Why Is Xtandi So Expensive?
The high cost of medications has been a topic of discussion in recent years. Xtandi (enzalutamide) is one such drug that seems to attract negative scrutiny. Xtandi is a drug that has proven itself to help patients with prostate cancer. The drug is recognized as effective, providing an important treatment modality for men with metastatic castration-resistant prostate cancer (mCRPC) or who have other prostate-related indications. But the cost of Xtandi raises concerns about why there must be a high cost for a therapy that is deemed important.
In this article, we will identify some contributors to the high-cost factors for Xtandi and what patients, health care providers, and politicians need to understand.
Factors for High Pricing
Research and Development (R&D) Expenditures
One of the major contributors to the high cost of Xtandi is the significant amount spent on research and development (R&D) costs to bring the ongoing drug to market. For a new pharmaceutical product, developing a new drug is a protracted and costly process involving pre-clinic studies, multiple phases of human clinical trials, and regulatory approvals, that can take an average of 10 years and cost billions of dollars.
Xtandi was developed to be administered safely and has been harrowingly tested. Pharmaceutical companies expend billions of dollars each year on clinical trials to demonstrate the drug's safety and efficacy in many different patient populations. If the clinical trials are successful, the trials' expenditure will be recouped through the revenues of the drug after it is sold. However, the price of medications like Xtandi is also set based on a cost structure that includes more than just clinical trial expenditures, as the insurance system embeds this extraordinarily high spending pricing structure, which ultimately falls on the patient.
Patent Protection and Market Exclusivity
Xtandi is under patent protection, which means only the original manufacturer (Astellas Pharma) and joint partners (Medivation, which was later acquired by Pfizer) can produce and sell that drug. Patent protection is a significant factor in the pricing of drug costs. When a drug is patented, the company that developed it has exclusive usage, which prevents competition and allows it to price the drug as high as the market will allow.
During exclusivity, there can be no other alternatives available as generic drugs. This means that as patients, they have no lower-cost mechanical alternatives available to them. When a patent has expired, typically the generic alternatives emerge in the market and drive down the price by often 90%. The incorporated patent protection means that, for the time being, it is going to remain expensive for patients.
Limited Competition in the Prostate Cancer Drug Marketplace
With a few exceptions, the treatment options available for prostate cancer are quite limited, especially in the case of patients with metastatic castration-resistant prostate cancer. Enzalutamide has very little competition in its category, and therefore has a wide range to maintain its price. There are some other drugs indicated for prostate cancer treatment, like ZYTIGA (abiraterone); however, XTANDI has features in the management of prostate cancer that have made it the go-to option over others, especially when used in drug combination therapy.
Limited competition allows pharmaceutical companies to set prices without being concerned about pricing wars or competitors lowering the costs of their medications. When the market is structured in this way, it often leaves patients with no option but to pay for the very high medication costs or seek alternatives to the medication, which may not be as effective.
Reimbursement Policies and Insurance Coverage
Both insurance companies and health systems negotiate price agreements with pharmaceutical companies. In most situations, insurance coverage may lessen the burden of the drug cost, but, as evident in the price of Xtandi, for example, high out-of-pocket costs will still negatively affect patients in clinical situations, especially those with high deductible insurance or patients who live in countries with less systemic control over the costing of pharmaceuticals.
Even with insurance coverage, Xtandi can be cost-prohibitive for various patients. Many insurance companies will require patients to go through a process, the prior authorization process, in order to receive coverage for the drug, and sometimes Xtandi may be tiered to a higher cost tier per the insurance company's tier process. The affordability of Xtandi can depend on various parameters based on shipment location, also making it difficult for some patients in some regions to even access this critical drug.
Costs in Marketing and Distribution
Pharmaceutical companies rely on marketing and distribution to promote their product in an attempt to maximize usage. Marketing and distribution costs include, but are not limited to, marketing and physician education campaigns, advertisements targeting patients, marketing to healthcare providers, and distribution logistics to make sure the drug is received at the correct medical facilities or pharmacies on time.
In the Marketing Strategy for Xtandi, the marketing plan is to also ensure the physician education campaign is delivered to the doctors, oncologists, and urologists prescribing treatment to prostate cancer patients; educating physicians on the benefits of the drug; and encouraging referrals of patients for prescribed treatment with Xtandi. All of the Marketing activities, along with the supply chain activities, contribute to the cost of the drug.
Profit Margins for the Pharmaceutical Industry
Pharmaceutical companies are businesses at the end of the day. The significant price of drugs such as Xtandi is somewhat an indication of their desire to achieve the ability to make a large profit. All kinds of costs make up the price of drugs like Xtandi (research, development, and marketing), but there is also a requirement to make sure that they can remain.
The pharmaceutical industry is also highly competitive, and any company will defend its price based on the need to continue funding research for new drugs, medications, and therapies. While it does serve to keep prices high, which means that Xtandi is a huge cost for individuals looking to manage chronic or life-threatening conditions.
Effects on Patients and Treatments for Affordability
The price of Xtandi and similar medications can severely impact patients, especially patients who do not have sufficient insurance coverage. Lots of patients have to make tough decisions about essential medications vs. other essential living expenses. This, eventually, will result in worse health outcomes or make someone choose not to take that medication at all.
To offset the prices of Xtandi, programs do exist. There are manufacturer-sponsored assistance programs, patient advocacy groups, and some insurance programs designed to make the cost of Xtandi more manageable. Although these programs can help sufferers, a lot still needs to be accomplished to make medications like Xtandi affordable for everybody requiring treatment.
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Final Words
Xtandi's price is influenced by a number of factors, including but not limited to the cost of research and development, patent protection, lack of competition, insurance coverage, marketing expenses, and profit margin for pharmaceutical companies. While there needs to be development costs that help patients get access to life-saving medications, these factors can also result in drugs such as Xtandi being too expensive for many patients to access.
At the end of the day, finding the right balance between reasonable pricing and accessibility is vital in ensuring that patients can get access to Xtandi without the financial burden. For the time being, it is very important, first, for the patient to check out all available assistance programs, and second, to engage with their health care providers to ensure that the patient pays the least amount of money for this important medication.
