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Who Pays for What?

The cost of a drug depends on opaque negotiations and secret deals, not on patient demand.

All cases of cancer are unique, but anyone familiar with the disease will recognize the broad strokes of Jennifer Gangloff’s story. During the fall of 1999, she found herself growing more winded on her daily five-mile runs. She started sweating at night. When a routine blood test showed elevated platelet and white blood cell counts, Ms. Gangloff searched the Web and learned that these were indications of chronic myeloid leukemia—bone marrow cancer—which is diagnosed in 6,700 Americans every year. Her doctor confirmed this, and, unable to find a suitable marrow donor, prescribed three interferon doses a week.

The interferon, of course, caused side effects. “It’s so toxic,” Ms. Gangloff says, enumerating her symptoms—diarrhea, muscle aches, constant fatigue. On good days she’d go to work, taking an alarm clock to wake her up from naps. On bad days she’d stay at home battling nausea. She could look forward to three to five years of both kinds of days, until “the blast crisis”—the disease’s final stage, when she’d be just 36.

Tortured Transactions; Copyright © 2004 Acumen Sciences, LLC, All Rights Reserved.But Ms. Gangloff’s story took an amazing turn when she entered clinical trials for Gleevec (imatinib mesylate). In May 2001, Novartis won U.S. Food and Drug Administration approval for Gleevec three months after filing a new drug application. The most prominent of a new generation of so-called designer drugs, Gleevec interrupts the signal transductor pathways of cancer cells, stopping them from dividing without affecting healthy cells. An alternative to surgery, radiation, and conventional chemotherapy, Gleevec can not only be less painful—it’s very often more effective. The regimen consists of one pill a day. After taking Gleevec for two years, Ms. Gangloff has good days much more frequently than bad ones. She finished a half-marathon in Alaska last year.

But Gleevec has side effects as well, some of them serious, like severe muscle cramps, others more or less inconvenient, like weight gain. The financial side effects may be the most debilitating though. Novartis prices Gleevec at $28,000 for a year’s supply. Until a prescription drug benefit is added to Medicare, many elderly patients will pay full price for the drug. Novartis has set up a financial program to assist poor patients, but Ms. Gangloff, a Web site producer for the Mayo Clinic who also maintains her own CML site, www.cmlsupport.com, is hearing from a lot of desperate visitors who can’t afford the lifesaving drug. Ms. Gangloff herself is lucky: her insurer covers all prescription costs except a 15% copay—but she sometimes wonders how long that will last. Novartis will make $1.3 billion off Gleevec this year alone, analysts estimate, and even more in the future, if indications that the drug treats other cancers prove true. At some point, insurers may take the drug off their formularies. “The financial pressures are building, and people are wondering how long insurers will be able to afford it,” Ms. Gangloff says. “They’re just waiting for the roof to fall in.”

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