Cancer drugs account for 40 percent of all costs associated with cancer treatments. With high rates of cancer prevalence and the subsequent medical costs, it is estimated that pretty soon only a few countries will be able to afford cancer treatments.

The researchers from the Mayo Clinic say that value-based pricing may reduce costs associated with cancer drugs.

Previous research has shown that direct medical spending for cancer reached $104 billion in the U.S. in 2010, an increase of 222 percent in the past two decades. The cost of cancer treatment rose by 25 percent between 2004 ($72 billion) and 2007 ($89 billion) partly because of the rise in the cost of anti-cancer drugs.

According to Mustaqeem Siddiqui, an oncologist and Vincent Rajkumar, a hematologist who wrote the commentary in the journal Mayo Clinic Proceedings, companies that manufacture drugs for cancer treatment have a monopoly in the market that increases the prices for cancer treatment.

According to the authors, some of the reasons for the high prices of cancer drug are: higher costs in drug discovery, patients' and insurer's willingness to pay for any drug (even the ones that have limited efficacy), lack of regulations and policies that don't look at the quality of life associated with the drug during the approval process.

However, the main reason for cancer drug monopoly is that the patient can't choose from the drug options available like he/she can in using over-the-counter pills. According to estimates, about 90 percent of all drugs approved by the FDA for cancer treatment over the past few years cost as much as $2,000 for a 12-week course, many of these drugs promise survival for about 2 months or even less.

According to an article in the Journal of Oncology Practice, people who have insurance also feel the burden of cancer treatment as some copayments can go up to $10,000 per month for certain cancers.

Siddiqui and Rajkumar suggest the following solutions to control cancer drug prices.

  • Generic drug companies must be able to manufacture generic drugs at low cost.
  • Patients and their families must be given information about the drug so that they can make informed choices
  • Drugs price must be based on its value that would depend on factors like its cost effectiveness and the years of life it might add to the patients' life; the possible outcomes of the drug intervention.
  • Medicare and Medicaid must have powers to negotiate cancer drug payments.
  • In cases where the drug has no competitor present, drug manufactures must be given other benefits like expedited approval in exchange of voluntary price control.

"Cancer care is not representative of a free-market system, and the traditional checks and balances that make the free-market system work so efficiently in all other areas are absent when it comes to most cancer treatment," write Siddiqui and Rajkumar.