A good report from Eye for Pharma on oncology drugs. While nearly every division of the industry has come under fire because of high healthcare costs, one therapeutic area that has continued to win premium reimbursement is oncology. Historically, cancer drugs have enjoyed premium pricing and widespread off-label usage because of their designation for patients with generally incurable diseases. Furthermore, new drugs have been rapidly adopted despite weak clinical evidence and overall questionable value. Thus, it is not surprising that spending on these drugs in the U.S. has risen at twice the rate of total drug spending in recent years. Is this about to change?
Rising drug costs have led many countries, including Canada, Australia, Scotland, England, and New Zealand, to rely on cost-effectiveness analysis (CEA) to inform decisions.
A recent illustration of a negative reimbursement decision based on lack of cost-effectiveness evidence comes from the UK, and involved bevacizumab (Avastin). The oncology drug was determined to be “not recommended as a treatment for a type of recurrent, advanced ovarian cancer”, according to the latest draft guidance (April 2013) published by the National Institute for Health and Care Excellence (NICE). According to health officials, while bevacizumab “may help to delay a person’s cancer from spreading for a few months… it does not represent good value for money for the NHS.”
Public payers in other E.U. countries such as Germany and France still consider the cost of new drugs, but place a much greater emphasis on a product’s added clinical benefit against a specific appropriate comparator. Companies that demonstrate that their drug is effective in terms of relevant outcomes for the patient are awarded reimbursement at a reasonable price.
In the United States, the comparative-effectiveness and cost-effectiveness evidence that is required in the EU and other countries has not hitherto been typical. Historically, cancer drugs have enjoyed “special status” because they are used to treat patients with generally incurable diseases whose life expectancies are often measured in months.
However, as the result of an aging population, significant therapeutic innovation, and increasing patient survi– vorship, the costs associated with cancer treatment in the US have skyrocketed over the past two decades. With more than 950 unique medicines and vaccines in clinical testing as of 2012 (see Figure 1), the cost of cancer therapeutics is expected to continue growing at more than 20% annually over the next few years.2,3 New products and increased spending on treatments, however, have not always resulted in significant improvement in patient survival rates.
Demonstrating value is about more than just managing drug costs. The emergence of the value discussion in oncology is part of a broader debate around the quality of cancer care, access to treatments, and changing stakeholder expectations.
As such, manufacturers should expect oncology to be treated by payers no differently than other diseases, especially with the arrival of key generics and biosimilars. Essentially, payer management will become more restrictive, and new treatment coverage decisions will be based on the demonstration of measurable value.
In the United States, drug coverage and reimbursement for approved oncology indications has been virtually assured. Medicare is required to cover all on-label indications, and has limited ability to control pricing for patented drugs. Additionally, Medicare covers off-label applications included in various compendia. Although the laws vary by state, commercial payers often have more flexibility to restrict access in the off-label setting by requiring preauthorization or large co-pays for high priced drugs.
A recent report from the Institute of Medicine (IOM) emphasized that cancer care in the U.S. is in crisis, largely attributed to poor coordination of care, lack of evidence-based medicine (EBM) care paths, inconsistency in treatment, and accelerating costs.
Payers require more companion diagnostic tests before approving certain therapies in an effort to focus expensive drugs on the most appropriate patients. “The ability to avoid the unnecessary adminis- tration of expensive therapies — which can cost upwards of $10,000/month or more — that will provide no clinical benefit and may incur a lot of side effects (and even ER or hospital visits) provides tremendous opportunities for cost savings to plans and to the overall healthcare system, so there’s a lot of interest in this,” adds Dr. Michael Kolodziej, national medical director for oncology solutions for Aetna. Kolodziej also warns manufacturers that as premium- priced oral cancer drugs continue to penetrate the market, PAs and companion diagnostic requirements become an even greater access barrier for these products; “With these two drivers in place, many community oncologists have been less willing to prescribe oral oncolytics when a suitable IV option exists.”
How Oncology Drug Makers Can Meet Increased Demands
Incorporate Economic and Clinical Value into R&D – As new oncology products are developed, R&D teams must ensure that economic and clinical value considerations relevant to payers and other stakeholders are incorporated into product and clinical study design.
New products should be evaluated based on their potential to improve current treatment regimens, save costs and improve outcomes.
Develop Sales and Marketing Strategies to Account for Healthcare Consolidation – As payer organizations become more powerful, and decision-making moves further from physicians, there is increasing pressure on commercial teams to identify key stakeholders and develop messages, including economic messages, that target their specific needs. Specifically, manufacturers should focus on creating strategic sales teams directed at evolving healthcare delivery models (e.g. ACOs and bundled pricing) and payers. These new sales team must be capable of strategic conversations and joint problem solving (versus feature and benefit discussions).