Download The Precision Oncology Annual Trend Report

The Precision Oncology
Annual Trend Report
Perspectives From Payers and Providers
First Edition
September 2014
TABLE OF CONTENTS
Foreword3
Executive Summary
4
The Oncology Landscape: Trending Toward
Precision Medicine in Cancer Care
7
Methodology9
Precision Medicine in Oncology: Pathway to Progress?
10
Value of Innovation: In the Eye of the Beholder
11
Paying for Outcomes: Toward Value-Based
Coverage and Reimbursement
16
Molecular Diagnostics: Making the Value Proposition
19
Clinical Adoption: Managing Information Overload
24
Conclusions26
The Precision Oncology Annual Trend Report | 3
Oncology care has always been personalized. For hundreds of years,
physicians have strived to help patients grapple with the characteristics
of the dreaded disease. What is different today is that advances in
molecular science and technology are enabling us to be much more
precise in how we prevent, diagnose, and treat cancer.
It is precision that promises improved patient outcomes and reduced
health care costs. It is precision that offers a viable solution to the
challenges facing our health care system, including the affordability
and accessibility of new cancer interventions in our current economic
environment.
We are at a critical turning point in our progress against cancer. As
we know, these advances are occurring in an environment of intense
pressure for fiscal restraint that could, if not managed properly, stifle
progress. Reimbursement policies, for example, that support or impede
innovative precision medicine technologies will play a major role in
determining whether recent progress against cancer can be sustained.
The Precision Oncology Annual Trend Report: Perspectives From Payers and
Providers, was commissioned to illuminate the perspectives of payers
and oncologists on key issues. It reveals where their perspectives align
and where they differ in order to identify the opportunities that may
emerge through personalized medicine. This, in turn, will enable us
to formulate potential solutions that may lead to more widespread
adoption and improved clinical outcomes based on progress in science
and technology.
This report is an important contribution to the field, reflecting some
payers’ and oncologists’ belief that precision oncology interventions
can improve patient outcomes in a cost-effective manner. Nonetheless,
it also underlines that we face challenges. Among those highlighted in
the report are defining the value of new interventions, collecting the
requisite levels of evidence to satisfy different constituencies to justify
investment in precision medicine, and using the data based on that
evidence to inform clinical decision making.
The insights from this trend report will help define a path forward for
many stakeholders in the health care community as we seek to promote
innovation that benefits both patients and the health system.
Edward Abrahams, PhD
President
Personalized Medicine Coalition
Foreword
4 | The Precision Oncology Annual Trend Report
Executive Summary
Progress against cancer is at a critical turning point. Advances in science
and technology are changing the way in which the more than 200 types of
cancer1 are identified, classified, and treated, and are forming the foundation
of precision medicine in cancer care. But these opportunities are occurring
at a time when the entire health care industry is under intense pressure to
exercise fiscal restraint. 2 The advance of precision medicine in cancer care
may offer viable solutions to the challenges facing our health care system,
including trade-offs between costs and quality, declining resources, and an
aging population. Accordingly, the creation of coverage and reimbursement
policies that support innovative precision medicine technologies may play a
critical role in determining whether progress against cancer can be maintained
in the current environment.
Payers and providers are the major stakeholder groups responsible for the
widespread implementation and adoption of precision medicine approaches,
and both are increasingly being challenged to manage these emerging
technologies and products. An unpublished survey conducted by Novartis
Oncology in 2011 found that 90% of payers interviewed did not believe they
had the information needed to effectively manage new oncology drugs,
regardless of the size and sophistication of the health care plans. Without the
full engagement of these communities, the transformation to a new generation
of precision medicine in cancer care may not succeed.
In order to address this information need, Novartis commissioned this
inaugural report, The Precision Oncology Annual Trend Report: Perspectives From
Payers and Providers, to reveal the perspectives of both payers and providers
on key issues within the field of precision medicine in oncology. Understanding
the perspectives of these major stakeholders will provide insight into adoption
of precision medicine and identify potential pathways for change that may lead
to improved clinical and economic outcomes.
