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The World Health Organization says the cost of developing new cancer treatments doesn’t seem to justify those drugs’ high prices, as the pharmaceutical industry argues.

The big picture: "The costs of R&D and production may bear little or no relationship to how pharmaceutical companies set prices of cancer medicines,” WHO officials said in a recent research paper.

The report says new cancer treatments have translated into better survival rates, but that high prices are the main factor limiting access to those life-saving drugs.

  • And it sharply contradicts the industry’s argument that those prices are necessary to recoup the cost of developing new drugs — including the money they spend on products that fail.
  • “Pharmaceutical companies set prices according to their commercial goals, with a focus on extracting the maximum amount that a buyer is willing to pay for a medicine,” the report says. “This pricing approach often makes cancer medicines unaffordable, preventing the full benefit of the medicines from being realized.”

The other side: “The report is wrong on the facts and deeply flawed,” a spokeswoman for the Pharmaceutical Research and Manufacturers of America said. “The report’s narrow scope fails to properly account for the value that cancer medicines provide to patients, health care systems and societies.”

  • And the WHO report does say that government price-setting doesn’t always work.
  • “In some countries, cost-containment measures ... have resulted in reduced, delayed and even cancelled treatment,” the report says.

By the numbers: Even after accounting for failed clinical trials and other opportunity costs, drug companies saw a median return of $14.50 for every $1 they spent on research and development, the paper says, citing earlier research published in the Journal of the American Medical Association.

  • By the end of 2017, 5 cancer drugs had each accumulated more than $60 billion in lifetime sales. (The top 3 are all manufactured by Roche, followed by Amgen and Novartis.)

The report also questions whether some new drugs are adding value commensurate with their price.

  • A product that extends a patient’s life by a few weeks or months, for example, means a lot to the patient but perhaps shouldn’t be priced like a bigger breakthrough.

The bottom line: “We’re spending a lot, but maybe we should expect more from those dollars that we’re spending,” said Stacie Dusetzina, a professor at the Vanderbilt University School of Medicine.

Go deeper

Dan Primack, author of Pro Rata
32 mins ago - Economy & Business

SoftBank and StubHub vets form new SPAC

Illustration: Sarah Grillo/Axios

Jeffrey Housenbold, who recently stepped down as a managing partner of SoftBank Vision Fund, has formed a new SPAC with Sukhinder Singh Cassidy, who was president of ticket resale firm StubHub until it was acquired last year by Viagogo.

Why it matters: The death of SPACs has been greatly exaggerated.

49 mins ago - World

U.K. government sets out agenda in first COVID-era Queen's Speech

Queen Elizabeth II walks behind the Imperial State Crown in the Royal Gallery of Parliament. Photo: Richard Pohle/POOL/AFP via Getty Images

Queen Elizabeth II laid out the U.K. government's agenda at the State Opening of Parliament on Tuesday, marking the first Queen's Speech since the pandemic began and her first major public appearance since the death of her husband, Prince Philip.

Why it matters: In a pared-back ceremony, the queen set out Prime Minister Boris Johnson's vision for recovering from a pandemic that inflicted the worst death toll in Europe and worst recession in 300 years.

The ransomware pandemic

Illustration: Aïda Amer/Axios

"We are on the cusp of a global pandemic," said Christopher Krebs, the first director of the Cybersecurity and Infrastructure Security Agency, told Congress last week. The virus causing the pandemic isn't biological, however. It's software.

Why it matters: Crippling a major U.S. oil pipeline this weekend initially looked like an act of war — but it's now looking like an increasingly normal crime, bought off-the-shelf from a "ransomware as a service" provider known as DarkSide.