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Navigating the tense, complex oncology market - Kantar Health

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maY/JUNE 2012<br />

Brand Marketing & Communications<br />

<strong>Navigating</strong> <strong>the</strong> <strong>tense</strong>, <strong>complex</strong> <strong>oncology</strong><br />

<strong>market</strong><br />

Oncology combines<br />

some of <strong>the</strong> most lifechanging<br />

<strong>the</strong>rapeutic<br />

events with <strong>the</strong> most<br />

<strong>complex</strong> commercialization<br />

pathways.<br />

Rising costs of treatments<br />

simply add to<br />

<strong>the</strong> tension<br />

By Suzanne Shelley<br />

In early June, more than<br />

30,000 cancer specialists and<br />

more than 400 exhibitors are<br />

expected to ga<strong>the</strong>r in Chicago<br />

for this year’s American Soc.<br />

Fig. 1.<br />

of Clinical Oncology (ASCO)<br />

meeting. The event, one of <strong>the</strong><br />

largest of any medical professional events, will be a showcase of new <strong>the</strong>rapies, research advances and <strong>the</strong>rapeutic<br />

innovations. Everyone from hospital administrators, to Wall Street analysts, to patient advocates will be hanging<br />

on news coming out of <strong>the</strong> meeting.<br />

Oncology is a big business. Nationally, cancer care consumed $124.6 billion in 2010, according to <strong>the</strong> 2011<br />

Medco Drug Trend report; global sales of oncolytics was $76 billion in that year, according to Decision Resources<br />

Pharmaview, and will rise to $98 billion in 2015.<br />

Society is getting something back for all those expenditures: While cancer remains <strong>the</strong> second leading cause of<br />

death in <strong>the</strong> US (heart disease is No. 1), ending <strong>the</strong> lives of 1,500 Americans daily, <strong>the</strong> survival rate has been rising.<br />

About two-thirds of patients survive for five years or more after initial diagnosis—up from 49% in <strong>the</strong> period<br />

1975–77, according to <strong>the</strong> American Cancer Society. A growing cohort of patients is able to manage <strong>the</strong>ir disease as<br />

a chronic condition: By 2020, <strong>the</strong> number of estimated cancer survivors living in <strong>the</strong> US is expected to reach 18.1<br />

million (up from 13.8 million in 2010), fur<strong>the</strong>r driving demand in <strong>oncology</strong>.<br />

Never<strong>the</strong>less, <strong>the</strong> many diseases that fall into <strong>the</strong> category of “cancer” remain a grim prospect for most patients,<br />

especially in cases where <strong>the</strong> survival rate has remained stubbornly low despite all <strong>the</strong> <strong>the</strong>rapies available. “Cancer<br />

can involve every organ system in <strong>the</strong> body, and <strong>the</strong> <strong>the</strong>rapy options available may employ every modality<br />

available, including surgery, radiation, chemo<strong>the</strong>rapy, biologics and targeted <strong>the</strong>rapies (such as targeted small<br />

molecules, monoclonal antibodies, antihormonals, targeted immuno<strong>the</strong>rapies and gene <strong>the</strong>rapies), photodynamic<br />

<strong>the</strong>rapy, laser ablation, bone marrow transplants, and radioisotopes,” says Jane Quigley, RN, senior principal at<br />

IMS <strong>Health</strong> (Plymouth Meeting, PA).<br />

The high mortality rates of many cancers ensure that it will continue to be a well-funded research arena, and<br />

<strong>the</strong> scientific advances in both pharmacology and chronic care remain high. Fully 28% of all drug research is<br />

May | June 2012 Visit our new website at www.PharmaceuticalCommerce.com


Brand Marketing &<br />

Communications<br />

<strong>Navigating</strong> <strong>the</strong> <strong>tense</strong>, <strong>complex</strong> <strong>oncology</strong> <strong>market</strong><br />

targeted at cancer, according to Decision Resources (Fig. 1);<br />

PhRMA counted 887 drugs in Phase I–III development last<br />

year, including 108 for leukemia alone, 98 for lung cancer,<br />

and 91 for breast cancer. Key research directions include <strong>the</strong><br />

development of clinical endpoints (surrogates for identifying<br />

a positive outcome); alternative delivery routes (oral drugs vs.<br />

injectables); and combination and adjuvant <strong>the</strong>rapies (which<br />

combine multiple molecular entities as a single <strong>the</strong>rapy).<br />

The payer environment<br />

The growing list of commercialized cancer <strong>the</strong>rapies (Fig.<br />

2)—many of which represent a thrilling new lease on life<br />

for cancer patients—are <strong>the</strong> justification for <strong>the</strong> hundreds<br />

of additional drugs in development. But that commercial<br />

success creates its own problems: paying for <strong>the</strong> <strong>the</strong>rapies, and<br />

realigning <strong>the</strong> economics of how drugs are made available to<br />

patients. A 2009 study in <strong>the</strong> New England Journal of Medicine<br />

