The Cost and Value of Cancer Medicine

Faculty Presenter
Bernardo H.L. Goulart, MD, MS, University of Washington/Seattle Cancer Care Alliance, Seattle, Washington, USA

Scholar Summary

Authored by Devika Rao, MD Albert Einstein College of Medicine/Montefiore, Bronx, New York, USA

In this era of precision medicine, ballooning expenditures for new medical technologies tend to be overlooked as we strive to provide "cutting edge" care to our patients. In this talk by Dr Bernardo Goulart, the cost of cancer care was shown in light of outcomes, which help define its value. The concept of ICER - Incremental Cost Effectiveness Ratio – was introduced against the background of trends in cancer care expenses across the globe. Perspective was gained through a discussion of the trends in drug approval over the past two decades and their impact on patient outcomes. Impact of costs on patients and caregivers was highlighted as a "financial toxicity" which is a significant barrier to optimal care. CAR-T cell therapy was used as a model to demonstrate the disconnect between cancer care costs and patient outcomes. It appears that the market will be unlikely to bear the financial burden of cancer care in the long term. While historical causes for this were touched upon, the potential solutions Dr Goulart put forth were the highlight of his talk: 1. Precision medicine, 2. Clinical care pathways, 3. New reimbursement models, and 4. Drug pricing policy. The need for major political will and culture change were acknowledged, and it was accepted that there would need to be complete overhaul of the current economic drivers in cancer drug development. The talk ended with the role academic physicians can play by taking on projects that create value but are not prioritized by industry. This could be the much needed game changer in ensuring sustainability of personalized cancer care.

Scholar Summary

Authored by Dominic Moon, MD University of North Carolina, Chapel Hill, North Carolina, USA

Dr. Goulart gave an interesting presentation on the value of cancer medicine. He first defined “value” as incremental benefit in outcomes over the incremental change in cost compared to the best alternative or standard of care. Explicitly defining “benefit” is often difficult, and different measures have been used, including survival, quality adjusted life years (QALY: survival weighted for quality of life developed in the United Kingdom by NICE), net health benefit score (ASCO), and magnitude of clinical benefit (ESMO). Value can also differ based on the perspective; society, payers, patients, and providers may each have different priorities of what is deemed valuable.

Then, he went on to discuss why we should care about value in health care, and cancer medicine specifically. Cost of cancer drugs in the United States is extremely high; the US has the highest per capita spending in the world. Spending on cancer drugs in the US accounts for 40% of global spending in this category. Often times, the FDA-approved drugs improve overall survival in the order of 2 months with a monthly cost of approximately $10,000 in 2010 compared to just $100 in 1970. Financial toxicity is not only a burden for the society at large, but it can also directly impact the outcomes for patients. Cancer patients are 2.5 times more likely than matched non-cancer patients to file for bankruptcy, and filing for bankruptcy among this cohort is associated with worse overall survival.

Dr. Goulart attempted to refute some common reasons people describe for the high cost of cancer drugs. First, some believe it is a fair price of innovation. He showed data demonstrating that revenues at pharmaceutical companies, on average, outweigh the R&D costs for the drug, and the drug prices for the same indication often increase at a faster rate than inflation. Drugs that are similar to others, i.e. not a “first in class” drug, are often priced similarly to the first in class medication, decreasing the incentive to innovate. Second, he referred to a misconception that demand drives the cost, i.e. pharmaceutical companies are simply setting prices based on what the market will bear. He discussed how this can only be true in a perfect competitive market, which the drug market is not. In fact, the current laws and regulations often lead to what resembles a monopoly with significant information asymmetry.

He concluded by suggesting a few potential solutions to the increasing financial burden of oncologic medications.

  • Better science that enables precision oncology, in which we can select for patients who will truly benefit from a drug, can reduce waste.
  • Cancer care pathways with evidence-based treatment decision-making, reduced variations in practice, and improved quality of care can also decrease overall costs while maintaining excellent outcomes.
  • Value-based drug pricing policies, in which the price of the drug is linked to a demonstrated benefit in individual patients, may also aid in setting fair prices.
  • Finally, new payment models such as accountable care organizations constructed in a thoughtful manner can help curb overall costs.

