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Payers Debate the Economics of Personalized Medicine in Oncology

February 2015, Vol 5, No 1

San Francisco, CA—The rising costs of biomolecular testing and targeted drugs have prompted many to ask whether the United States can afford personalized medicine in oncology. At the Third Annual PMO Live Conference, a Global Biomarkers Consortium Initiative, medical directors from 2 health plans tackled this question from the payer perspective.

Ken Schaecher, MD, Medical Director at SelectHealth, answered “it depends” to the key question. Dr Schaecher noted that healthcare costs in the United States now stand at 17.2% of gross domestic product. The United States can afford personalized medicine “until we decide not to,” he said, pointing out that some targeted medicines cost upwards of $100,000 annually, because the United States has no threshold to pay for these medicines.

Most payers have defined sets of rules, Dr Schaecher said, but the problem in the United States is the large number of payers, each with their own set of rules. Sometimes, even within a plan, one set of rules may be applied, but different benefit structures mean that one patient can get a therapy that another cannot.

Is It Cost-Effective?

Gary Johnson, MD, MS, MBA, Regional Medical Director at Humana, said that paying for treatments and tests is always possible, but the real question is, “Should we pay?” As stewards of the premium dollar, insurers can cover anything they want to but they will have to raise premiums to do so.

The targeted approach to care allowed by personalized medicine creates the opportunity for greater cost-effectiveness, as in KRAS testing to select patients with colorectal cancer for targeted therapy. Being able to select the right treatment for the right patient improves health outcomes, said Dr Johnson.

Personalized medicine “shows us where treatments will be effective, and just as important, where treatments will not be effective so we can avoid toxicities and morbidities from treatments that, in essence, cause harm,” he said. “All of this is the goal of managed care and of clinical care.”

By reducing unnecessary risks of treatments not likely to work in a given patient, personalized medicine can reduce provider liability, said Dr Johnson. A well-defined treatment pathway linked with a diagnostic marker provides legal cover denial of a treatment.

“We can identify disease at an earlier state, and as a general rule, the earlier we treat various cancers, the more effective it is clinically, and, as impor­tant, the more cost-effective it is,” he said. “BRCA testing, which has been around for decades, and Oncotype DX, for breast cancer are additional examples of why the answer to this question, ‘Can we afford personalized medicine?’ is a resounding ‘yes.’?”

The higher price tags of targeted therapies reduce the cost-effectiveness of personalized medicine, said Dr Schae­cher.

“We’ve found that, typically, with more targeted therapies, the price tag goes up, and there’s only so much money in the bank,” he reasoned. “A great example is crizotinib. It has a $96,000 price, because it only works in 4% of the non–small-cell lung cancer [NSCLC] population that has the mutation. That price tag is much above most of the other therapies used in NSCLC.”

The Biomarkers Dilemma

Biomarker costs are increasing as well, Dr Schaecher said, with some tests exceeding $3000.

The misapplication of information in directing therapy is another potential con to personalized medicine in oncology. Sometimes, tests with low sensitivity or specificity are being used to determine clinical utility. And, in some instances, providers select the same treatment they would have otherwise without the biomarker test.

There is also a risk that information from testing may be applied when evidence is not present, said Dr Schae­cher. “It’s arguable that there is adequate evidence for whole-genome sequencing in oncology, but for most payers, they don’t believe that the evidence is there yet,” he said. “Using biomarkers in a one-off circumstance can help one patient but, unfortunately, as payers, we have to make broad payer-based decisions and not individual decisions. When there’s a lack of evidence we have to be consistent in our decisions. If I make an exception for one patient, that can bind us to make an exception for every patient going forward.”

Pharmacogenetic testing to identify drug metabolism may also add cost without utility. It is unproven that knowing that a patient may be a rapid metabolizer of an antidepressant medication is going to alter the therapy. That can occur in the oncology arena also, said Dr Schaecher.

A lack of process standardization across laboratories argues against the wholesale use of biomarker tests. “As much as we would like all of the tests to be FDA-approved, sometimes FDA approval can mean different things,” Dr Schaecher said. “Many [tests] are home-brewed, done in university labs, and when you don’t have that standardization, it’s harder for us to want to approve having a test covered.”

Finally, a patient may still insist on a therapy anyway with a negative biomarker test.

“Provide payers with evidence that it’s useful, and that it would be no more costly or preferably less costly than the current approach to management, and you win the day,” said Dr Schaecher. “It’s that easy.”

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