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The racket behind Pfizer's new $9,850 breast cancer drug

Profit not research and development costs are largely behind Pfizer’s expensive new breast cancer pill.

Profit not research and development costs are largely behind Pfizer’s expensive new breast cancer pill.

Laura Robison of Minneapolis used crowdfunding to help pay for Ibrance, a breast cancer treatment drug that hit the market less than a year ago. Robison's disease is Stage 3. She's seeking donations to cover her medical expenses, which add up fast considering the monthly cost for Ibrance is almost $10,000. Key word: almost. 

Ibrance's cost wasn't determined by the research and development costs incurred to get it to market. The sticker price comes in so steep because its manufacturer decided that was the sweet spot, the perfect dollar amount to bring in maximum returns without scaring off insurance companies that must approve its customers' use of the pharmaceutical.

The story of big pharma greed and the introduction of a drug needed by desperate people starts in 2011. 

Pfizer, Inc. knew it had a big pharma cash cow as early as four years ago. Dr. Mace Rothenberg, a scientist who oversees the company's development of cancer drugs, visited its facility in La Jolla, California. The lab trials showed a new concoction brought the progress of breast cancer to almost a standstill when compared to patients taking an older drug.

More encouraging tests fueled further Pfizer investment. Along with clinical trials, Pfizer hired an outside company to interview more than 125 cancer doctors in six cities.

What's the drug's price point? Pfizer's consultant asked.   

Debu Tripathy, then of the Women’s Cancer Program at the University of Southern California, said the drug that would become known as Ibrance compared favorably to an older cancer-fighting med called Herceptin, which cost about $4,775 a month as of 2013. According to Dr. Tripathy, now at Houston's University of Texas MD Anderson Cancer Center, Pfizer staffers countered that wasn't a fair comparison because Herceptin was an old guard pharmaceutical. 

They also surveyed pharmacists and medical directors from more than 80 health plans, and eventually hit on a price  "where patients get the maximum access, [insurance companies] will be OK, and Pfizer will get the [returns] for a breakthrough product,” according to Pfizer executive Albert Bourla

A cost of $10,000 or higher get flagged by insurance numbers, as the high number would require additional paperwork for approval. Pfizer didn't want that.

Pfizer's Bourla last January signed off on Ibrance's price: $9,850. FDA approval came a month later. Roughly 18,000 breast cancer patients have taken the drug already. Early projections suggest Pfizer's financial fortunes will benefit by billions of dollars in annual revenue.

Breast cancer is the second most common cancer for women in the United States. In 2014, almost 233,000 women in the country were diagnosed with the disease, and 40,000 died, according to the U.S. National Cancer Institute.

Despite the high cost, the medical returns on Ibrance aren't as impressive as the financial ones. When 165 postmenopausal women with breast cancer were administered Ibrance in conjunction with a second med, they lived an average of 10 months longer than woman given Letrozole, another approved cancer drug. Letrozole retails for slightly less than Ibrance: $56 for 30 pills