December 2016 Vol 9, Special Issue: Payers’ Perspectives In Oncology: AVBCC 2016 Highlights - Value in Oncology
Wayne Kuznar

Washington, DC—Although significant advancements in oncology research, development, and treatment have improved cancer care, they have been accompanied by rising drug costs, and differences in drug availability and delivery worldwide. These trends will continue into 2020, according to Douglas Long, Vice President, Industry Relations, IMS Health.

More than 20 tumors types are being treated with drugs that have launched in the past 5 years, including new molecules or agents with new indications. “I think this shows tremendous progress. Probably the most significant example of this is the immune-oncology drugs,” said Mr Long at the Sixth Annual Conference of the Association for Value-Based Cancer Care.

The oncology drug pipeline is growing, with 586 therapies (developed by 511 pharmaceutical companies) in late-phase clinical trials. This clinical development has expanded by 63% in the past 10 years (Figure 1).

Figure

“As you would expect, the top 10 oncology companies worldwide are in the marketplace, but you have other large pharmaceutical companies in the market,” said Mr Long, adding that smaller pharmaceutical companies are also contributing to the oncology pipeline, but are being bought out by bigger pharmaceutical companies to commercialize their drugs.

In 2015, the median time from patent filing to FDA approval for oncology drugs was 9.5 years, an improvement over the 10.25 years it took in 2013.

Who Offers the Latest Treatment?

Although remarkable discoveries are hitting the market, patients in only 5 countries (United States, Germany, Italy, France, and Canada) and the United Kingdom had access to at least 50% of the 49 new oncology drugs that were launched between 2010 and 2014. Other countries’ restricted formularies create access issues for new oncology drugs; therefore, increased drug costs are attributed to the expanded use of older drugs and the incorporation of new oncology treatments.

“There’s an issue when you try to globalize your oncology portfolio, which is that some countries may not be willing to take these on, because they’re more expensive than they’re normally used to. They would blow a hole in their budget, so this is a real issue,” Mr Long said.

Targeted treatments, including immunotherapies, biologics, and small molecules, are more likely to be offered in North America, Western Europe, and Japan than in Eastern Europe. Regardless of whether they are commercially available, not all cancer drugs are reimbursed across the world (Figure 2). The United States leads the developed markets in the wide and early adoption of new, targeted cancer treatments.

Figure 2

“If you’re going to have cancer, probably the best place to get treated is the United States,” he said.

Cancer Drug Costs Rising Globally

In addition to drug accessibility issues, the global costs of oncology therapies and supportive care drugs increased by 11.5% to $107 billion in 2015. The United States accounted for 46% of this total global drug cost, up 39% from 2011. The US cost of oncology drugs increased 73% in the past 5 years, from $21.9 billion in 2010 to $37.8 billion in 2015. This increase was affected by multiple factors, including costs associated with new therapies, branded volume, branded price, loss of exclusivity, and generic drugs.

Pricing concessions that are made by drug manufacturers also affect drug pricing, including mandatory and negotiated rebates, discounts, and patient cost offsets, which are reducing manufacturer-realized net price growth compared with the invoice price.

Nevertheless, the cost of oncology drugs is expected to increase through 2020, with cancer drug prices expected to increase 7.5% to 10.5% annually. By 2020, the global oncology market will total $148 billion to $178 billion. The US market will comprise $79 billion of that portion, up from its current $49 billion. However, the United States is not the most expensive country in terms of oncology drug cost as a proportion of the overall drug cost; this proportion remains higher in Germany, France, Italy, the United Kingdom, Spain, and Japan compared with the United States, where oncology drugs represent approximately 11.5% of the overall drug cost.

To understand the personal cost to patients, the average annual total treatment costs for patients who received active cancer treatment reached $58,097 in 2014, a 19% increase from 2013.

Who Pays?

Although Mr Long recommended a redesign of the Medicare system for reimbursing oncology drugs, he said that payment is also affected by hospitals’ acquisition of outpatient clinics. “We know that it costs far more to do something in a hospital than it does in a local oncology practice, so that’s a big issue,” he said.

Advancements in the compounding of oral oncology drugs have resulted, in part, in their availability in retail pharmacies, including a 28% increase in oral targeted drugs between 2011 and 2015. Although more than 75% of oncology drug spending is through hospitals, retail still experienced a 17.5% growth in oncology drug spending between 2011 and 2015.

“In the United States, more than one-third of the costs are from medicines available at retail pharmacies, up from 25% just 10 years ago,” said Mr Long.

Despite the retail growth and costs of administration in US hospitals, as oncology drugs become more expensive, they will leave the retail channel and enter the hospital channel.

Integrated Delivery Network Affects Cancer Care

The delivery of cancer care in the United States is shifting to integrated delivery systems; with 70% of oncology providers affiliated with an integrated delivery network in 2015 compared with 57% in 2010. The level of network integration varies greatly by state, with greater use of integrated delivery networks in more urbanized areas of populous states.

In addition, the ownership of oncology medical groups is shifting, as these practices are getting acquired and integrated into larger hospital systems.

“I think a contributing factor to this was the change of reimbursement, which has taken the incentive out for the oncologists to handle an oncology practice,” said Mr Long. “It makes them more susceptible to sell out to a large hospital system and become an employee of that hospital system,” he added.

Therein lies a paradox—although oncologists benefit from joining a hospital system, the costs associated with the delivery of oncology drugs in that hospital system are increased, which will affect the future growth of oncology.

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