Aiming for Value Over Volume in Cancer Drug Spending

Each June, more than 35,000 leading scientists, academics, oncologists, and other stakeholders gather in Chicago, Illinois, for the American Society for Clinical Oncology (ASCO) Annual Meeting. The event has traditionally been a place to reveal potentially practice-changing results from clinical studies, but ASCO has, in recent years, focused attention on a related topic: the ever-increasing cost of cancer care.

This year, attendees may have even more to chew on as they consider cancer drug pricing because the meeting comes only weeks after an expert panel, appointed by President Donald Trump, released a report on the topic, Promoting Value, Affordability, and Innovation in Cancer Drug Treatment.¹

Although the report didn’t break much new ground, it serves as an important reminder of what we have at stake and how stakeholders need to work together to put patients at the center of all health care decision making.

As the report notes, and as ASCO attendees understand well, “innovations in cancer therapy, particularly in the development of targeted drugs and immunotherapies, hold remarkable potential to transform treatment of the disease.”

However, breakthrough medicines can work only in patients who are able to access them.

The cancer panel’s study focuses much of its attention on what it considers high list prices for therapies. The cost of medication to the patient certainly is a legitimate topic of discussion and is frequently compounded by hospital markups and the byzantine system of rebates and fees accrued within the drug supply chain. Focusing solely on this 1 slice of health care spending not only misses the point, but it also misses the opportunity to fundamentally make the system more efficient without sacrificing improved outcomes.

That’s not a simple task, and it is even more complex in the case of cancer, for which physician visits, diagnostics, surgery, and medical treatment all connect in subtle and critical ways and the personal and societal challenges and costs are meaningful. But that is the level of analysis needed to help us deal with the most important questions regarding how we invest our limited resources.

To the authors’ credit, the report touches on several recommendations that are already in use or being tested by stakeholders as a way to address spending and access concerns. We are very pleased that the report used the National Pharmaceutical Council’s research in some of the critical areas it references for value-based cancer care:

Value-Based, or Outcomes-Based

Contracts Many innovative manufacturers and insurers negotiate value-based, or outcomes-based, contracts,² in which a medicine is reimbursed based on how well it works for a particular patient population. Doing so can reduce the payer’s risk of exposure to failed outcomes and makes treatments more affordable for patients. However, adoption of these contracts has been slow, largely because of difficulty in agreeing on measurable outcomes, lack of required infrastructure, and regulatory barriers. Recently, US Department of Health & Human Services Secretary Alex Azar made it one of his 4 priority efforts to ease regulatory barriers that exist across the health care spectrum, which could accelerate innovative value-based contracting models.

Value Assessment Frameworks

Several groups, including ASCO, have developed value assessment frameworks³ to consider the value of new treatments, which are intended for use by specific end users. Yet most frameworks still fall short in the effort to balance the evaluation of treatment costs with the consideration of benefits to the patient. By not incorporating the full value and benefits of medical innovation, as well as the patient’s input, frameworks will fall short of the goal to meaningfully assess value. On the other hand, the development of flexible, transparent frameworks, in which providers and patients understand how value is being measured, offer the opportunity for more thoughtful decisions about treatment.

Incentives to Use High-Value Medicines and Minimize Out-of-Pocket Costs

With a greater number of insurers offering high-deductible health plans, out-of-pocket costs have been increasing for consumers in recent years.⁴ Results from studies have shown that those costs fall particularly hard on low-income consumers, causing them to skip treatments or postpone care.

In response, some insurers and government programs, such as Medicare, have been testing value-based insurance design (V-BID),⁵ which is intended to give patients an incentive (or in some cases eliminate a built-in disincentive) to use high-value medical services. Like many of the other solutions proposed, a move to V-BID could change medicine for the better but only if it is grounded in a strong evidence base, with enough flexibility to ensure that no patient is left behind.

Another consideration—not as much in oncology—is to lower or reduce out-of-pocket costs for patients who need higher-cost treatments based on their biology or genetics.⁶ This approach recognizes that patients shouldn’t be penalized for “bad luck” and aligns costs with the benefits of a treatment.

Meaningful Communication

Transparency is an important concern, especially in oncology. Given the vast number of available health insurance plans, it is challenging for both physicians and their patients to know whether a particular oncology treatment will be covered. Similarly, many insurers and health systems use care pathways, also known as clinical pathways or integrated care pathways,⁷ as a method to manage patient care based on clinical practice guidelines.

Patients are often not aware that their treatment plans follow a care pathway. They may also be unaware whether the clinical practice in which care is being delivered is subject to pathway-related incentives. We need to increase transparency to ensure patients are armed with the best possible care and coverage.

The report also highlights the need for market competition and investment in biomedical research, both of which are important factors in driving innovation for the development of oncology treatments and for other complex conditions. Ensuring a robust environment that balances continued innovation and access is vital, not only for patients but also for the health system as a whole. “This complex problem will not be solved quickly or easily, and it will not be solved by any organization or sector working alone,” the report concludes. “The Panel urges all stakeholders—drug developers and manufacturers, policy makers, government, public and private payers, health care institutions and systems, providers, and patients—to work together to address rising costs and ensure that patients have access to innovative, high-value, and affordable cancer drugs.”

We could not agree more with that sentiment. This is a conversation we all should welcome, not just during ASCO’s once-yearly meeting but all the time.