Stakeholder perspectives on the cost of cancer care

Neal J. Meropol, M.D.Fox Chase Cancer Center

Philadelphia, PAMay 30, 2009

Economics of Cancer Care:It’s Everyone’s Problem

Why focus on oncology?

• Cancer is life-threatening

• Cancer is common

• Treatments and diagnostics are increasingly costly

• High cost drugs command attention

• Treatments have only modest benefit in many circumstances

What the media tells us

• “Targeted therapy save lives!”

• “We’re going to bankrupt the economy!”

• “The pharmaceutical industry is evil!”

What we should be asking

• What does this mean for individual patients and their decisions about treatment?

• What does this mean for how we invest in, develop, and pay for new cancer treatments?

The Cost of Care Has Wide Impact

PatientsProducers Providers

Payers Employers

What are we spending?

Adapted from C. Borger, et al. Health Affairs 25(2): w61-w73, 2006; Reproduced in Meropol and Schulman, J Clin Oncol, 2007

US Health Expenditures and GDP

Growth in healthcare spending is greater than growth in GDP

Healthcare Costs: A Primer, Kaiser Family Foundation, 2007

More spending = Better health

Meropol and Schulman, J Clin Oncol, 2007

Cancer Survival Worldwide

adapted from Coleman et al. Lancet Oncology, 2008http://www.oecd.org/document/16/0,3343,en_2649_34631_2085200_1_1_1_1,00.html

0102030405060708090

100

Slova

kia

($1.

3K)

Spain ($

2.5K

)

Japan

($2.

6K)

UK ($2.

8K)

Austra

lia ($

3.1K

)

US ($6.

7K)

BreastColon (men)Prostate

NIH Estimates for Cancer Costs in the United States: 2007

• Total costs: $219 billion

• $89 billion for direct medical costs

• US spends ~$2 trillion on healthcare per year

American Cancer Society

Oncology Drug Contribution to Spending Growth - 2007

Growth RateAll clinic drug expenditures 9.9%Antineoplastics 16%

*Cancer drugs are #1 among hospital and clinic drug expenditures*In general, drugs account for only 10% of healthcare spending

Hoffman JM et al. Am J Health-Syst Pharm, 2009

Wong et al. Cancer, 2009

Cost Effectiveness of Colon Cancer Drug Treatment

A

BC

D

E

F

G

H

I

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

30 40 50 60 70 80 90 100 110 120

Effectiveness (weeks)

Co

st

A B C D E F G H I not dominated

Cost Effectiveness of Adjuvant Therapy for Stage III Colon Cancer

British payer perspective• Addition of oxaliplatin to FU/LV (MOSAIC)

– £ 2970 per QALY gained• Capecitabine vs. Mayo Clinic FU/LV

– £ 3320 savings per patient• Extrapolated: FOLFOX vs. Capecitabine

– £ 13,000 per QALY gained

Pandor et al. Health Technology Assessment, 2006

Considerations for Innovators(producers)

It costs $1 billion to develop a new drug

Adams and Brantner. Health Affairs, 2006

A double-edged sword

• Biotechnology/oncology is an attractive realm for investment

• Patients benefit from new drugs• However,

– Potential for profit-driven inefficiencies in drug development

– Incentives for marginally better treatments– Potential disincentive for identification of

predictive markers/personalized medicine

Some assumptions about targeted/personalized drug development

may not be true• Certainly true

– Smaller market - bad– Competitive advantage - good

• Uncertain– Drug development will be faster, cheaper, more

successful?– Patients will stay on treatment longer?– New markets will be identified?– Pricing premium based on value and novelty will offset

narrowed market

The impact on patients

Weinfurt, K. P. J Clin Oncol; 25:223-227 2007

Prospect Theory: People Care More About Loss Than Gain

Therefore, cancer patients may place

high value on treatments with “modest” benefit

Individual patients feel the burden

• Insurance premiums• Co-pays• Co-insurance• Tiered formularies• Part D donut hole

Increased financial burden on families

Delay in seeking treatment

Limit/alter treatment

The Financial Burden of Cancer

• 29% of families spend >10% of income on cancer (Banthin, JAMA, 2006)

• KFF/USA Today Survey– Burden of costs on the family – 17% major burden– 25% used up all or most of savings– 13% borrowed from relatives– 11% sought charity– 8% delayed or did not get care because of cost– 22% lower income

• 10% spent >%18K out-of-pocket in 2003-04 (Goldman, Health Affairs, 2006)

Cost is a component of decision making for patients

Ben

efits

Monetary Costs

Toxicities

Patients Feel Ill-Equipped to Consider Costs

• How do I ask about costs, about value?• Will I anger my doctor?• How can I predict costs of treatment?• Where can I get information?• How can I discuss this with my family?• How do I access patient assistance plans?• I don’t have the resources to help me

navigate this

What is the oncologist’s role, and how do we deal with this

patient issue?

Are oncologists to blame for rising costs?

• Oncologist income is tied to chemotherapy administration

• Aggressive use of drugs, diagnostics, and technologies, sometimes with limited evidence

• Lots of chemotherapy in the weeks before death

• It’s easy to give drugs; it’s hard to talk about stopping

On the other hand….

• Who creates demand?– Patients, society?

• Why focus on oncologists?– Radiation, diagnostic radiology, surgery

• Other members of the supply chain certainly seek to maximize profit– Drug and device makers, pharma, insurers

Oncologists Feel Ill-Equipped to Consider Costs

• How do I talk about costs, about value?• How can I predict costs of treatment?• Where do I find the time?• How do I balance my dual responsibilities to

society and my individual patients?• I don’t have the resources to help me

navigate this

The High Cost of Care Can Widen Disparities in Cancer Outcomes

Ward, E. et al. CA Cancer J Clin 2008;58:9-31.

Changes in Health Insurance Premiums, Inflation, and Workers' Earnings, 2000-2007

INSURANCE

INFL

EARNINGS

As healthcare costs rise, employers will:

• Reduce benefits

• Reduce wages

• Become non-competitive

As healthcare costs rise, providers will provide:

• Less “off-label” treatment

• Less charity care

Ward, E. et al. CA Cancer J Clin 2008;58:9-31.

Health Insurance Coverage Among Individuals Under Age 65 Years, 2006

(in Millions)

Ward, E. et al. CA Cancer J Clin 2008;58:9-31.

Colorectal Cancer Stage is Higher Stage Among

Private

Uninsured/Medicaid

Wh

ite

AA

His

pan

ic

Ward, E. et al. CA Cancer J Clin 2008;58:9-31.

Colorectal Cancer

Survival is Worse Among

Uninsured

Private

Uninsured

Medicaid

Wh

ite

AA

His

pan

ic

Can we afford the cancer care of the future?

• % of GDP spent on cancer care is currently small• However

– cancer care is an increasing component of healthcare expenditures

– Cost is an increasing consideration for patients, and can lead to disparities in care

– Personalized medicine may have unintended economic consequences for the cancer enterprise

• Policy solutions must integrate various perspectives, and ultimately address the value of specific interventions and distribution of finite resources