Kettering’s in-house expert on cancer drug prices.

Lesley Stahl: So Zaltrap. One day your phone rings and it’s Dr. Saltz. Do you remember what he said?

Dr. Peter Bach: He said, “Peter, I think we’re not going to include a new cancer drug because it costs too much.”

Lesley Stahl: Had you ever heard a line like that before?

Dr. Peter Bach: No. My response was, “I’ll be right down.”

Lesley Stahl: You ran down.

Dr. Peter Bach: I think I took the elevator. But yes, exactly.

Bach determined that since patients would have to take Zaltrap for several months, the price tag for 42 days of extra life would run to nearly $60,000. What they then decided to do was unprecedented: reject a drug just because of its price.

Dr. Peter Bach: We did it for one reason. Because we need to take into account the financial consequences of the decisions that we make for our patients. Patients in Medicare would pay more than $2,000 a month themselves, out-of-pocket, for Zaltrap. And that that was the same as the typical income every month for a patient in Medicare.

Lesley Stahl: The co-pay.

Dr. Peter Bach: Right. 20 percent. Taking money from their children’s inheritance, from the money they’ve saved. We couldn’t in good conscience say, “We’re going to prescribe this more expensive drug.”

“It was a shocking event. Because it was irrefutable evidence that the price was a fiction.”
And then they trumpeted their decision in the New York Times. Blasting what they called “runaway cancer drug prices,” it was a shot across the bow of the pharmaceutical industry and Congress for passing laws that Bach says allow the drug companies to charge whatever they want for cancer medications.

Dr. Peter Bach: Medicare has to pay exactly what the drug company charges. Whatever that number is.

Lesley Stahl: Wait a minute, this is a law?

Dr. Peter Bach: Yes.

Lesley Stahl: And there’s no negotiating whatsoever with Medicare?

Dr. Peter Bach: No.

Another reason drug prices are so expensive is that according to an independent study, the single biggest source of income for private practice oncologists is the commission they make from cancer drugs. They’re the ones who buy them wholesale from the pharmaceutical companies, and sell them retail to their patients. The mark-up for Medicare patients is guaranteed by law: the average in the case of Zaltrap was six percent.

Dr. Leonard Saltz: What that does is create a very substantial incentive to use a more expensive drug, because if you’re getting six percent of $10, that’s nothing. If you’re getting six percent of $10,000 that starts to add up. So now you have a real conflict of interest.

But it all starts with the drug companies setting the price.

Dr. Peter Bach: We have a pricing system for drugs which is completely dictated by the people who are making the drugs.

Lesley Stahl: How do you think they’re deciding the price?

Dr. Peter Bach: It’s corporate chutzpah.

Lesley Stahl: We’ll just raise the price, period.

Dr. Peter Bach: Just a question of how brave they are and how little they want to end up in the New York Times or on 60 Minutes.

That’s because media exposure, he says, works. Right after their editorial was published, the drug’s manufacturer, Sanofi, cut the price of Zaltrap by more than half.

Dr. Peter Bach: It was a shocking event. Because it was irrefutable evidence that the price was a fiction. All of those arguments that we’ve heard for decades, “We have to charge the price we charge. We have to recoup our money. We’re good for society. Trust us. We’ll set the right price.” One op-ed in the New York Times from one hospital and they said, “Oh, okay, we’ll charge a different price.” It was like we were in a Turkish bazaar.

Lesley Stahl: What do you mean?

Dr. Peter Bach: They said, “This carpet is $500” and you say, “I’ll give you $100.” And the guy says, “Okay.” They set it up to make it highly profitable for doctors to go for Zaltrap instead of Avastin. It was crazy!

But he says it got even crazier when Sanofi explained the way they were changing the price.

Dr. Peter Bach: They lowered it in a way that doctors could get the drug for less. But patients were still paying as if it was high-priced.

Lesley Stahl: Oh, come on.