(NEJM, 2009, 360:626–633) found that <strong>the</strong> median cost of<br />

newly approved cancer medications had increased more than<br />

4.5 times in <strong>the</strong> preceding decade — up from $1,553 per month<br />

for <strong>the</strong> period 1995–1999 to $7,112 for 2005–2009 (constant<br />

2007 dollars). At <strong>the</strong> same time, <strong>oncology</strong> service providers<br />

are still adjusting to reductions in Medicare reimbursements<br />

instituted in 2005. Community-based oncologists, like most<br />

independent physician practices, are undergoing a wave of<br />

business realignments that connect <strong>the</strong>m (or outright sell<br />

<strong>the</strong>m) to hospital systems and integrated delivery networks.<br />

And that, in turn, affects how manufacturers can gain access<br />

to <strong>the</strong> <strong>market</strong>.<br />

“With <strong>the</strong> average cost of cancer care rising from $53,000<br />

per patient per year a decade ago to $150,000 per patient<br />

per year now, <strong>the</strong> trend is literally unsustainable,” says Burt<br />

Zweigenhaft, CEO of OncoMed (New York, NY), a specialty<br />

pharmacy. “We can no longer say we don’t care about<br />

formulary cost considerations or we don’t have to actually<br />

collect patient co-pays or carry out comparative-effectiveness<br />

studies.”<br />

Over <strong>the</strong> past few years, FDA has raised <strong>the</strong> bar for<br />

approval, and private and government payers have been<br />

more aggressive about scrutinizing <strong>the</strong>ir coverage policies<br />

related to <strong>oncology</strong> and instituting cost-control measures.<br />

These include stricter requirements for prior authorizations<br />

and adherence to FDA label indications, and limiting <strong>the</strong><br />

off-label use of anti-cancer treatments to Medicare-approved<br />

compendia listings. “With this heightened scrutiny, payers<br />

often have a higher expectation of clinically relevant benefit<br />

compared to <strong>the</strong> level of clinical response that is required<br />

for <strong>the</strong> drug to gain regulatory approval in <strong>the</strong> first place,”<br />

says Debbie Warner, VP, commercial planning, at <strong>Kantar</strong><br />

<strong>Health</strong> (Horsham, PA). “For instance, payers frequently cite<br />

a minimum of six-month improvement in overall survival<br />

before <strong>the</strong>y feel a treatment is ‘worth’ its cost. While approved<br />

drugs that deliver significantly lesser clinical benefit may still<br />

be covered, <strong>the</strong>y may face a much higher level of scrutiny in<br />

<strong>the</strong> prior authorization process to help control costs.”<br />

Concerns like <strong>the</strong>se hung up Provenge (sipuleucel-T), <strong>the</strong><br />

innovative cancer “vaccine” for prostate cancer, for its maker,<br />

Dendreon, in 2008–09, until FDA relented and approved<br />

<strong>the</strong> drug in 2010. More recently, Genentech’s Avastin<br />

(bevacizumab)—a blockbuster that has been on <strong>the</strong> <strong>market</strong><br />

since 2004 (and approved in 2008 for breast cancer)—had<br />

its approval for breast cancer revoked because later studies<br />

showed insufficient life extension or improvement in quality<br />

of life. (The drug is still approved for o<strong>the</strong>r cancers, and is<br />

being used off-label by some breast cancer patients).<br />

Fig. 2. IMS <strong>Health</strong>’s count of top global <strong>oncology</strong><br />

manufacturers (left) and top products (right)<br />

Deciding which indication or indications to pursue (when<br />

<strong>the</strong> agent has shown preliminary effectiveness in several<br />

tumor types and hematologic disorders) is anything but<br />

straightforward. When a promising <strong>oncology</strong> compound<br />

has several potential target indications in different cancers or<br />

tumor types, it’s up to drug companies to decide how broad a<br />

<strong>the</strong>rapeutic footprint to pursue, and identify which indications<br />

may represent <strong>the</strong> most realistic or lucrative opportunity — a<br />

