President's Cancer Panel

Promoting Value, Affordability, and Innovation in Cancer Drug Treatment

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Part 1:

The Rising Cost of Cancer Drugs: Impact on Patients and Society

Advances from basic science in understanding the molecular underpinnings of cancer and lessons from the clinical and population sciences are creating new opportunities to treat many cancer types effectively to produce extended remissions and, ultimately, cures. Biopharmaceutical companies are contributing to and capitalizing on this new knowledge. Several new therapies already have changed the cancer treatment landscape. The number of oncology drugs under development—also referred to as the oncology drug pipeline—grew by 63 percent between 2005 and 2015,1 raising hopes that even more effective, potentially curative treatments are on the horizon. However, spending on cancer drugs has strained patient and societal resources and is a major cause for concern, particularly since the number of cancer cases is expected to rise as the U.S. population ages.2 The United States faces the challenge and tension of creating both a robust pipeline of innovative cancer drugs while ensuring that these drugs are accessible and affordable for those who need them.

Cancer Drug Prices Are Increasing

Remarkable scientific innovation has produced a growing number of immunotherapies and molecularly targeted therapies over the past couple of decades. Over the same time period, launch prices of cancer drugs in the United States have increased dramatically, vastly outpacing growth in household incomes since 1975 (Figure 1). There are no signs that this price escalation is slowing. Over half of new cancer drugs approved by the U.S. Food and Drug Administration between 2009 and 2013 were priced at more than $100,000 per patient for a year of treatment.3 In 2015, new cancer drugs ranged in price from $7,484 to $21,834 per patient per month.4

Drugs account for about 20 percent of the total costs of cancer care, but cancer drug costs are accelerating faster than costs for other components of care. While total cancer care costs increased about 60 percent for commercially insured cancer patients between 2004 and 2014, spending on cytotoxic and biologic chemotherapies grew by 101 and 485 percent, respectively, over the same timeframe.5 In addition, annual Medicare spending on targeted oral cancer drugs has increased dramatically, outpacing price increases for medical care and prescription drugs overall (Figure 2).6 Increased spending is the result of higher drug prices, greater use of high-priced drugs, and an increase in the proportion of chemotherapy infusions being done in hospital outpatient settings, which is generally more expensive than administering drugs in physicians’ offices.5,7

Some new cancer drugs have been transformative—significantly improving patients’ outcomes and, in some cases, producing long-term remissions (see Imatinib: Case Study of a Generic Cancer Drug in Recommendation 4).8 Innovative new therapies—such as chimeric antigen receptor T-cell (CAR-T) therapies9,10—also have potential to extend survival for many more patients. High prices may be warranted for drugs that significantly extend survival and/or substantially improve quality of life. Many new cancer drugs, however, do not provide clinically meaningful improvements as defined by the American Society of Clinical Oncology.11 U.S. patients and their insurers are paying more than ever for cancer drugs—$54,100 for a year of life in 1995 compared with $207,000 in 201312—but survival gains for most drugs still are measured in months.11 Prices are similarly high for novel drugs and the “me-too” drugs that often follow,3,13 and prices often increase substantially after launch.14 Market entry of generic drugs has not reliably provided relief from high prices.15-17 The emergence of combination therapies that include more than one high-priced drug will exacerbate the problem.18

Figure 1

Launch Price of New Cancer Drugs Compared with Household Income, 1975-2014

This line graph shows changes in median monthly prices of new cancer drugs and median monthly household income between 1975 and 2014. 
                        Median monthly prices of new cancer drugs increased from $129 in 1975-1979 to $10,059 in 2010-2014. A notable acceleration in price increases is observed beginning in 2000-2004. 
                        Median monthly income remained relatively steady during the same time period, increasing from $4,068 in 1975-1979 to $4,426 in 2010-2014.

Source: Prasad V, Jesus K, Mailankody S. The high price of anticancer drugs: origins, implications, barriers, solutions. Nat Rev Clin Oncol. 2017. Available from: https://www.ncbi.nlm.nih.gov/pubmed/28290490

Figure 2

Price Changes for Targeted Oral Cancer Drugs, Medical Care, and Prescription Drugs, 2007-2015

This line graph illustrates rate of annual price changes over time. Data are shown for 2007-2008 through 2014-2015. Three lines are shown: (1) changes in Medicare spending on targeted oral cancer drugs, (2) changes in Consumer Price Index data for medical care, and (3) changes in Consumer Price Index data for prescription drugs.
                        The rate of annual price changes was higher for Medicare spending on targeted oral cancer drugs than for medical care and prescription drugs. For Medicare spending on targeted oral cancer drugs, annual prices increased 10 percent in 2007-2008, 10 percent in 2008-2009, 13 percent in 2009-2010, 11 percent in 2010-2011, 15 percent in 2011-2012, 13 percent in 2012-2013, 20 percent in 2013-2014, and 17 percent in 2014-2015. 
                        For medical care, annual prices increased 4 percent in 2007-2008, 3 percent in 2008-2009, 3 percent in 2009-2010, 3 percent in 2010-2011, 4 percent in 2011-2012, 2 percent in 2012-2013, 2 percent in 2013-2014, and 3 percent in 2014-2015. 
                        For prescription drugs, annual prices increased 2 percent in 2007-2008, 3 percent in 2008-2009, 4 percent in 2009-2010, 4 percent in 2010-2011, 4 percent in 2011-2012, 1 percent in 2012-2013, 4 percent in 2013-2014, and 5 percent in 2014-2015.

