Gleevec, a drug that treats a rare form of leukemia, was approved in 2001 with a list price of $26,400 per year. Since then, its price has steadily increased, reaching over $120,000 per year currently. While the drug has competition now, its price increases were incremental at first and accelerated even before competitors entered the market. The price hikes have helped make Gleevec a top revenue drug for its manufacturer, Novartis, even though it was initially not expected to be a major moneymaker due to the small patient population. However, critics argue there is a lack of meaningful competition in the drug market that would normally drive prices down.
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Gleevec
1. Business
This drug is defying a rare
form of leukemia — and it
keeps getting pricier
By Carolyn Y. Johnson March 9
When the drug company Novartis launched its breakthrough cancer medicine, Gleevec, in 2001, the list price was $26,400 a
year. The company’s chief executive acknowledged it was expensive, calling it an “uphill battle to win understanding for our
decision.”
Today, that hill is a mountain. Since Gleevec was approved to treat a rare form of leukemia, similar drugs have come on the
market — and the U.S. wholesale list price for a year’s supply of that little orange pill has soared to more than $120,000.
The pharmaceutical industry has insisted that the competitive market controls the costs of medications and that the overnight
price hikes that have sparked public outrage and congressional investigations are outliers.
But Gleevec’s arc shows that even for a medicine that is the fruit of years of research — a prime example of what drug companies
aspire to do — the market can fail. Instead of rising in sudden surges, Gleevec’s price crept inexplicably upward each year. When
powerful secondgeneration drugs began to give physicians choices, Novartis raised the price even faster.
This price inflation helped turn Gleevec, a drug that was not supposed to make much money, into the biggest drug by revenue at
one of the world’s largest drug companies.
“They say market forces set the prices reasonably, but there are no market forces,” said Hagop Kantarjian, chairman of the
leukemia department at the University of Texas MD Anderson Cancer Center. “The drug companies are so few, they have
carved out oligopolies.”
In a normal competitive market, prices influence what people buy — but not in health care. Brandname drugs generally do not
compete on price, because physicians and patients rarely pick treatments based on price — and often are not even aware what
the prices are. Drugs each have a different benefit and sideeffect profile, and doctors pick the drug they think will work best for
their patients. What competition does take place occurs in secret negotiations between drugmakers and middlemen.
Which all points to a very strange fact about drug prices: They do not really exist. List prices are nothing more than a starting
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