niche vs. more comprehensive <strong>market</strong> opportunity. The<br />

decision involves tradeoffs between clinical and commercial<br />

considerations. “It’s common to see a fierce internal struggle<br />

within a given drug company, as some stakeholders want to<br />

follow <strong>the</strong> science and let clinical drivers guide <strong>the</strong> decision,<br />

while o<strong>the</strong>rs would prefer to let commercial issues (related<br />

to <strong>market</strong> size, potential ease of regulatory approval, and<br />

potential for high pricing) guide <strong>the</strong> process,” says Wen Shi,<br />

practice executive for Campbell Alliance (New York, NY), <strong>the</strong><br />

consulting arm of inVentiv <strong>Health</strong>.<br />

While large patient populations have traditionally been<br />

<strong>the</strong> primary focus in many disease categories, focusing on<br />

Biomarkers create treatment opportunities, headaches<br />

There may be no better example of how advancing medical science creates opportunities<br />

(and saves lives)—while generating operational and economic problems for healthcare<br />

systems and drug manufacturers—than biomarkers. It is now well-established that some<br />

oncolytics are “targeted” for specific genetic profiles, and some tests give signals of <strong>the</strong><br />

advent or progression of cancer, thus guiding treatment options.<br />

Today, some 25% of Phase III assets in <strong>oncology</strong> have associated biomarker programs;<br />

and <strong>the</strong> majority of leading <strong>oncology</strong> companies, including Roche, Novartis, Bristol-Myers<br />

Squibb, Merck, Pfizer, Eli Lilly and GlaxoSmithKline, have stated <strong>the</strong>ir intent to develop<br />

biomarkers for most or all of <strong>the</strong>ir drugs in clinical development, says Wen Shi of Campbell<br />

Alliance. “Having a strong biomarker program has increasingly become a cost of doing<br />

business ra<strong>the</strong>r than <strong>the</strong> true differentiator it once was.”<br />

The drawbacks to biomarker use are <strong>the</strong> <strong>complex</strong>ity and uncertainty for payers, and <strong>the</strong><br />

potential reduction in <strong>market</strong> for a drug. Many healthcare plans are struggling to decide<br />

which biomarkers to test, which genetic tests to include in <strong>the</strong>ir coverage decisions, and what<br />

levels of coverage to provide. “Payers are acutely aware of <strong>the</strong> proliferation of genetic test<br />

options, but <strong>the</strong>y are scrambling to analyze <strong>the</strong> scientific data and complete <strong>the</strong> necessary<br />

patient care and financial impact analyses,” says Neely of Xcenda.<br />

For manufacturers, a diagnostic test can reduce its potential use dramatically. In 2004,<br />

Erbitux (cetuximab; Eli Lilly/BMS/Merck Serono) was approved for colorectal cancer<br />

(CRC) patients that expressed <strong>the</strong> epidermal growth factor receptor (EGFR)—which<br />

represent <strong>the</strong> vast majority of CRC patients. However, a retrospective analysis published in<br />

2007 indicated a lack of response to Erbitux in CRC patients with ano<strong>the</strong>r biomarker—<strong>the</strong><br />

KRAS mutation. As a result, FDA added a notation on <strong>the</strong> label indications for both Erbitux<br />

and Vectibix (panitumumab; Amgen/Takeda; a similar drug to Erbitux) to specifically<br />

recommend against <strong>the</strong> use of <strong>the</strong>se drugs on KRAS-mutant CRC patients. “With FDA’s<br />

changes, <strong>the</strong> <strong>market</strong> for <strong>the</strong>se two drugs was cut in half overnight; <strong>the</strong>se companies<br />

cannot just double <strong>the</strong>ir prices to make up for that,” says Shi of Campbell Alliance. “In<br />

addition, payers now require <strong>the</strong> KRAS test to be conducted before <strong>the</strong>se two drugs can be<br />

considered.”<br />

In <strong>the</strong> final analysis, however, payers will benefit from targeted <strong>the</strong>rapies that avoid<br />

patients for whom <strong>the</strong> drugs will do no good; and manufacturers can get products to <strong>market</strong><br />

that might o<strong>the</strong>rwise remain in <strong>the</strong> laboratory because clinical results in undifferentiated<br />

populations were too marginal to support additional development.<br />

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areas of unmet medical need in <strong>oncology</strong><br />

