Oncology spending has grown unabated for years, with systemic cancer costs forecast to grow by as much as 40% from 2010 to 2020, reaching $173 billion, according to Community Oncology Alliance (COA). While this growth can be attributed to improved longevity, earlier detection and changes in care settings—such as the increased use of hospital settings for patient care in lieu of less-expensive, community-based settings—novel therapies continue to remain a primary cost driver. From 2011 to 2016, 68 approvals for new cancer therapies across 22 different cancer types have increased the oncology drug spend in the US by 73%. In short, as the proliferation of novel therapies increased, the rising cost of cancer therapies remains unabated, reaching an average monthly price of $10,000 in 2015.
To address the rising cost in cancer care, the Center for Medicare and Medicaid Innovation (CMMI), developed a new payment model, the Oncology Care Model (OCM), to improve the quality and efficiency of cancer care by requiring participants to deliver care management and coordination, and generate sustainable cost savings. The OCM officially launched in July 2016 with more than 190 participants representing nearly one-third of community-based oncology practices across the US. It has recently entered its third year and, while participants have been closing the cost gap on average, optimizing the use of novel therapies remains a challenge.
According to an Integra Connect analysis of OCM participants’ claims, Part B and Part D drugs account for nearly 60% of the total costs of cancer care, followed by ER visits and inpatient hospitalizations. As the influx of novel therapies continues to rise and the increase in enhanced patient services reduces ED visits and hospitalizations, the proportion of total costs comprised by drugs is only expected to grow. It is therefore not surprising that oncologists are experiencing surmounting pressure to find new ways to reduce drugs costs.
Due to the increasing impact growing pharmaceutical prices have on financial toxicity, elected officials have taken special interest in addressing these concerns. In May 2018, President Trump and Secretary Azar introduced their plan to bring down prescription drug prices.
To address the continued rise of drug prices, two major subscription drug bills were also recently introduced in the Senate earlier this year: the Prescription Drug Sunshine, Transparency, Accountability and Reporting (STAR) Act of 2019 and the Stopping the Pharmaceutical Industry from Keeping drugs Expensive (SPIKE) Act of 2019. Both bills aim to require manufacturers to justify their per month pricing if a drug price increases by more than 10% or $10,000 over one year or by more than 25% or $25,000 over three years. The bill will also require manufacturers to justify the price of a new drug at launch should the launch price meet or exceed $26,000. The STAR Act of 2019 would also require manufacturers of certain drugs, devices, biologics, or medical supplies to report the value and quantity of samples they give to certain health care providers each year and will require HHS to publicly disclose the aggregate rebates, discounts, and other price concessions achieved by pharmaceutical benefits managers (PBMs).
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While patient advocacy groups support these recommendations, Dr. Monica M. Bertagnolli, President of American Society of Clinical Oncology (ASCO) cautioned, “[I]t is critical that any required reporting in this area be accurate and not impede access for patients, such as those with cancer beginning a round of oral chemotherapy in a physician office.”
Moreover, while increased transparency is expected to incite competition, a step toward reducing costs, drug price transparency alone will not reduce the cost of drugs. It is, therefore, paramount to view oncological care through the lens of value-based care and apply key learnings from the OCM to future reimbursement models, ensuring the delivery of sustainable, value-based and outcomes-driven care for oncology.
Toward value-based oncology care
Success under value-based reimbursement models requires oncologists to deliver high-quality, patient-centered care while sustaining meaningful cost savings. Having exhausted more impactable high-cost areas, such as hospital admissions and ED visits, oncologists are now laser-focusing on drugs to identify incremental cost savings.
While some are opting for lower cost therapies, turning to generics and biosimilars, others are seeking a deeper understanding of drug value and looking to pharma and payers to help them make more informed treatment decisions.