Navigating the tense, complex oncology market - Kantar Health

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Navigating the tense, complex oncology market
and GPOs provide an increasingly broad range of services,
including advanced clinical support to patients, support with
side effect management, improved compliance support, and
administrative assistance in gaining insurance coverage or
identifying additional financial assistance for patients (such
as drug-company-sponsored patient assistance programs for
those who need it).
However, under the buy-and-bill model, “oncologists face
increased risk that they will have administered a high-cost
therapy only to find that their charge is denied payment or
payment is significantly delayed, and a growing number of
patients are unable to afford their portion of the bill,” says
Warner of Kantar Health.
In 2005, CMS implemented significant changes in the
way it pays oncologists for physician-administered drugs
and related services—changes that continue to influence
the landscape in oncology today. At that time, Medicare
changed its policies to set payments for covered drugs at the
Average Sales Price (ASP) rate plus 6%, which is based on
actual transaction prices and, basically, less than the previous
setpoint, Average Wholesale Price (AWP). “Prior to 2005, it
was not uncommon for oncologists to make more than 50%
markup on a class of drugs that was already growing at 25%
per year, so when patients were not able to pay their co-pays,
it didn’t really matter,” says OncoMed’s Zweigenhaft. “The
earlier CMS rules, which allowed for huge margins, set up a
whole set of perverse economics, rather than economics based
on sound outcomes data,” says Zweigenhaft. “Cancer is still
not managed that way—but it should be.”
With current reimbursement rates dramatically reduced,
many physicians would be forced to operate at a loss if they
were unable to collect the patients’ co-payment. “In certain
situations, it is becoming increasingly common for patients
to be referred to the hospital out-patient setting, so that their
anti-cancer medications can be billed through the oftenmore-generous
medication benefit, rather than the pharmacy
benefit, portion of their coverage, due to these financial
dynamics,” says Warner of Kantar Health.
In an effort to eliminate some of the financial incentives
tied to drug administration in the buy-and-bill model, some
payer plans now require that oncologists order their infused
drugs on a patient-by-patient basis from a specific specialty
pharmacy. The pharmacy delivers the drugs to the practice
at the time the patient has their infusion visit. “In this newer
model, the payer pays the specialty pharmacy directly for the
drugs and the physician only bills the drug administration
fee,” explains Warner of Kantar Health. “While this eliminates
the profit incentive, this model can result in significant
drug waste if the patient is not able to receive their intended
chemotherapy because the drugs cannot be returned or used
for a different patient.”
Not surprisingly, it is also “very unpopular” with
oncologists, Warner adds. “The greatest advantage of the
traditional buy-and-bill model is that a large inventory is
maintained at the oncologists’ practice setting, so physicians
are able to tailor the exact dose and combination of drugs to
patients as they arrive for their visit.”
Altos Solutions, a Los Altos, CA-based IT and oncology
consulting company, performs a National Oncology Practice
Benchmark annually. In its 2011 Benchmark (published
in the November issue of J. of Oncology Practice, an ASCO
publication), it reports that drug revenue as a percentage
of total practice revenue has declined from 85% in 2005 to
about 66% in 2010, and that the drug margin (i.e., profit) has
declined from 22% to 9% (as a percentage of total revenue)
over the same period. Although drug margin is clearly not the
only source of revenue for community oncology practices, it
has been an important one. In a previous report (published
in the September J. of Oncology Practice), the Altos authors
conclude:
“As the economic model for community practice
transitions from one that relied on the profit margin from
drugs, the question becomes what is the next economic
model? … Clearly, appropriate use of [new diagnostics and
sophisticated tumor typing] will demand more physician
time, not less. … Although the benefits of new diagnostic
and treatment tools are desired by everyone involved in
cancer care—patients, providers and payers—they cannot
be delivered in the existing community oncology economic
business model.”
Off-label drug use in oncology
Given the limited number of oncology agents available and
the many types of cancers that are encountered, the off-label
use of medications in cancer treatment has been widespread
for decades. Today, estimates show that more than half of all
uses of cancer-treating drugs are prescribed off-label, notes
Brown of Xcenda.
While having more options to choose from may offer an
ongoing ray of hope for oncologists and patients who are
running out of treatment options, “the quality of clinical
evidence to support off-label use for a given patient may be
weak, thereby exposing patients to ineffective and potentially
toxic therapy, and creating unnecessary expenses for payers,”
says Harish Dave, MD, MBA, VP of the Oncology Therapeutic
Delivery Unit of Quintiles (Rockville, MD). As a result, to
curtail healthcare costs, payers are actively working to curtail
off-label prescribing in oncology.