may offer better prospects in terms of rapid<br />

regulatory approval and more attractive<br />

payer reimbursement. Too often, aiming for<br />

a larger population can backfire in <strong>oncology</strong>,<br />

because <strong>the</strong> efficacy data becomes diluted<br />

when highly specific <strong>the</strong>rapies fail to work<br />

on a certain percentage of patients, and this<br />

can undermine both insurer and prescriber<br />

support. In <strong>the</strong>se cases, <strong>the</strong> ability to segment<br />

and focus <strong>the</strong> patient population—often<br />

through <strong>the</strong> use of biomarkers—for <strong>the</strong> sake<br />

of a stronger value proposition can make all<br />

<strong>the</strong> difference.<br />

“Population size can certainly influence<br />

<strong>the</strong> decision, with larger populations offering<br />

a potentially more lucrative opportunity,”<br />

says Stephanie Hawthorne, PhD, a director<br />

at <strong>Kantar</strong> <strong>Health</strong>. “However, if multiple<br />

agents with <strong>the</strong> same mechanism are being<br />

developed in one indication, it may prove<br />

difficult to differentiate your agent, especially<br />

if you are not first-to-<strong>market</strong>; this could<br />

drive development toward a less competitive<br />

alternative indication.”<br />

“By targeting an area with few or no<br />

effective treatments, a manufacturer can<br />

potentially accelerate <strong>the</strong> time between<br />

discovery, approval and commercialization,<br />

and accelerate <strong>the</strong> uptake in <strong>the</strong> targeted<br />

area,” adds Adrian Barfield, GM of <strong>the</strong><br />

pharmaceutical and biotech group of<br />

Cardinal <strong>Health</strong> Specialty Solutions (Dublin,<br />

OH).<br />

“An increasingly common approach is<br />

to obtain initial FDA approval in an orphan<br />

indication and <strong>the</strong>n access <strong>the</strong> larger<br />

populations via compendia-supported<br />

off-label utilization in larger tumor types,”<br />

says Doug Neely, CMPE, MHA, senior<br />

director for Xcenda, a business unit of<br />

AmerisourceBergen Consulting Services<br />

(Valley Forge, PA). However, “that can set<br />

up unique pricing challenges,” adds Loreen<br />

Brown, MSW, an SVP at Xcenda.<br />

“The indication of first launch will set<br />

<strong>the</strong> price of <strong>the</strong> drug for that tumor type,<br />

but it could have repercussions for later<br />

line extensions if a significantly higher dose<br />

(which may prove too expensive) or a lower<br />

dose (which may undervalue <strong>the</strong> product)<br />

is approved,” adds Hawthorne of <strong>Kantar</strong><br />

<strong>Health</strong>. “Meanwhile, in some indications,<br />

particularly those with no <strong>the</strong>rapeutic options<br />

and high unmet need, <strong>oncology</strong> products<br />

may obtain accelerated regulatory approval<br />

based on limited data, such as a single arm<br />

Phase II trial or interim data for a surrogate<br />

endpoint—with <strong>the</strong> goal of getting an active<br />

agent to <strong>market</strong> more quickly.”<br />

“Paradoxically, while regulators may<br />

be willing to fast-track certain anti-cancer<br />

agents—as much as 37% of all oncolytics,<br />

according to Xcenda—<strong>the</strong>y are also<br />

increasingly calling for more proof of<br />

definitive overall survival gains during <strong>the</strong><br />

regulatory review, especially when o<strong>the</strong>r<br />

treatment options already exist for that<br />

indication,” says <strong>Kantar</strong> <strong>Health</strong>’s Warner.<br />

Market access<br />

It’s rare to see a cancer drug in eveningtelevision<br />

DTC ads, for <strong>the</strong> simple reason<br />

that <strong>the</strong>ir utilization is a <strong>complex</strong> interplay of<br />