Dr. Peter Bach: They said to the doctor, “Buy Zaltrap from us for $11,000 and we’ll send you a check for $6,000.” Then you give it to your patient and you get to bill the patient’s insurance company as if it cost $11,000. So it made it extremely profitable for the doctors. They could basically double their money if they use Zaltrap.

“High cancer drug prices are harming patients because either you come up with the money, or you die.”
All this is accepted industry practice. After about six months, once Medicare and private insurers became aware of the doctor’s discount, the price was cut in half for everyone.

John Castellani: The drug companies have to put a price on a medicine that reflects the cost of developing them, which is very expensive and takes a long period of time, and the value that it can provide.

John Castellani is president and CEO of PhRMA, the drug industry’s trade and lobbying group in Washington.

Lesley Stahl: If you are taking a drug that’s no better than another drug already on the market and charging twice as much, and everybody thought the original drug was too much…

John Castellani: We don’t set the prices on what the patient pays. What a patient pays is determined by his or her insurance.

Lesley Stahl: Are you saying that the pharmaceutical company’s not to blame for how much the patient is paying? You’re saying it’s the insurance company?

John Castellani: I’m saying the insurance model makes the medicine seem artificially expensive for the patient.

He’s talking about the high co-pay for cancer drugs. If you’re on Medicare, you pay 20 percent.

Lesley Stahl: Twenty percent of $11,000 a month is a heck of a lot more than 20 percent of $5,000 a month.

John Castellani: But why should it be 20 percent instead of five percent?

Lesley Stahl: Why should it be $11,000 a month?

John Castellani: Because the cost of developing these therapies is so expensive.

Lesley Stahl: Then why did Sanofi cut it in half when they got some bad publicity?

John Castellani: I can’t respond to a specific company.

Sanofi declined our request for an interview, but said in this email that they lowered the price of Zaltrap after listening “to early feedback from the oncology community and … To ensure affordable choices for patients…”

Dr. Hagop Kantarjian: High cancer drug prices are harming patients because either you come up with the money, or you die.

Hagop Kantarjian chairs the department of leukemia at MD Anderson in Houston. Inspired by the doctors at Sloan Kettering, he enlisted 119 of the world’s leading leukemia specialists to co-sign this article about the high price of drugs that don’t just add a few weeks of life, but actually add years, like Gleevec.

It treats CML, one of the most common types of blood cancer that used to be a death sentence, but with Gleevec most patients survive for 10 years or more.

Dr. Hagop Kantarjian: This is probably the best drug we ever developed in cancer.
Lesley Stahl: In all cancers?

Dr. Hagop Kantarjian: So far. And that shows the dilemma, because here you have a drug that makes people live their normal life. But in order to live normally, they are enslaved by the cost of the drug. They have to pay every year.

Lesley Stahl: You have to stay on it. You have to keep taking it.

Dr. Hagop Kantarjian: You have to stay on it indefinitely.

Gleevec is the top selling drug for industry giant Novartis, bringing in more than $4 billion a year in sales. $35 billion since the drug came to market. There are now several other drugs like it. So, you’d think with the competition, the price of Gleevec would have come down.

Dr. Hagop Kantarjian: And yet, the price of the drug tripled from $28,000 a year in 2001 to $92,000 a year in 2012.

“They are making prices unreasonable, unsustainable and, in my opinion, immoral.”
Lesley Stahl: Are you saying that the drug companies are raising the prices on their older drugs.

Dr. Hagop Kantarjian: That’s correct.

Lesley Stahl: Not just the new ones. So you have a new drug that might come out at a $100,000, but they are also saying the old drugs have to come up to that price, too?

Dr. Hagop Kantarjian: Exactly. They are making prices unreasonable, unsustainable and, in my opinion, immoral.

When we asked Novartis why they tripled the price of Gleevec, they told us, “Gleevec has been a life-changing medicine … When setting the prices of our medicines we consider … the benefits they bring to patients … The price of existing treatments and the investments needed to continue to innovate…”

[Dr. Hagop Kantarjian: This is quite an expensive medication.]

Dr. Kantarjian says one thing that has to change is the law that prevents Medicare from negotiating for lower prices.