Dr. Goulart encouraged the Forum participants to consider the value in both our clinical care and our research endeavors.

Scholar Summary

Authored by Christopher LaRocca City of Hope National Medical Center, Duarte, California, USA

For his second session, Dr. Bernardo H. L. Goulart discussed the cost and value of cancer care. He began by defining value as a change in outcome with respect to cost. Outcomes can be measured in many ways, including survival, quality adjusted life years, net health benefit score, or the magnitude of clinical benefit. The costs can be paid by society, insurance payers, or the patient’s out of pocket costs. He also noted the relationship between value and cost effective analyses where the incremental cost effectiveness ratio (ICER) is the difference in cost between two interventions divided by the difference in their effects. The discussion of value is particularly relevant because the US spends markedly more on cancer drugs than any other country, but the resulting mortality outcomes in the US do not necessarily correlate with these expenditures (as the US cancer mortality rates are not always superior to those of many other first world nations). Additionally, as the price of drugs has increased in recent years, there is an element of financial toxicity at play, whereby cancer patients’ rate of bankruptcy is higher than that of non-cancer matched controls. He went on to use CAR-T cells as an example of an expensive treatment ($475,000 per treatment plus associated medical costs of managing adverse events) in which there may be a discrepancy between drug benefits and costs in certain patient populations. He related that drug pricing does not incentivize competition between pharmaceutical companies and used the monthly costs of select checkpoint inhibitors ( ~ $14,000) as an example. Next, he mentioned multiple reasons for market failures in oncology drug development. The first cited example was political, which included pharmaceutical industry lobbying, patent laws, and the inability of Medicare to negotiate drug prices. The second cause of these market failures was misaligned incentives, for which the example of the “buy and bill” model was given. He indicated that the final cause of these market failures was information asymmetry, whereby patients and caregivers have misinformation about the benefits versus costs of cancer treatments. In conclusion, as potential solutions to these difficulties, he cited the use of precision oncology (e.g. using multi-gene panel sequencing and biomarkers to guide treatment decisions), cancer care pathways, adjusted reimbursement models, and new drug pricing policies.

Scholar Summary

Authored by Diego Herrera, MD, Albert Einstein College of Medicine/Montefiore, Bronx, New York, USA

Dr. Goulart gave an exceptional talk presenting his perspective and research on the cost and value of oncology drugs, particularly in the context of increasing use of novel drugs and treatment modalities for the routine care of cancer patients.

He started by reviewing the definition of value in cancer care according to different expert societies and describing the available strategies to quantify and study value in cost-effective analysis. Dr. Goulart then made the argument as to why this is an important topic in modern oncology; it is due to a disconnect between drug benefits and cost, with many available high-cost new drugs only associated with limited clinical gains. He also introduced the concept of financial toxicity and explained how cancer care costs impacts the finances of cancer patients.

After defining the necessary concepts, he explored and commented on the causes of the high cost of cancer drugs, offering his own perspective and calling into question the common belief that the pricing of oncology drugs reflects the cost of scientific innovation. He provided examples of drugs in the same family with similar indications that continue to rise in price despite not establishing innovation in the field or providing significantly better clinical results. Dr. Goulart suggested that the existing drug pricing arrangement does not incentivize competition due to inability to fully apply the rules of a perfect open competitive market to oncology pharmaceuticals.

Finally, Dr. Goulart summarized what he considers the market failures in oncology drug development and presented potential helpful solutions and strategies that we can adopt as researchers interested in drug development. His perspective and expertise in the subject was extremely helpful to the understanding of real world economic issues that will undoubtedly be needed for a successful academic career in a drug development program. His talk helped us understand how investigators can contribute to the resolution of economic problems in cancer patient care by guiding drug development with better scientific proposals like precision medicine and understanding of cancer biological pathways.

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