From Our 2016 Archives
Cutting Cancer Drug Costs: No Pain, No Gain
Over the past decade, as the price of cancer drugs has skyrocketed, many in the oncology community have asked this question: Is it possible to create a public policy that will harness these costs and cut out-of-pocket expenses for patients?
It is possible, but not without making significant tradeoffs that could reduce access to some oncology drugs, according to Scott Ramsey, MD, PhD, director of the Hutchinson Institute for Cancer Outcomes Research in Seattle, and colleagues.
Whether or not "society will accept that pain for the gain of a more equitable and sustainable cancer drug market remains to be seen," they write in an editorial published online February 11 in JAMA Oncology.
They propose three interventions that could help relieve the financial distress many cancer patients experience.
Unlike many calls for reform, which are directed toward the pharmaceutical industry, their proposals are focused primarily on health insurance.
First, they explain, both public and private health insurers must have the ability to negotiate prices with manufacturers.
Second, insurers need to be able to withhold products from their formularies if drug prices do not represent good value.
And third, there needs to be greater transparency of cancer drug pricing and better information about treatment choices.
"I don't think oncologists should be put in the position of rationing based on cost, but they do need to consider out-of-pocket costs when prescribing," Dr Ramsey told Medscape Medical News. "Not completing expensive treatments due to financial burden may be worse than completing a therapy that is affordable."
"It's not a world that I want for cancer care, but I don't see other viable options in the near term," he explained. "To get changes in Medicare to allow negotiation, we need a functional Congress. Not likely soon."
Many experts have weighed in on the cost of drugs, both in cancer and other diseases. Dr Ramsey and his colleagues agree that the current model for cancer drug pricing is not sustainable and can be harmful to patients.
But solutions that attempt to balance access, affordability, and incentives to innovate might have a downside, they note.
They could, in fact, create "situations where low-value drugs are not available except outside of the insurance system."
Value in cancer care has become a hot topic because high price tags do not necessarily translate into high-quality care or improved outcomes. Thus, various strategies, such as those proposed by the American Society of Clinical Oncology, have sought to define the actual "value" of a cancer treatment.
But Dr Ramsey's team proposes taking it a step further. They think that insurers should not be forced to cover low-value drugs.
Several states currently mandate coverage of all cancer drugs for all approved indications. And with only a few exceptions, Medicare is explicitly prohibited from negotiating prices or excluding any drugs from its formulary.
Without the ability to refuse coverage, the authors argue, health insurers become severely compromised during price negotiations. To address high costs, drugs are put into copay tiers, which can become very expensive for the patient.
"We believe eliminating or narrowing mandatory coverage laws for cancer drugs represents the preferable and most equitable option," they write.
Patient acceptance of this type of policy would largely depend on having "compelling evidence" to support this move.
Holly Campbell, a spokesperson for the Pharmaceutical Research and Manufacturers of America, pointed out that a great deal of leverage is already available, without the need to impose restrictions.
"Significant negotiation already occurs between manufacturers and payers in the commercial space and in Medicare Part D," she told Medscape Medical News. "This is one reason why we've been able to bring more than 500 new medicines to patients since 2000, and spending on medicines has been a consistent share of overall healthcare spending."
In addition to aggressively negotiating drug prices, payers have extensive tools to drive patients to preferred lower-cost drugs on a formulary or to not place a medicine on a formulary, Campbell noted. "These include strategies such as prior authorization or step therapy, which prevent patients from accessing certain medicines without first satisfying plan-established protocols."
"While discussions about cost are important, we need to make sure they are centered on high-quality patient-centered care and encourage the development of innovative, life-changing medicines," she added.
Paradigm Shift Needed
The industry has argued that any attempt to reduce prices would stifle innovation, Dr Ramsey and colleagues explain. But that fear might be unfounded, they add.
They note that a number of factors, such as patent protections, advances in technology, and the accelerated approval program of the US Food and Drug Administration, might be lowering the cost of cancer drug discovery and development.
"These factors, along with the high value society places on better cancer drugs, are huge incentives for innovation," they write.
The consequence of their recommendations would most likely be that a low-benefit product would not survive the development process.
"For example, a product found to improve patient survival by a few weeks with a significant adverse-effect profile might be shelved rather than taken through the full approval process," the authors explain.
Another option could be variable pricing, based on the benefits by indication, they add.
"Without a doubt, we are sorely in need of policy reform," said Yousuf Zafar MD, associate professor of medicine and public policy at the Duke Cancer Institute in Durham, North Carolina.
"While each of these reforms individually might not have much of an impact, together they could potentially reduce costs for patients," he told Medscape Medical News.
"Personally, I wholeheartedly agree with the need for such reforms," Dr Zafar added. "However, in our current political environment, they are not necessarily politically palatable. In short, we need more than reform; we need a paradigm shift."
However, concerns about the proposed interventions were expressed by Leonard Saltz, MD, chief of gastrointestinal oncology at the Memorial Sloan Kettering Cancer Center in New York City.
Consider what Dr Ramsey's team is advocating, he said. "The right for the buyer to negotiate a price with the seller, the right for the buyer to choose not to buy if the seller does not bring the price into line with the value that the buyer perceives the product to offer, and the need for transparency throughout this process so that both buyer, seller, and everyone else can see just what is being offered and what is being asked."
"It's hard to think of other situations in which we would quibble about these points," Dr Saltz emphasized.
The editorialists have disclosed no relevant financial relationships.