Value-Based Care Tackles Oncology Costs


Oncologists are under intense pressure to come up with cost savings-and many are turning to value-based care structures.

Cancer ribbons

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.

Growing scrutiny

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


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).

Related article: How to Successfully Transition to Value-Based Care

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.

According to a recent Integra Connect survey, over half of survey respondents, representing approximately 530 community oncologists, believe receiving better data from pharma about treatment costs (25%), and care quality and outcomes (29%) will help them make more informed decisions about treatments and novel therapies. Forty percent stated the existence of a value-based reimbursement schedule is the number one driver that would incentivize oncologists to prescribe a novel therapy.

With oncologists facing increasing pressures to find new ways to reduce the total cost of care, value-based programs are becoming especially attractive to this specialty.

The new era of drug pricing: value-based contracting

For physicians and payers, the influx of novel therapies, particularly immunotherapies and the accompanying requirement to test for genetic markers, adds to cost and complexity of treating patients across different cancer types. It should come as no surprise, then, that payers are increasingly limiting approvals for high-cost drugs to the FDA label, thereby restricting off-label use. Value-based contracting, which ties reimbursement to both short-term and long-term efficacy, offers a unique opportunity to share in the cost savings generated by the on-label use of drugs and expand access of novel therapies to the right patients at the right time.

These innovative arrangements are best suited to therapies where patient populations and clinical end points are well defined, such as oncology, for which therapies have clear and measurable near-term and long-term outcomes.

Related article: Eight Predictions for Cancer Care in 10 Years

Unfortunately, adoption barriers persist, including the lack of technology and infrastructure to track and measure outcomes; growing concerns around patient privacy; misaligned incentive structures; and legislative hurdles, to name a few.

That said, while the industry is still at an early stage, according to the PWC Health Research Institute 2017 Pharmaceutical Executive Survey, biopharma executives who have participated in value-based contracts have felt successful and plan to sign more.

While stakeholders across the healthcare ecosystem are taking significant steps to improve overall costs of care, from deploying enhanced services to reduce unnecessary hospitalizations to promoting more transparency, we still have a long way to go. To truly move the needle, aligning incentives-and accountability-across the industry will be paramount.

Dr. Jeffrey Scott is the Chief Medical Officer at Integra Connect where he oversees the development of all clinical products, content and services, enabling community-based oncology practices to optimize the value of care delivered.

Ash Malik is the President of the Life Sciences Division at Integra Connect where he is responsible for designing data and analytics-driven solutions that enhance the products and services offered to patients and physicians by pharmaceutical and genomic-based life science companies. 

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