June 2015, Vol 8, No 4 - Industry Trends
Michael Kleinrock
Research Development Director
IMS Institute for Healthcare Informatics
IMS Health
Washington, DC
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Cancer is already the largest clinical area of drug spending in the United States, and a cluster of innovative medicines utilizing new mechanisms of action for patients with a wide variety of tumor types promise to further increase cancer-related spending. New treatments will replace older ones, and some patients will receive multiple targeted therapies and/or will be adding immunotherapies, which are often determined by biomarkers, with the promise of extending lives and improving survival rates fairly dramatically.

There remain substantial challenges for payers and for patients in navigating the increasing maze of cancer treatment options and in addressing affordability at a patient level and at a system level. The concerns about these issues go hand in hand with the growing excitement about new treatments that has escalated in the past few years. The United States is a global leader and can yet learn important lessons from other countries regarding oncology treatments and funding. It is naïve to examine the US oncology market in isolation.

In cancer care perhaps more than anywhere else, we face the challenge of population health versus individual health, because the costs of treating an individual patient can balloon rapidly, whereas the benefits may be only incremental. Funding unlimited treatment choices is increasingly unsustainable. The consequences of not resolving this divide between the individual health and population health will be severe for all stakeholders in the healthcare system, because the gap is only getting wider, and the stakes for ­patients simply do not allow them to consider the common good.

The need for personalized medicines and diagnostics to bring greater precision in treatment selection and innovative funding mechanisms continues to escalate. The successes in cancer research are many, but that concentration of the research focus is creating a set of prioritization and funding challenges that have so far escaped the ability of stakeholders to reach consensus.

Increasing Spending on Cancer Drugs
Based on the recent report from the IMS Institute for Healthcare Informatics, the total global spending on cancer and supportive care medicines reached the $100-billion threshold globally in 2014 (Figure 1), even as their share of the total pharmaceutical spending increased only modestly.1

Figure 1

Oncology drug spending has risen slightly as a percentage of the total drug spending over the past 5 years in all regions, most notably in the European Union 5 countries (ie, France, Germany, Italy, Spain, and the United Kingdom), where oncology now represents 14.7% of the total drug spending, an increase from 13.3% in 2010.1

In the United States, oncology drug spending has increased more modestly, from 10.7% to 11.3% of the total drug spending over the same period. Future spending on oncology medicines through 2018 is expected to increase 6% to 8% annually (Figure 2) compared with the 6.5% level that was seen over the past 5 years, as growing demand for novel therapeutic options are offset to some extent by a new competition from biosimilars and small-molecule generics after patent expirations.1

Figure 2

Measures of value in oncology continue to be tested by payers and providers who, in some health systems, most notably in the United States, have growing concerns about the financial burden faced by patients with cancer. These concerns are reflected in activity ­on social media networks, which patients are increasingly relying on for support throughout their cancer journey. These concerns are also reflected in the actions and statements of leading clinicians, who are now calling for oncologists to consider cost when making treatment decisions. As cancer treatment costs continue to rise, physicians must consider their patients’ financial resources at least as important as their clinical considerations.

Although survival rates and the prognosis for patients with cancer are continuing to improve as a ­result of improved treatments and earlier diagnoses, cancer is hundreds of diseases, not one: cancer remains stubbornly resistant to therapies that use a single mechanism of action. Cancer management requires a “team approach” from a clinician perspective and in relation to the drugs, radiotherapy, and surgical options that are being used. Over the next 5 years, we can expect to see an acceleration in the number of combination regimens being launched for the treatment of cancer (Figure 3).

Figure 3

Personalized Medicine
The largest area of potential leverage in cancer care is the development of personalized treatments and diagnostics that can identify responding patients who have vastly better outcomes than the norm, as well as avoid wasteful medication use in nonresponsive patients. This diagnostic revolution is, of course, not based on definitive biomarker tests, because multiple tests may be used to identify markers, and their results are likely to vary in specificity and sensitivity. Few diagnostics are as definitive as those available for the diagnosis of the Philadelphia chromosome.

The emergence of greater numbers of diagnostics linked to treatments is critical from the perspective of payers and providers as a way to help them navigate the maze of treatment choices, and to help avoid wasteful use of expensive but ultimately ineffective treatments for a particular patient or a cohort of patients.