Dr. Hagop Kantarjian: This is unique to the United States. If you look anywhere in the world, there are negotiations. Either by the government or by different regulatory bodies to regulate the price of the drug. And this is why the prices are 50 percent to 80 percent lower anywhere in the world compared to the United States.

Lesley Stahl: Fifty percent to 80 percent?

Dr. Hagop Kantarjian: Fifty percent to 80 percent.

Lesley Stahl: The same drug?

Dr. Hagop Kantarjian: Same drug. American patients end up paying two to three times more for the same drug compared to Canadians or Europeans or Australians and others.

Lesley Stahl: Now, Novartis, which makes Gleevec, says that the price is fair because this is a miracle drug. It really works.

Dr. Hagop Kantarjian: The only drug that works is a drug that a patient can afford.

The challenge, Dr. Saltz at Sloan Kettering says, is knowing where to draw the line between how long a drug extends life and how much it costs.

Lesley Stahl: Where is that line?

Dr. Leonard Saltz: I don’t know where that line is, but we as a society have been unwilling to discuss this topic and, as a result, the only people that are setting the line are the people that are selling the drugs.


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  • Elle

    My question is where does all this money for cancer research go?!

    • June

      It goes back to the pharmaceutical companies so that they can make more useless drugs in order to bring suffering and death to more and more people. There’s big money in sick people. The pharmaceutical companies, the US Government, and the mainstream medical community as a whole has no interest in healing or preventing disease. Healthy people do not bring them profits. It’s twisted. And all these pink ribbons, pink socks, pink toasters…being sold in the name of “cancer awareness” is one of the biggest shams ever. I don’t get why people don’t see it for what it is. Incidences of cancer and death from cancer have gone up not down since all these cancer awareness fund raisers have started. One and three people are currently diagnosed with cancer. It is predicted that soon that statistic will be one in two. People need to wake up to what’s going on.

  • Beverly

    Thank you for sharing this great & informative story. It is shocking at what is happening in the cancer business and it is a business that most are not aware of. My hope is that everyone learns about this. Also, we need to change the laws so that our government isn’t backing the pharmaceutical companies and allowing them to bankrupt people just so they can live. More importantly, how about we use all this extra money to invest in natural cures that we can honestly look and find a real cure. Because chemotherapy is not the answer. My husband just went throughout cancer treatment last year but we opted to go natural (instead of chemo or radiation)and we are so grateful to God for his healing. We used your website as guidance & inspiration along with other resources. Thank you for all that you do to educate everyone about natural healing.

  • Rebecca Cody

    While this story was needed and an eye-opener for many, they really missed the mark by not focusing on the fact that these drugs do so little and cause such horrible side effects.

    The financial costs are outrageous, especially since Congress voted for the drug companies instead of representing the interests of its’ constituents. Now they need to focus on the costs that aren’t financial: the costs in pain, frustration, unneeded illness, disappointment when the drugs don’t work, and often death caused by drug toxicity. All that for drugs that don’t extend life much or at all.

    Even the drug company representative called Gleevec a miracle drug because it works! Wow!

  • Rebecca Cody

    While this story was needed and an eye-opener for many, they really missed the mark by not focusing on the fact that these drugs do so little and cause such horrible side effects.

    The financial costs are outrageous, especially since Congress voted for the drug companies instead of representing the interests of its’ constituents. Now they need to focus on the costs that aren’t financial: the costs in pain, frustration, unneeded illness, disappointment when the drugs don’t work, and often death caused by drug toxicity. All that for drugs that don’t extend life much or at all.

    Even the drug company representative called Gleevec a miracle drug because it works! Wow!

    On a related subject, I wonder how many people who donate to the pink ribbon campaigns really get it that their dollars go to support this very industry that then turns around and bankrupts patients. Who would donate to them if they realized how the money enriches the very companies that impoverish the rest of us?

  • “High cancer drug prices are harming patients because either you come up with the money, or you die.”

    Actually, it sounds to me like you come up with the money AND you die.

