Rising Costs of Cancer Drugs Explored

Phoebe Starr

August 2017, Vol 7, No 8 - Value-Based Care


San Antonio, TX—The cost of cancer drugs has increased exponentially over the past decade, straining the healthcare system and patients’ ability to pay for them. Cancer treatments that cost $150,000 or more are not unusual in the United States. Pharmaceutical manufacturers continue to increase drug prices through packaging maneuvers and the use of artificial expiration dates, and as a result, some old drugs “in new clothing” remain expensive.

At the 2016 San Antonio Breast Cancer Symposium, Peter Bach, MD, MAAP, Director, Center for Health Policy and Outcomes, Memorial Sloan Kettering Cancer Center, New York City, discussed these issues and the benefit that value-based frameworks have in assessing the true worth of a new cancer drug.

Dr Bach developed Memorial Sloan Kettering Cancer Center’s Drug Abacus, a value-based framework. This interactive tool compares a company’s price to one based on value for more than 50 cancer drugs.

“With this tool, you can manipulate how much these drugs should actually cost,” Dr Bach explained. “This helps us think about what pricing would look like if value were incorporated into the price. For example, what would you pay for a drug that treats a rare disease? The more you pay for one drug, the less you can pay for others.”

The Institute for Clinical and Economic Review also uses a value framework that proposes a budget impact threshold above which a drug would likely contribute significantly to excessive growth in healthcare costs.

In Dr Bach’s opinion, the ASCO Value Framework, which is currently being updated, will likely gain the most traction in the United States. This framework assesses the value of new cancer therapies based on clinical benefit, side effects, and improvement in patient symptoms or quality of life in the context of cost.

“The ASCO Value Framework will probably be adopted at point of care in the United States,” he said.

Changing Healthcare Landscape in the United States

“Since 1970, the cost of drugs has gone up 100% when adjusted for inflation. Over the last 3 years, drug costs represent the fastest rising sector of spending, and over the next 50 years, the cost of drugs will outpace Part A and Part B of Medicare at a growth rate of 1% per year,” Dr Bach said. “Old drugs are rising in costs too.”

“Importantly, as the cost of drugs rise, the value is falling. The iPhone has a rising value, while the value of Gleevec is falling,” he continued.

Some cancer drugs have a quality-adjusted life-year gained of $250,000, whereas not that long ago $20,000 was considered the standard.

“The United States is underperforming compared with other developed countries. For both branded and generic drugs, we spend more per patient than many other countries, even though all patients don’t have access to these drugs. We rank near the bottom,” Dr Bach pointed out.

Healthcare plans that have high deductibles and high out-of-pocket copays are causing financial toxicity that leads to bankruptcy for some patients and their families. One study showed that 26% of insured patients had trouble paying their bills, he noted.

What should be expected with President Trump’s new administration? “Rising prices on drugs will keep making headlines and harming patients. New policy directions will expose patients to more rising prices,” Dr Bach said.

The hope going forward is that a value-based approach will have some impact on increasing prices and on how the US healthcare system pays for drugs.

“It’s an uncertain political time. It is difficult to predict where these forces will prevail,” he concluded.