Access to Care
Patient access to oncology medicines varies widely by country, and closer scrutiny is being placed on value by payers and by patients who may face a growing share of the treatment costs. Overall, the monthly treatment costs have increased 39% over the past 10 years in inflation-­adjusted terms, similar to the 42% increase in overall response rates and 45% increase in number of months that patients with cancer are receiving therapy, which further contribute to the higher overall spending levels associated with improved survival rates.1

In the United States, patient out-of-pocket costs associated with intravenous cancer drugs have risen steeply as a result of the consolidation of smaller group practices into larger hospital systems, which has triggered higher outpatient facility costs that are shared with patients.1

Because patient costs rise faster than incomes, the number of patients who effectively have access to novel medicines is progressively decreasing. At the very least, these patients are making tougher choices about nonhealthcare versus healthcare costs, and at worst they are forgoing lifesaving treatment because of the costs, assuming their access to care was not already limited by payer or provider decisions.

Setting Priorities for Innovation
As we see the continued pace of innovation in cancer care, and stakeholders consider whether the level of innovation is commensurate with the increases in costs, we must finally begin to grapple with choices regarding which cancer treatments to fund and prioritize. Health technology assessment is increasingly being used to judge value for money, but countries differ substantially on the methods they use. The United Kingdom’s NICE (the National Institute for Health and Care Excellence, previously the National Institute for Clinical Excellence) judges value against a £30,000 per quality-adjusted life-year gained by the treatment.1

In isolation, this appears to be a rational approach, but because many cancer drugs do not meet that threshold and yet are strongly desirable from social and political viewpoints, the United Kingdom has created a cancer drugs fund for the expressed purpose of funding access to these drugs, even though NICE has determined them to be too expensive.1 In this important sense, negative assessments of value for money are not the only factor that determines a drug’s value.

In Germany, the Arzneimittelmarkt-Neuordnungsgesetz policy assesses drugs to input to reimbursement discussions, and few pharmaceuticals assessed on this basis have achieved the same level of value across countries.1 France, another leader in health technology assessment policy, uses a drug innovation rating system and then bands reimbursement linked to the level of innovation.1

On the face of it, each country’s approach appears reasonable; however, agreement on the value of a drug, or agreement on which methods to use in determining value, is fairly limited. These issues are complicated by the complex nature of cancer treatments that often have one price but differential value in different tumor types; their value often emerges over time, whereas their price is typically set with the initial approval of the drug.

The lack of transparency regarding drug pricing to different purchasers only exacerbates discussions and questions of value.

In the 4 decades since President Richard Nixon declared war on cancer, rarely has there been a discussion about which cancers to prioritize and which treatments to deem more important. Today, treatments allow multiple lines of therapy for patients, and successive chances to treat their tumors and extend their lives. The cost of treating a patient with cancer includes longer treatment durations as well as multiple treatment modalities, which sometimes far overstretches the existing cost-sharing and funding models. Patients’ share of costs in the United States is often designed to reflect a fair balance, but a percentage coinsurance model, if uncapped, could expose a patient to hundreds of thousands of dollars in costs.

In a single-payer environment, as exists in Europe, balancing access for some patients to innovative drugs with overall health system funding is forcing societal discussions about the value of treatments. For access to these treatments to be fair and equitable, society must balance the appropriate rewards for innovators to keep the flow of treatments coming, as well as the ability of systems and patients to afford these treatments.

As healthcare funding approaches zero-sum game levels, we must also consider population health issues, such as prioritizing some disease treatments over others.

Tough Choices May Limit Innovation
These issues present tough choices, and no single country has addressed these issues of system funding versus patient need. The pressures this will no doubt place on stakeholders will likely result in fewer commercially successful pharmaceutical innovators, and that, in turn, could slow down the flow of innovation.

These are trade-offs that stakeholders must consider, but if we were asked 4 decades ago to choose, clearly we all would choose this problem over a lack of treatments. Now we have to decide how to make the fairest and best use of the available dollars and treatments that have emerged from research laboratories.

Author Disclosure Statement
Mr Kleinrock is an employee of IMS Health, which serves as a consultant to many pharmaceutical companies.

 

Reference
1. IMS Institute for Healthcare Informatics. Developments in Cancer Treatments, Market Dynamics, Patient Access and Value: Global Oncology Trend Report 2015. May 2015.

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