Note: Graph based on gross Medicare drug costs per patient per month. Dashed line represents projection on the basis of data published by the Centers for Medicare & Medicaid Services. Medical care and prescription drug data are based on Consumer Price Index data from the Bureau of Labor Statistics. Source: Shih YT, Xu Y, Liu L, Smieliauskas F. Rising prices of targeted oral anticancer medications and associated financial burden on Medicare beneficiaries. J Clin Oncol. 2017;35(22):2482-9. Reprinted with permission. © 2018 American Society of Clinical Oncology. All rights reserved. Available from: https://www.ncbi.nlm.nih.gov/pubmed/28471711

The Toll of Drug Costs on Patients and Their Families

The burden of high drug costs on patients—even those with health insurance—can be significant. Out-of-pocket spending on drugs can be hundreds, or even thousands, of dollars a month for patients in active treatment.6,7,19 Many patients are paying more for their drugs as insurance plans increasingly are charging coinsurance—a percentage of a drug’s cost—rather than fixed copayments for prescription drugs.20-23 As drugs extend survival, more patients are taking high-priced drugs for months, or even years, which may create long-term financial hardship. Patients with higher out-of-pocket expenses are less likely to adhere to recommended treatment regimens, which may have a detrimental impact on outcomes.24-28

Although out-of-pocket expenses for drugs can be high, they are only one of many costs cancer patients face. Costs of other components of care—surgery, radiation, hospitalization, and clinic visits—each often represent a higher share of treatment costs than drugs.29,30 Many patients and their families and caregivers also experience indirect costs related to loss of income, and transportation and childcare costs, among other expenses.31 Collectively, these costs can impose a significant burden on patients. Many cancer patients incur considerable debt as a result of their treatments32 and/or reduce spending on basic necessities to defray out-of-pocket expenses.33

The term financial toxicity describes the negative impact of cancer care costs on patients’ well-being (see Financial Toxicity in Recommendation 3). Like medical toxicities caused by cancer treatment, financial toxicity can significantly diminish patients’ quality of life, interfere with high-quality care delivery, and even reduce survival rates.34-38

Action Is Needed to Ensure Patients’ Access to High-Value Drugs

Drug development is an expensive and high-risk undertaking. While estimates vary widely, one recent study estimated the cost of developing a new drug at $2.6 billion,39 and only 1 in 15 oncology drugs studied in Phase 1 clinical trials will make it to market.40 Biopharmaceutical companies cannot be expected to incur the high costs of development without the potential for achieving financial benefits, including recovery of research and development costs, when drugs provide high value to patients. This is part of the cycle that drives future innovation. While drug developers should be rewarded financially for creating innovative drugs that provide high value to patients, it also is important that drugs are affordable and accessible for patients and society.

The President’s Cancer Panel held a series of workshops in 2016-2017 to investigate the causes and consequences of rising cancer drug prices in the United States. During the series and in this report, drugs are defined broadly to include small molecules, biologics, and immunotherapies. The Panel concluded that misalignment of drug prices and value is a critical problem that must be addressed. The costs of drugs should reflect the value to those who receive treatment—patients. Defining the value of cancer drugs is challenging. Numerous factors influence value, and the relative importance of each of these factors depends on the perspective of the stakeholders—patients, providers, payers, healthcare systems, manufacturers, researchers, and society (Figure 3).41 Though the needs of all stakeholders should be considered, patient benefit must be central when assessing value. In this report, the Panel makes several recommendations to maximize value and affordability while continuing to support a pipeline of biopharmaceutical innovation. The ultimate goal is to ensure that all cancer patients—now and in the future—have affordable access to high-value drugs without experiencing financial toxicity.

Figure 3

Factors That Influence Cancer Drug Value

This infographic illustrates factors that influence cancer drug value. It includes the text, “Stakeholders consider multiple factors when assessing the value of a cancer drug. The relative importance of these factors may vary among stakeholders:” There are icons representing the following stakeholders: patients, providers, healthcare systems, payers, drug manufacturers, researchers, and society. 
                        The infographic includes four boxes, each of which represents a category of factors that influence cancer drug value. The “Health Outcomes” category includes potential for cure, strength of evidence, likelihood of benefit, quality of life, side effects, and survival. The “Costs and Payments” category includes effect on health budgets, patients’ out-of-pocket costs, provider reimbursement, manufacturing costs, impact on future care, and R&D costs. The “Market Success” category includes market exclusivity, market size, approval time, unmet need, novel mechanism of action, and return on investment. The “Accessibility” category includes ability to pay, available alternatives, regimen convenience, and impact on health inequities.

References

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