The paper, published in the latest issue of the Journal of Economic Perspectives, found that while drug price was related to quality improvement over existing therapies, the price increase surpassed quality.
The prices of leading cancer drugs have risen at rates far outstripping inflation over the last two decades, according to a new study co-authored by an MIT economist — but the exact reasons for the cost increases are unclear.
Since 1995, a group of 58 leading cancer drugs has increased in price by 10% annually, even when adjusted for inflation and incremental health benefits, the study finds. More specifically, in 1995, cancer drugs in this group cost about $54,100 for each year of life they were estimated to add; by 2013, such drugs cost about $207,000 per each additional year of life.
Those increases have sparked criticism in recent years from doctors, among other groups, who have questioned the pricing of major drugs. But the empirical results may also show, the researchers say, that rising price levels reflect a greater social tolerance for significant health-care costs.
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