Today, the majority of cancer patients—roughly 60%—are
on Medicare. When it comes to Medicare, coverage of offlabel
drug use in oncology is limited to those agents that are
listed in at least one of four accepted compendia:
• American Hospital Formulary Service Drug Information
• Gold Standard Inc. Clinical Pharmacology Compendium
• National Comprehensive Cancer Network (NCCN)
Drugs and Biologics Compendium
• Thomson Micromedex DrugDex Compendium
“Today, most private payers follow Medicare coverage
policy when setting their own criteria. Thus, payers are
increasingly refusing to pay for treatments off-label, unless
they have a compendia listing or sufficient evidence to support
their clinical value,” says Warner of Kantar Health. “For this
reason, it’s in the drug company’s best interest to actively
pursue a solid compendia strategy.”
Oral meds and self-injectables
Yet another complexity of oncolytics is that the form of
drug delivery can affect its affordability, patient acceptance
and, indirectly, its efficacy. Traditionally, chemotherapy has
been administered via intravenous infusion, but over the past
decade, there has been a surge of newer oral and self-injected
agents. Some are traditional chemotherapies, such as Xeloda
(capecitabine), while others are targeted therapies, such as
Gleevec (imatinib) and Sutent (sunitinib). Today, of the 125
drugs in Phase III clinical development for cancer, 38 are oral
medications, according to Medco.
For drug developers, the decision about whether
to pursue the development of a compound as an oral or
injectable therapy will be dictated by clinical and commercial
considerations. If the drug’s side effect profile supports selfadministration,
there are some key benefits for the right
patients, says Koerner of ION Solutions. These include the
freedom for patients to take their medications at home (saving
time and travel), and in some instances, increased insurance
coverage, as the pharmacy benefit may be preferential to the
medical benefit in terms of patient co-pays and administrative
requirements for oral oncology medications.
Meanwhile, the pursuit of self-injectable oncology meds
is also garnering attention. For instance, Roche is currently
developing subcutaneous reformulations of Herceptin and
Rituxan (rituximab). The potential benefit for the patient
would be shorter medical visits, as the subcutaneous injection
(rather than the IV infusion) can be given in a few minutes
rather than hours, or possibly at-home administration. “This
is particularly attractive for these two agents when they are
used in the adjuvant/maintenance settings with treatment
lasting for more than a year,” says Kate Keeping, principal
analyst at Decision Resources, a market research company.
“From a commercial perspective, this also offers Roche the
opportunity to offset the imminent threat of biosimilar
competition to the intravenous formulations of these brands.”
A subcutaneous formulation of Velcade (bortezomib;
Millennium Pharmaceuticals) for multiple myeloma was
recently launched, which not only offers more convenient
delivery, but also reduced neurotoxicity, she says.
There are drawbacks to self-administration: the risk of
adherence and compliance issues, and failure to use the
therapy as prescribed (in particular, missing doses) that can
impact outcomes and result in premature emergence of
drug resistance. And at-home administration reduces patient
interaction with both physicians and nurses, which reduces
opportunities for regular monitoring. US physicians, who
receive a fee for administering intravenous drugs, may also
resist the loss of that revenue stream.
National studies confirm that overall noncompliance to
oral drugs across all disease categories can run as high as 50%
to 70%. “This presents a challenge in any disease state but can
have a significant impact when it comes to chemotherapy,”
says Koerner of ION Solutions. “In some instances, patients
may have side effects or cost pressures, and decide not to
take the drug or take the drug less frequently,” says Brown of
Xcenda. “In others, the physician may opt to dose-reduce the
patient to manage through certain side effects, but the patient
may want to take the full dose to ensure they are getting the
maximum benefit of the drug.” With many of these drugs
costing as much as $7,500 a month, says Quigley of IMS,
it serves nobody’s interest to have them be administered
incorrectly or not at all.”
As for distribution, oral oncology therapies often fall
outside the traditional buy-and-bill model. In this realm,
“Specialty pharmacy providers are taking on a much greater
role in patient management, as office-based clinicians turn
over the ongoing management for self-administered products
to them,” says Doug Neely of Xcenda. “Payers are much more
comfortable managing drugs through traditional pharmacy
benefit management (PBM) systems.”
“With the growing availability of oral options for oncology
treatment, some larger oncology practices have opened
dispensing pharmacies, so they can also dispense oral cancer
drugs to patients,” says Warner of Kantar Health. However,
this approach can bring significant business challenges
for oncology practices, so it tends to be seen only in larger
oncology practices. It is thought that less than 10% of practices
currently dispense oral oncology drugs directly. “In oncology,
payers in turn will continue to scrutinize the incremental value
of new therapies, while experimenting with new approaches
to manage overall costs, while maintaining access to quality
cancer care,” she concludes. “Manufacturers need to evolve
their clinical development, marketing and sales strategies in
order to remain competitive in this complex arena.”
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