High pharma margins squeeze health systems.

Curing cancer for the masses will be challenging if healthcare systems are crippled by drug prices that bear little relationship to R&D and manufacturing costs. 

A 2019 investigation into cancer pricing in Switzerland by Swiss public television RTS found that some cancer treatments are billed at more than 80 times their manufacturing costs. In Switzerland alone, more than 50,000 people are diagnosed with cancer every year.

A vial of the blockbuster breast cancer drug Herceptin costs around CHF50 to produce. In 2018, it was sold for CHF2,095 in Switzerland, 42 times its manufacturing cost. This represents an 85% profit margin for Herceptin’s manufacturer, Swiss pharmaceutical company Roche. The drug has earned the company CHF82.8 billion since it came on the market 20 years ago.

In Switzerland, drug prices are negotiated and validated at the Federal Office of Public Health (FOPH). The FOPH uses two criteria to determine the price: a price estimate based on a group of nine European countries and a comparison to prices of other drugs used to treat the disease.

Pharmaceutical companies have typically defended high drug prices by pointing to huge investments in research and development, including clinical trials. But a 2019 WHO study recently established that for every dollar invested in cancer research, pharmaceutical companies earned on average US$14.50 in revenue.

According to the RTS report, the price for reimbursement for cancer-fighting drugs in Switzerland has increased by 54% in the last five years, from CHF603 to CHF931 million per year.

(Diagram via @swissinfo_en

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