    You can buy a lot of veggies, supplements, and alternative treatments for $120,000 that would most likely give you more than 41 extra days with the benefit of no side effects.

    • Mildred

      ^ Ha! So true. You come up with the money (lots of it mind you) and you still die.

      If I have to come up with $2,000-$5,000 dollars copay a month just so I could live 41 more days living miserable life, bald and vomiting due to the toxic side effects of the cancer drug, I would rather spend the money going to a naturopath doctor, drink lots of green juice and natural supplements, go on vacation, get fresh air and smell the roses. I might live longer than 41 days and probably die happy.

      • Bill

        Not true! If you did what you say then you would actually heal yourself and save big at the same time.
        There are so many people opting out and going alternative and ending up cancer free. Most include the very things you stated as just part of many different protocols. Lifestyle change. Mainstream medicine is a sham and their motto is, ” Your health is our wealth “

  • Robert

    I looked at the videos. And before I could finish them, I just decided: “I don’t want to be bothered with this garbage; the pharmaceutical company, the oncologists, and perhaps others in the medical profession as well are making money off of other people’s suffering and misery”. It is as simple as that. I myself suffer with prostate cancer. However, I have made a drastic change in my diet in that I eat 98% organic veggies, fruits. The only “meat” I eat is strictly organic chicken – and not much of that.
    I take 2 to 3000 IUs of vitamin D3 daily on average. I get plenty of D3 naturally from the sun because I live in the Desert Southwest. I take a boat-load of turmeric/curcumin-95. I still work everyday to support myself. And last, but not least, I try my level best to greatly reduce stress. SO FAR, SO GOOD. All of this benefit is gained for little of nothing in comparison to what many pay for the so-called cancer miracle drugs. Oh yes, let me not forget about those tasty GREEN SMOOTHIES….I love them!!

  • ant

    Chemo devastates the immune system
    as AIDS patients have an depress immune system, so does chemo therapy patients.
    We all know chemo gives you AIDS an acquired immune deficiency syndrome from so much poisonous and repeated drug use.
    Many (Fast track) or chronic drug using gays get AIDS from so much bad drug use same with devastating chemo drugs!

  • June

    This reports just goes to show how dirty and deceiving big pharma is. While the oncologist in the report is seemingly “trying to do the right thing,” the fact of the matter is that he, too, is part of the problem because he prescribes these chemo drugs that do not heal people. Also, the drug company in the report is still getting the amount of money they wanted for the chemo drug. All they did was shuffle around the way in which they’re making a profit. Insurance companies and people are still getting ripped off. How does the drug company get away with this? Seems like anything goes in the name of profit.

    Anyone whose been down the path with a loved one who was killed by chemo and radiation, knows that chemotherapy is an epic sham and that drug comapanies and mainstream oncologists turn a profit through pumping people full of chemicals that cause their hair to fall out, including their eyebrows and eye lashes, gives them red mouths sores inside and out, takes away their apetite, turns their skin grey, dries out their skin, accelerates aging, messes with their mind, and then kills them….I could go on and on.

    Chemo is not the answer. Prevention and natural, nontoxic modes of healing are the answer. And, that is what 60 Minutes should report on instead of painting a mainstream oncologist like a saint and talking about a pirating drug company that goes with impunity despite the fact that they are ripping people off while killing them.

    A year ago or 60 Minutes portrayed Bill Gates and his wife like they were two Mother Teresas because they are paying to vaccinate the world. 60 Minutes needs to report the truth as to how many children have died, developed autism, developed cancer and will die as a result of Bill Gates’ vaccination program. 60 Minutes is not a credible source. It is a typical, mainstream, deceiving newscast.

  • Kaye

    LOL Chris, this sure helps me to weed out the pro-drug/anti-God crowd on FB. I had two in the medical field comment on one of my last posts about how the misuse of drugs is now the leading cause of death; of course they never read it all so I had to “correct” that… It’s all about the money, and people either don’t know/don’t care/or get their $$$$$$$$$$ from this collection of poisons! Evil.