cancer types, biomarkers, genetic mutations<br />

and step <strong>the</strong>rapies. At <strong>the</strong> same time,<br />

oncologists are renowned for being <strong>the</strong> most<br />

demanding of relevant clinical data in making<br />

<strong>the</strong>rapy decisions (Pharmaceutical Commerce<br />

Mar/Apr 2011, p. 1). For <strong>the</strong>se reasons,<br />

<strong>oncology</strong> product managers are in continuous<br />

contact with oncologists <strong>the</strong>mselves, and that<br />

leads to <strong>the</strong> group purchasing organizations<br />

and practice-management companies that<br />

serve oncologists and hematologists.<br />

Traditionally, <strong>the</strong> “buy-and-bill” model<br />

has dominated <strong>the</strong> <strong>oncology</strong> drug sales<br />

channel; and today, more than 95% of<br />

distribution in <strong>oncology</strong> flows through a<br />

handful of GPOs, including Oncology Supply<br />

(part of AmerisourceBergen Specialty Group,<br />

and <strong>the</strong> largest dedicated <strong>oncology</strong> GPO),<br />

VitalSource GPO (owned by Cardinal <strong>Health</strong><br />

Specialty Solutions), McKesson and o<strong>the</strong>rs.<br />

“GPOs facilitate better pricing through<br />

aggregated purchasing from manufacturers as<br />

<strong>the</strong>y are able to negotiate with manufacturers<br />

to create volume- and <strong>market</strong> share-based<br />

incentive contracts,” says Bruce Feinberg,<br />

chief medical officer, <strong>oncology</strong> for Cardinal<br />

<strong>Health</strong> Specialty Solutions. Related practicemanagement<br />

businesses at <strong>the</strong>se companies<br />

include P4 (now owned by Cardinal) and<br />

ION Solutions (AmerisourceBergen Specialty<br />

Group).<br />

The <strong>oncology</strong> GPO not only aggregates<br />

purchase demand to lower prices for its<br />

member physicians, but it can also be an<br />

aggregator of data about <strong>the</strong> behavior of those<br />

same member physicians, says Feinberg. For<br />

instance, valuable pharmacy data, outcomes<br />

data, and information about side effects and<br />

adverse reactions can be aggregated at <strong>the</strong><br />

practice level and linked with patient medical<br />

information, adds Michael (Mick) Koerner,<br />

RPh, a senior director at ION Solutions.<br />

Feinberg says that analyzing patterns<br />

of care and purchasing trends can help to<br />

identify rates of new <strong>the</strong>rapy adoption, areas<br />

of significant variance in treatment and more;<br />

and such data can <strong>the</strong>n drive clinical trial<br />

development and comparative-effectiveness<br />

research. “In our view, <strong>the</strong> GPO of <strong>the</strong> future<br />

will be much more like a trusted advisor and<br />

consultant that can provide competitively<br />

priced medications.”<br />

Practice-management groups are centrally<br />

involved in one of <strong>the</strong> o<strong>the</strong>r distinct trends<br />

in <strong>oncology</strong> <strong>market</strong> access: clinical pathways.<br />

Driven mostly by payer pressure, <strong>the</strong><br />

practice networks work with oncologists to<br />

develop preferred treatment progressions<br />

based on <strong>the</strong> type of cancer and <strong>the</strong> patient’s<br />

response. These standardized protocols<br />

are published and regularly updated by <strong>the</strong><br />

National Comprehensive Cancer Network<br />

(NCCN), ASCO, Innovent Oncology and<br />

o<strong>the</strong>r stakeholder groups. Today, some<br />

payers offer incentives or more advantageous<br />

reimbursement strategies when <strong>the</strong> course<br />

of treatment follows an approved treatment<br />

pathway. “Similar to getting a drug on<br />

formulary, manufacturers need to work<br />

collaboratively with providers and payers<br />

to ensure that <strong>the</strong>ir product is positioned<br />

appropriately/favorably within <strong>the</strong> relevant<br />

pathways,” says Brown of Xcenda.<br />

In addition to dispensing <strong>oncology</strong> drugs,<br />

<strong>oncology</strong>-oriented specialty pharmacies<br />

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Brand Marketing &<br />

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<strong>Navigating</strong> <strong>the</strong> <strong>tense</strong>, <strong>complex</strong> <strong>oncology</strong> <strong>market</strong><br />

and GPOs provide an increasingly broad range of services,<br />

including advanced clinical support to patients, support with<br />

side effect management, improved compliance support, and<br />

administrative assistance in gaining insurance coverage or<br />

identifying additional financial assistance for patients (such<br />

as drug-company-sponsored patient assistance programs for<br />

those who need it).<br />

However, under <strong>the</strong> buy-and-bill model, “oncologists face<br />

increased risk that <strong>the</strong>y will have administered a high-cost<br />

<strong>the</strong>rapy only to find that <strong>the</strong>ir charge is denied payment or<br />

payment is significantly delayed, and a growing number of<br />

patients are unable to afford <strong>the</strong>ir portion of <strong>the</strong> bill,” says<br />

