The Importance of Payment Reform in Cancer Care

In an interview with Pharmacy Times® at the Community Oncology Alliance (COA) 2024 Payer Exchange, Nick Ferreyros, managing director at COA, speaks about the significance of payment reform in cancer care and the role of state and federal regulations.

Pharmacy Times: What factors regarding payment reform were most significant in your session?

Nick Ferreyros: The core of what we talked about in our session was the impact of public policy and some of the big hot topic issues on payment reform and how it impacts all of the various stakeholders in the system and how they're working together to address it and advance it. Because public policy or bad public policy, it can either fuel or stymie payment reform and efforts to transition to a more value-based cancer care system.

Pharmacy Times: How are state and federal policies impacting factors impacting healthcare costs and payment reform?

Ferreyros: State and federal policies have a tremendous impact on payment reform and the transition to a value-based cancer care system, whether it's site of service, working in hospitals and dealing with consolidation and then what comes off of that, whether increasing costs, 340B markups, et cetera, or it's pharmacy benefit managers and the impact on the overall access to system. Then you also can get into things such as insurance regulation and how that impacts patients being able to access the right drug and right treatment in the right time, in the right place for their unique situation. So all of this big, systemic world of public policy can have a really big impact on payment reform and cancer care and the cancer experience and how much we're spending on that system.

Pharmacy Times: How are federal and state policies shaping prior authorization requirements for hospitals and physicians?

Ferreyros: Prior authorization requirements and all of insurance regulation, whether it's the laws or actually enforcing the laws as written, have a huge impact on value-based care and the patient experience. Because at the end of the day, a law is only as good as how it's enforced. what happens when you throw up all of these big burdens on the system of prior authorization and other utilization management challenges, of which a recent study we talked about on stage, 81% of all care denials are ultimately overturned. When you do that, you are creating just this incredible layer of friction within the system and increased cost, and that is not good for anybody. It costs more. There's an administrative and overhead cost. There's a patient cost that's either measurable in dollars and cents or just in their lived experience of pain and suffering. So overall, you have this entire process that can be improved upon. And that's what we're trying to do here. We're trying to bring all the stakeholders together, the people who pay for care, the people who deliver care, the people who get the care. To talk about how we can work together to make the cancer care system better.

Pharmacy Times: What are some of the key regulatory challenges in managing PBMs?

Ferreyros: Pharmacy benefit managers, we like to talk about as like playing “Whack-a-Mole.” You have your core set of issues in front of you that you want to address, whether it's spread, pricing or formulary management challenges, but then you have all these different other games that come up where they start redistributing the fees and changing names and changing how they do their business. PBM regulation is going to be one of those things that I think the rest of my career is going to be here, trying to navigate right now. I think the biggest one that's on the table that's most likely to happen at the federal level is transparency and trying to really understand where the dollars are flowing, what the ownership structures are and how they're impacting patient experience. And then you go into the bigger things, where you're banning spread pricing, where they buy low, sell high, and keep the margin in that or rebate pass through in the whole system, there's a there's multifaceted ways of approaching PBM regulation. There's probably three, close to 300 bills in the States, 35+ in the US Congress that we're tracking right now and tackling PBMs from all sides. But realistically, we're most likely going to see transparency coming down the pike this year.

Pharmacy Times: What are the most significant policy changes that need to happen to reduce the administrative and financial burden on hospitals and improve payment reform efforts?

Ferreyros: The financial burden of cancer care in our country is not a 1-party problem. It's not one something we can just say, “oh, it's the PBMs fault, or oh, it's the manufacturer's fault, or the hospitals.” We all need to come together at the table to figure out a holistic solution to our problems and how we can work together to make a system that gets the right drug to the right patient at the right time in the setting that is best and most convenient for them. And that's part of what we're doing here at the payer exchange Summit. We bring all the stakeholders together to talk about the problems and the challenges we're facing, whether it's prior authorizations, whether it's pharmacy benefit managers, whether it's other barriers and challenges to how we get to that value and quality equation and ultimately reduce the cost. Because 30% of our health care spending goes to hospitals. We have hospitals in the 340B program, marking up drugs at 5 times. You have pharmacy benefit managers here that are doing spread pricing with drugs. So, you have a lot of actors in the system that are making a tremendous margin just on marking up drug costs, let alone all the other issues that are there. And at the end of the day, when the patient is at the counter or gets that that invoice in the mail from their provider, all of that doesn't matter. It's what comes down at the end of the pike. So, we need to come together and say, “okay, you are doing this bad thing and you are doing that bad thing. And we all need to figure out a solution where we can work [together] because we're spending more and more of our dollars on health care and on health insurance and on cost sharing in the system, and the patients and the public do not feel like they're getting the benefit of that.” So that's why things like the COA payer exchange summit are so important, because it's creating a forum where we can all talk together about solutions and work to find that common ground that will reduce costs.