The Cancer Racket

The House always wins. The supply and demand distortion that turned Cancer into a market failure.

Cancer. Just the word elicits an emotional response. We’ve all either faced it ourselves or supported someone who has. Unlike diabetes, heart disease, or even other serious conditions like lupus, cancer holds a unique place in our collective psyche - and understandably so. Each year, two million people are diagnosed, and it remains the second leading cause of death in the U.S.

Siddhartha Mukherjee calls it the Emperor of All Maladies, and the war against it has given us undeniable heroes: oncologists, miracle drugs, and breakthrough discoveries.

But there’s also a seedy underbelly.

Cancer is a leading driver of medical bankruptcy in the U.S.; 1 in 2 survivors report going into debt. 82% of employers name cancer as the number one factor driving healthcare costs. Nearly half of Medicare beneficiaries with cancer receive aggressive treatment in their final months—often with worse quality of life and little impact on survival.

It doesn’t have to be this way. But to fix it, we must confront the truth: cancer has become a racket.

Rackets - whether they involve protection schemes, loan sharks, or smuggling rings - survive by manipulating supply and demand to artificially drive up price and control the market. The cancer industry is eerily similar.

Manipulating Demand

Cancer brings immediate fear, urgency, and uncertainty. That’s all the “marketing” the system needs. The promise of survival becomes the ultimate product, and we (patients, families, and doctors) will pay anything for a shot at it.

This dynamic breaks normal market checks:

• Insurance must cover almost any FDA-approved cancer therapy.

• There’s little price sensitivity - to question cost feels morally wrong.

We assume these therapies are rigorously reviewed, actually work, and are better than what came before.

But many cancer drugs today are approved based on surrogate endpoints, not survival or quality of life. Tumor shrinkage or molecular response often stand in for quality of life and longevity.

Take Ayvakit, approved for gastrointestinal cancers based on tumor shrinkage. It costs nearly $400,000 per year. Or Keytruda, which has clear survival benefits in some cancers, but is increasingly approved for others via biomarker responses or cross-over trial designs (where control patients eventually receive the drug too, muddying survival comparisons).

You know what is insidious? Many of these drugs are designed for chronic use, with no clear stopping point. Keytruda runs about $150,000 a year, often indefinitely. Once you’re on it, you're on it for life. I guess the cartels can teach us something.

Manipulating Supply

Patent and Regulatory Games

Drugs get 20 years of patent protection from the time of discovery—but most of that is burned during R&D and approval. So the real monopoly window is 8–12 years. But pharma companies game the system with “patent thickets”: filing dozens of follow-on patents for minor tweaks.

Take Imbruvica, used in chronic lymphocytic leukemia. Its original patent was set to expire in 2026, but the company filed 88 additional patents, extending exclusivity well into the 2030s. By the way it costs $13,000/month.

Cancer drugs also get extra exclusivity through specific regulations. The Orphan Drug Act allows an extra 7 years of marketing rights to incentivize creation of drugs that affect less than 200,000 patients. Cancer is unique since most larger categories (Multiple Myeloma) can be carved up into small subtypes (IgA lambda, IgG kappa) to get the orphan status. Also for each new indication for a new cancer subtype, FDA will grant 3 years of additional exclusivity.

PBMs and Rebates

Pharmacy Benefit Managers (PBMs) lower the supply of generic cancer therapies and increase the supply of higher cost branded therapies. Ideally, PBMs aim to help insurance companies build formularies and negotiate better drug pricing. But in reality, pharmaceutical companies offer rebates to PBMs for using certain branded medications (which PBMS keep a cut of), and therefore make generic medications harder to get through mechanisms like prior authorizations.

Take Herceptin, a biologic used in breast and gastric cancer. It costs ~$70,000/year. Several biosimilars (cheaper, equally effective versions) entered the market, but didn’t reach patients. Why? Genentech offered massive rebates to PBMs to keep Herceptin on top-tier formularies.

Infusions = $$

Cancer infusions, especially IV chemo and immunotherapy, can be administered in:

• Community practices

• Hospitals

• Physician-owned infusion centers

Where you get infused often depends on who profits.

Physician-owned centers are booming. Thanks to a Stark Law loophole called the “In-Office Ancillary Services Exception”, doctors can refer patients to centers they own - getting a little extra green foam on the top.

If you’re treated at a hospital-based center? Costs are even worse. Remicade, used in cancer and autoimmune diseases, can cost $10,000+ per infusion in hospitals, versus $3,000 in a physician's office.

The Contrarian Prescription

You don’t reform a racket - you bust it up, the way we did with Jimmy Hoffa and the Teamsters. We need transformational change in this system, otherwise the sickest and most vulnerable patients will continue to be taken advantage of.

Here’s my take:

1. Simplify Demand

We need an emotional and clinical reframe around cancer.

• Introduce palliative care earlier - to define goals of care, not just next steps. Right now, 30% of all cancer spending happens in the last 6 months of life. And the associated quality of life is often low.

• Shift research incentives toward outcomes that matter: survival and quality of life, not molecular proxies. That is what the people want.

2. Simplify Supply

The current market is anything but free. It’s a maze of subsidies, middlemen, and regulatory gamesmanship. But also, I don’t think pure free market economics can work here. We still can simplify government subsidy intervention.

• Government investment in early-stage innovation tied to price ceilings. You want public funding? Cap the price.

• Redirect subsidies and rebates to patients directly, rather than intermediaries. As I’ve argued before, shifting power to individuals is the only way to break the grip of entrenched players.

• Boost transparency and accountability at every stage, from drug development to pricing to PBM negotiations. Think Lina Khan at the FTC, but going after healthcare: market discipline with moral clarity.

Cancer may always be the Emperor of All Maladies, but emperors don’t rule unchecked forever. The cost of treating cancer - financially, emotionally, morally - can be fixed. We just have to bust up this racket.