Warner of <strong>Kantar</strong> <strong>Health</strong>.<br />

In 2005, CMS implemented significant changes in <strong>the</strong><br />

way it pays oncologists for physician-administered drugs<br />

and related services—changes that continue to influence<br />

<strong>the</strong> landscape in <strong>oncology</strong> today. At that time, Medicare<br />

changed its policies to set payments for covered drugs at <strong>the</strong><br />

Average Sales Price (ASP) rate plus 6%, which is based on<br />

actual transaction prices and, basically, less than <strong>the</strong> previous<br />

setpoint, Average Wholesale Price (AWP). “Prior to 2005, it<br />

was not uncommon for oncologists to make more than 50%<br />

markup on a class of drugs that was already growing at 25%<br />

per year, so when patients were not able to pay <strong>the</strong>ir co-pays,<br />

it didn’t really matter,” says OncoMed’s Zweigenhaft. “The<br />

earlier CMS rules, which allowed for huge margins, set up a<br />

whole set of perverse economics, ra<strong>the</strong>r than economics based<br />

on sound outcomes data,” says Zweigenhaft. “Cancer is still<br />

not managed that way—but it should be.”<br />

With current reimbursement rates dramatically reduced,<br />

many physicians would be forced to operate at a loss if <strong>the</strong>y<br />

were unable to collect <strong>the</strong> patients’ co-payment. “In certain<br />

situations, it is becoming increasingly common for patients<br />

to be referred to <strong>the</strong> hospital out-patient setting, so that <strong>the</strong>ir<br />

anti-cancer medications can be billed through <strong>the</strong> oftenmore-generous<br />

medication benefit, ra<strong>the</strong>r than <strong>the</strong> pharmacy<br />

benefit, portion of <strong>the</strong>ir coverage, due to <strong>the</strong>se financial<br />

dynamics,” says Warner of <strong>Kantar</strong> <strong>Health</strong>.<br />

In an effort to eliminate some of <strong>the</strong> financial incentives<br />

tied to drug administration in <strong>the</strong> buy-and-bill model, some<br />

payer plans now require that oncologists order <strong>the</strong>ir infused<br />

drugs on a patient-by-patient basis from a specific specialty<br />

pharmacy. The pharmacy delivers <strong>the</strong> drugs to <strong>the</strong> practice<br />

at <strong>the</strong> time <strong>the</strong> patient has <strong>the</strong>ir infusion visit. “In this newer<br />

model, <strong>the</strong> payer pays <strong>the</strong> specialty pharmacy directly for <strong>the</strong><br />

drugs and <strong>the</strong> physician only bills <strong>the</strong> drug administration<br />

fee,” explains Warner of <strong>Kantar</strong> <strong>Health</strong>. “While this eliminates<br />

<strong>the</strong> profit incentive, this model can result in significant<br />

drug waste if <strong>the</strong> patient is not able to receive <strong>the</strong>ir intended<br />

chemo<strong>the</strong>rapy because <strong>the</strong> drugs cannot be returned or used<br />

for a different patient.”<br />

Not surprisingly, it is also “very unpopular” with<br />

oncologists, Warner adds. “The greatest advantage of <strong>the</strong><br />

traditional buy-and-bill model is that a large inventory is<br />

maintained at <strong>the</strong> oncologists’ practice setting, so physicians<br />

are able to tailor <strong>the</strong> exact dose and combination of drugs to<br />

patients as <strong>the</strong>y arrive for <strong>the</strong>ir visit.”<br />

Altos Solutions, a Los Altos, CA-based IT and <strong>oncology</strong><br />

consulting company, performs a National Oncology Practice<br />

Benchmark annually. In its 2011 Benchmark (published<br />

in <strong>the</strong> November issue of J. of Oncology Practice, an ASCO<br />

publication), it reports that drug revenue as a percentage<br />

of total practice revenue has declined from 85% in 2005 to<br />

about 66% in 2010, and that <strong>the</strong> drug margin (i.e., profit) has<br />

declined from 22% to 9% (as a percentage of total revenue)<br />

over <strong>the</strong> same period. Although drug margin is clearly not <strong>the</strong><br />

only source of revenue for community <strong>oncology</strong> practices, it<br />

has been an important one. In a previous report (published<br />

in <strong>the</strong> September J. of Oncology Practice), <strong>the</strong> Altos authors<br />

conclude:<br />

“As <strong>the</strong> economic model for community practice<br />

transitions from one that relied on <strong>the</strong> profit margin from<br />

drugs, <strong>the</strong> question becomes what is <strong>the</strong> next economic<br />

model? … Clearly, appropriate use of [new diagnostics and<br />

sophisticated tumor typing] will demand more physician<br />

time, not less. … Although <strong>the</strong> benefits of new diagnostic<br />

and treatment tools are desired by everyone involved in<br />

cancer care—patients, providers and payers—<strong>the</strong>y cannot<br />

be delivered in <strong>the</strong> existing community <strong>oncology</strong> economic<br />

business model.”<br />

Off-label drug use in <strong>oncology</strong><br />

Given <strong>the</strong> limited number of <strong>oncology</strong> agents available and<br />

