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60 Minutes spotlights rising drug costs


Insurers might want to say a big thank you to "60 Minutes" for airing a show Sunday night about the extremely high cost of cancer drugs. Many drugs used to treat cancers cost more than $100,000 a year, a large portion of which is often absorbed by insurers.

"We have a pricing system for drugs [that] is completely dictated by the people who are making the drugs," Peter Bach, Memorial Sloan Kettering's in-house expert on cancer drug prices, said during an interview with 60 Minutes Correspondent Lesley Stahl.

When Sloan Kettering decided not to use Sanofi's cancer drug Zaltrap because it cost twice as much as a competitor with no added benefits, Sanofi lowered the price--but not for insurers.

Bach explained that Sanofi told doctors to buy Zaltrap for the regular $11,000 price and it would then pay them $6,000 back. Then the doctors could prescribe Zaltrap to their patients while continuing to bill insurers for the full $11,000 cost.

After Medicare and private insurers learned of the doctor discount, Sanofi dropped the Zaltrap cost by 50 percent for everyone, Stahl reported.

However, the drug industry laid much of the blame for high cancer costs on insurance companies.

"We don't set the prices on what the patient pays," John Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), told Stahl. "What a patient pays is determined by his or her insurance."

He added that it's the insurance model that "makes the medicine seem artificially expensive for the patient." Castellani particularly questioned why insurers often require members to pay a 20 percent co-pay on medications.

Cancer drugs aren't the only expensive medications that insurers are trying to get pharma companies to lower. The insurance industry has been battling drug makers over the pricey Hepatitis C drug Sovaldi for months now, as FierceHealthPayer has reported.

To learn more:
- see the "60 Minutes" interview

Related Articles:
Insurers seek to shift more Rx costs to members
Medicaid insurers struggle to pay for pricey drugs
Excellus: 3 key pieces of data drive Rx savings
WellPoint targets costly cancer care
AHIP slams pharma for taking advantage of insurers