(Reuters) – Medical providers have begun to think more about cost, as well as safety and effectiveness, when they decide on cancer treatments.
In the past, pharmaceutical companies could launch a high-priced drug with little push back. But now, there is more pressure from insurers as well as doctors to justify using drugs that provide only incremental benefits. Products that offer clear-cut advances in treatment, however, still command premium prices.
The pressure on costs is likely to accelerate. The U.S. Affordable Care Act includes several provisions aimed at improving the value of healthcare, including paying hospitals for the quality of care rather than the quantity.
“It’s a sign of the times,” said Mark Mynhier, partner, healthcare industries advisory at PricewaterhouseCoopers PwC. “We are in fact in a significantly financially challenging environment.”
Four-fifths of U.S. health insurers recently polled by PwC now require evidence of cost savings or a clear clinical benefit to include new products on their lists of covered drugs.
Doctors at New York’s Memorial Sloan-Kettering Cancer Center decided in November not to use Zaltrap, a new $ 11,000 a month colon cancer drug, because it has a “modest” impact on survival, works no better than Avastin, a similar but cheaper competitor, and has worse side effects.
Sanofi SA, according to the hospital, responded by offering the drug to all health providers at a 50 percent discount to its wholesale price.
The Manhattan cancer center still does not include Zaltrap on its list of available drugs. Sanofi and Regeneron, which helped develop and also sells the drug, both declined to comment.
“In order to warrant the price, you are going to have to have better overall survival,” said Rhonda Greenapple, chief executive at Reimbursement Intelligence, a consulting firm specializing in medical reimbursement.
Linking value to patient outcomes – mainly a drug’s impact on survival – is particularly important in oncology, where treatment costs can total tens of thousands of dollars a year.
“In cases where there are co-pays, they really do effect the consumer,” Mynhier said. “Patients are saying ‘I can’t afford to pay 10 or 20 percent of a $ 100,000 therapy.’”
WellPoint Inc, the second-largest U.S. health insurer by market value, said it is increasing the amount it pays for less expensive generic cancer drugs as an incentive for doctors to use them.
PROFIT OPPORTUNITY FOR DOCTORS
Infused cancer medications are first purchased by doctors, who then bill insurers for reimbursement. That is different from pills and other oral drugs for which doctors typically write a prescription filled at a pharmacy.
The offer of a 50-percent discount to Zaltrap’s list price is a potential windfall for doctors. Patients, health insurers, the government or anyone else who pays healthcare bills would not see a benefit.
“At the very least it is an incentive for doctors to use the drug,” said Dr Leonard Saltz, chief of Memorial Sloan-Kettering’s gastrointestinal oncology service. “And I find that concerning.”
He noted that rebates and discounts for cancer drugs are not uncommon, but said this is the first time he is aware of a verbal across-the-board offer for a half-price discount.
The average U.S. oncologist, according to the Journal of Oncology Practice, generated revenue of nearly $ 5 million last year, of which drug costs accounted for nearly $ 3 million.
To combat the temptation of wider profit margins, health plans in recent years began reimbursing doctors for cancer drugs based on average sales prices, rather than wholesale prices. But for a new drug such as Zaltrap, reimbursement is based on the full list price until a sales track record is established.
WellPoint said it is raising reimbursements to independent oncologist on a range of generic chemotherapy drugs by as much as 140 percent.
“These drugs are the backbone of many therapies recommended by the National Comprehensive Cancer Network (NCCN) … and typically much less expensive than their brand counterparts,” said Jennifer Malin, WellPoint’s medical director oncology.
She said the goal is to shift the system away from what has been a largely drug-revenue based practice model, to one where oncologists are paid for providing good patient-centered care.
“The payers are looking at the quality data and demanding incremental value over existing products,” said Dan Mendelson, chief executive officer of consulting firm Avalere Health.
“COKE DIDN’T WORK, SO LET’S TRY PEPSI”
Zaltrap was approved in August by the Food and Drug Administration after a study found it improved survival, in combination with chemotherapy, by 1.4 months in colon cancer patients who had stopped responding to chemo.
That is the same benefit seen with Avastin, sold by Roche Holding AG for around $ 5,000 a month, or about half the price of Zaltrap.
NCCN guidelines say either one or the other drug should be used, not both, but Dr Saltz said most Zaltrap use is likely in patients who were already treated with Avastin – a practice that insurers will eventually stop.
“It’s like saying Coke didn’t work so let’s try Pepsi,” he said.
As scientists unravel the biological underpinnings of cancer cells, new targeted therapies are being developed, but the process is expensive.
Dr. Saltz said the solution might just be to walk away from drugs with small, incremental benefits.
“We simply can’t afford to pay these very, very large amounts for drugs that offer most people very small benefit,” Dr Saltz said. “We haven’t figured out how to rein it in.”
(Reporting By Deena Beasley in Los Angeles. Editing by Andre Grenon)
Medications/Drugs News Headlines – Yahoo! News