<strong>the</strong> many types of cancers that are encountered, <strong>the</strong> off-label<br />

use of medications in cancer treatment has been widespread<br />

for decades. Today, estimates show that more than half of all<br />

uses of cancer-treating drugs are prescribed off-label, notes<br />

Brown of Xcenda.<br />

While having more options to choose from may offer an<br />

ongoing ray of hope for oncologists and patients who are<br />

running out of treatment options, “<strong>the</strong> quality of clinical<br />

evidence to support off-label use for a given patient may be<br />

weak, <strong>the</strong>reby exposing patients to ineffective and potentially<br />

toxic <strong>the</strong>rapy, and creating unnecessary expenses for payers,”<br />

says Harish Dave, MD, MBA, VP of <strong>the</strong> Oncology Therapeutic<br />

Delivery Unit of Quintiles (Rockville, MD). As a result, to<br />

curtail healthcare costs, payers are actively working to curtail<br />

off-label prescribing in <strong>oncology</strong>.<br />

Today, <strong>the</strong> majority of cancer patients—roughly 60%—are<br />

on Medicare. When it comes to Medicare, coverage of offlabel<br />

drug use in <strong>oncology</strong> is limited to those agents that are<br />

listed in at least one of four accepted compendia:<br />

• American Hospital Formulary Service Drug Information<br />

• Gold Standard Inc. Clinical Pharmacology Compendium<br />

• National Comprehensive Cancer Network (NCCN)<br />

Drugs and Biologics Compendium<br />

• Thomson Micromedex DrugDex Compendium<br />

“Today, most private payers follow Medicare coverage<br />

policy when setting <strong>the</strong>ir own criteria. Thus, payers are<br />

increasingly refusing to pay for treatments off-label, unless<br />

<strong>the</strong>y have a compendia listing or sufficient evidence to support<br />

<strong>the</strong>ir clinical value,” says Warner of <strong>Kantar</strong> <strong>Health</strong>. “For this<br />

reason, it’s in <strong>the</strong> drug company’s best interest to actively<br />

pursue a solid compendia strategy.”<br />

Oral meds and self-injectables<br />

Yet ano<strong>the</strong>r <strong>complex</strong>ity of oncolytics is that <strong>the</strong> form of<br />

drug delivery can affect its affordability, patient acceptance<br />

and, indirectly, its efficacy. Traditionally, chemo<strong>the</strong>rapy has<br />

been administered via intravenous infusion, but over <strong>the</strong> past<br />

decade, <strong>the</strong>re has been a surge of newer oral and self-injected<br />

agents. Some are traditional chemo<strong>the</strong>rapies, such as Xeloda<br />

(capecitabine), while o<strong>the</strong>rs are targeted <strong>the</strong>rapies, such as<br />

Gleevec (imatinib) and Sutent (sunitinib). Today, of <strong>the</strong> 125<br />

drugs in Phase III clinical development for cancer, 38 are oral<br />

medications, according to Medco.<br />

For drug developers, <strong>the</strong> decision about whe<strong>the</strong>r<br />

to pursue <strong>the</strong> development of a compound as an oral or<br />

injectable <strong>the</strong>rapy will be dictated by clinical and commercial<br />

considerations. If <strong>the</strong> drug’s side effect profile supports selfadministration,<br />

<strong>the</strong>re are some key benefits for <strong>the</strong> right<br />

patients, says Koerner of ION Solutions. These include <strong>the</strong><br />

freedom for patients to take <strong>the</strong>ir medications at home (saving<br />

time and travel), and in some instances, increased insurance<br />

coverage, as <strong>the</strong> pharmacy benefit may be preferential to <strong>the</strong><br />

medical benefit in terms of patient co-pays and administrative<br />

requirements for oral <strong>oncology</strong> medications.<br />

Meanwhile, <strong>the</strong> pursuit of self-injectable <strong>oncology</strong> meds<br />

is also garnering attention. For instance, Roche is currently<br />

developing subcutaneous reformulations of Herceptin and<br />

Rituxan (rituximab). The potential benefit for <strong>the</strong> patient<br />

would be shorter medical visits, as <strong>the</strong> subcutaneous injection<br />

