Brands in the News

$40,000

13 May , 2013  

I have a cousin battling ovarian cancer. It has been a long and difficult fight but she has done better than anyone could have imagined. She is amazing.

Last week I talked with her mother and learned that the family is rounding up funds to pay for a $40,000 oncology drug. My cousin lives in Germany and apparently the healthcare system there doesn’t cover the drug. So the only way she will receive it is if someone comes up with the money.

This all feels wrong. She only gets the drug if she comes up with $40,000? You can’t be serious.

But the more I think about it, the more it seems like a reasonable situation.

My cousin’s healthcare system decided the product wasn’t worth paying for. Germany is notoriously stingy when it comes to innovative pharmaceutical products, so this isn’t all that surprising. I suspect the product works in some patients but not others so the overall efficacy isn’t compelling.

It is difficult to get too mad at the healthcare system for this decision. Budgets are limited. A low-cost system can pay for some things but not everything. Healthcare isn’t free; if you want low prices you won’t get the latest therapies.

The pharmaceutical company decided to price the product at $40,000 per person. This is a lot of money, considering the production cost might be $100 or even less. But the company has a product that apparently works in some patients and gives everyone hope. A high price seems appropriate in this case.

The company probably invested hundreds of millions of dollars developing the molecule. This investment should have no bearing on the price; people don’t make purchase decision based on how much a company spent on R&D. But I don’t think the company is morally obligated to set a low price; doing so would limit future R&D spending and potentially slow the flow of new therapies benefitting other patients.

This leaves the decision with my cousin and her family. Should she be able to buy and have the drug? This is an easy question: of course. If she believes it is worth it and she has the resources, she should absolutely be able to move forward.

Ultimately, healthcare decisions should rest with the patient and family. Physicians can help patients understand the options and recommend a therapy. Insurance programs should cover some therapies but not all. There should be difficult options: one plan might cover only the most established treatments while another plan covers a broader range of options.

The people who see the benefit are the patient and the family. Ultimately they should make the tough decisions about treatments and costs.

So in the next few days my cousin will pay $40,000 and receive a new oncology therapy. And I hope it works.

*    *    *

Spring semester is my busiest time for teaching; I have three MBA courses at Kellogg, plus a series of executive education seminars at Kellogg and a number of corporate projects. As a result, I’m posting a bit less than usual. I’ll be back to a weekly post in June.


2 Responses

  1. Alexander (WHU EMBA KW16) says:

    Dear Tim,

    thank you for sharing this article. Three weeks ago i have lost my wife due to this terrible cancer disease. She was mother of two litle doughters – 7 and 9 years young.

    Our all hope was due to the strong and modern medicine in Germany. But it did not helped us. She died at the age of 34.

    It hurts me hard to read such story again, and i hope your cousin will find the way to fight this terrible disease.

    Alexander

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