(ra<strong>the</strong>r than <strong>the</strong> IV infusion) can be given in a few minutes<br />

ra<strong>the</strong>r than hours, or possibly at-home administration. “This<br />

is particularly attractive for <strong>the</strong>se two agents when <strong>the</strong>y are<br />

used in <strong>the</strong> adjuvant/maintenance settings with treatment<br />

lasting for more than a year,” says Kate Keeping, principal<br />

analyst at Decision Resources, a <strong>market</strong> research company.<br />

“From a commercial perspective, this also offers Roche <strong>the</strong><br />

opportunity to offset <strong>the</strong> imminent threat of biosimilar<br />

competition to <strong>the</strong> intravenous formulations of <strong>the</strong>se brands.”<br />

A subcutaneous formulation of Velcade (bortezomib;<br />

Millennium Pharmaceuticals) for multiple myeloma was<br />

recently launched, which not only offers more convenient<br />

delivery, but also reduced neurotoxicity, she says.<br />

There are drawbacks to self-administration: <strong>the</strong> risk of<br />

adherence and compliance issues, and failure to use <strong>the</strong><br />

<strong>the</strong>rapy as prescribed (in particular, missing doses) that can<br />

impact outcomes and result in premature emergence of<br />

drug resistance. And at-home administration reduces patient<br />

interaction with both physicians and nurses, which reduces<br />

opportunities for regular monitoring. US physicians, who<br />

receive a fee for administering intravenous drugs, may also<br />

resist <strong>the</strong> loss of that revenue stream.<br />

National studies confirm that overall noncompliance to<br />

oral drugs across all disease categories can run as high as 50%<br />

to 70%. “This presents a challenge in any disease state but can<br />

have a significant impact when it comes to chemo<strong>the</strong>rapy,”<br />

says Koerner of ION Solutions. “In some instances, patients<br />

may have side effects or cost pressures, and decide not to<br />

take <strong>the</strong> drug or take <strong>the</strong> drug less frequently,” says Brown of<br />

Xcenda. “In o<strong>the</strong>rs, <strong>the</strong> physician may opt to dose-reduce <strong>the</strong><br />

patient to manage through certain side effects, but <strong>the</strong> patient<br />

may want to take <strong>the</strong> full dose to ensure <strong>the</strong>y are getting <strong>the</strong><br />

maximum benefit of <strong>the</strong> drug.” With many of <strong>the</strong>se drugs<br />

costing as much as $7,500 a month, says Quigley of IMS,<br />

it serves nobody’s interest to have <strong>the</strong>m be administered<br />

incorrectly or not at all.”<br />

As for distribution, oral <strong>oncology</strong> <strong>the</strong>rapies often fall<br />

outside <strong>the</strong> traditional buy-and-bill model. In this realm,<br />

“Specialty pharmacy providers are taking on a much greater<br />

role in patient management, as office-based clinicians turn<br />

over <strong>the</strong> ongoing management for self-administered products<br />

to <strong>the</strong>m,” says Doug Neely of Xcenda. “Payers are much more<br />

comfortable managing drugs through traditional pharmacy<br />

benefit management (PBM) systems.”<br />

“With <strong>the</strong> growing availability of oral options for <strong>oncology</strong><br />

treatment, some larger <strong>oncology</strong> practices have opened<br />

dispensing pharmacies, so <strong>the</strong>y can also dispense oral cancer<br />

drugs to patients,” says Warner of <strong>Kantar</strong> <strong>Health</strong>. However,<br />

this approach can bring significant business challenges<br />

for <strong>oncology</strong> practices, so it tends to be seen only in larger<br />

<strong>oncology</strong> practices. It is thought that less than 10% of practices<br />

currently dispense oral <strong>oncology</strong> drugs directly. “In <strong>oncology</strong>,<br />

payers in turn will continue to scrutinize <strong>the</strong> incremental value<br />

of new <strong>the</strong>rapies, while experimenting with new approaches<br />

to manage overall costs, while maintaining access to quality<br />

cancer care,” she concludes. “Manufacturers need to evolve<br />

<strong>the</strong>ir clinical development, <strong>market</strong>ing and sales strategies in<br />

order to remain competitive in this <strong>complex</strong> arena.”<br />

Visit our new website at www.PharmaceuticalCommerce.com May | June 2012

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