Methodology
This trend report is based on data obtained from both a fielded survey and
in-depth interviews with subject matter experts. All participants were selected
to represent a mix of government, private, and large employer payers, payers
from regional and national health plans (N=50 for survey; N=5 for interviews),
as well as small and large group health care providers (sometimes referred
to as “oncologists” in this report) from both community and large specialized
clinics (N=50 for survey; N=5 for interviews) with geographic balance. The
survey and in-depth interviews were conducted with complete transparency.
(Note: this report uses the terms “survey” or “surveyed” to discuss findings
from the 50 respondents, and “interview” or “interviewed” to discuss findings
or comments from the 5 individuals who were interviewed.)
Perspectives From Payers and Providers | 5
Key Findings
Precision Oncology Is a Pathway to Progress
The majority of payers and providers surveyed and interviewed believe that
precision medicine in oncology is a viable solution to the challenges facing our
health care system. Specifically, these stakeholders are in agreement that:
•Precision oncology interventions can improve patient outcomes—
and in a cost-effective manner
•Higher short-term [direct] costs for increased biomarker-based diagnostic
testing are worth the potential long-term savings in health care costs
•Precision medicine in oncology offers a solution to the rising costs of
health care, mainly because these interventions can help to avoid waste
in the system
The ability of precision medicine to improve patient outcomes in a cost-effective
manner comes with the following caveat from payers: treatment decisions must
be based on the results of the molecular diagnostic tests.
Value Is in the Eye of the Beholder
Most payers and oncologists surveyed and interviewed have different
perspectives on the benefit-cost ratio of targeted cancer treatments that have
been launched within the last 5 years. While the majority of payers surveyed
believe that less than 25% of targeted cancer treatments have a price that is
justified by the known health outcomes delivered, most providers surveyed
believe that more than 25% of these treatments have a justified price point.
Payers and oncologists are in agreement that after overall survival and cost,
the next most valuable attributes of a new cancer intervention are improved
progression-free survival (PFS), improved quality of life, and fewer side effects/
hospital visits. Although payers agree that quality-of-life improvements are
valuable attributes of a new cancer intervention, quality of life is not a key
attribute that payers consider when making coverage decisions for these
interventions. According to payers interviewed, part of the challenge lies in
the ability to define suitable quantitative metrics.
6 | The Precision Oncology Annual Trend Report
Payers rely on a number of resources when considering coverage decisions,
including clinical trial data and comparative effectiveness research. But to
help make the most informed coverage decisions for precision medicine
interventions, payers surveyed stated that they need additional information
beyond what existing value assessment approaches provide, including
•Head-to-head studies/data between new agents and standard of care
(not placebo)
•Economic data (eg, cost of overall care)
•Long-term, real-world clinical and economic data
•Clinical utility data for molecular diagnostic tests
Assessing the Value of Molecular Diagnostics
The lack of clinical utility data (the ability of test results to inform clinical
decision making) for molecular diagnostic tests is the most common
concern for payers and providers with respect to expanding coverage for,
and incorporating these tests into clinical practice, respectively. Additionally,
payers are concerned that providers will order molecular diagnostic tests, but
will not use the test results to support treatment decisions. This concern was
not supported by the providers’ viewpoint, however: the majority of oncologists
surveyed almost always prescribe the molecular diagnostic test before treating
patients with targeted agents—and almost always base their clinical decisions
on the results of the test.
Most payers and oncologists surveyed and interviewed are in agreement that
molecular diagnostic tests should have to demonstrate the same level of
clinical evidence as therapeutics via randomized controlled trials, and that
the US Food and Drug Administration (FDA) should regulate all laboratorydeveloped tests (LDTs).
Perspectives From Payers and Providers | 7
The Oncology Landscape:
Trending Toward Precision Medicine in Cancer Care
Overview
•This trend report provides the perspectives of both payers and oncologists on key issues within the field
of precision medicine, and future editions will seek to report on changes in attitudes and practices over time
•Precision medicine in cancer care may offer a viable solution to the challenges facing our health care system,
and the field is becoming increasingly important to all stakeholders
•Advances that are being made in this field, however, are occurring at a time when the entire health care industry
is under intense pressure to exercise fiscal restraint
•Understanding the perspectives of these major stakeholders will provide insight into barriers to adoption of precision
medicine and identify potential pathways for change that may lead to improved clinical outcomes
•The creation of policies that support the development, reimbursement, and widespread adoption of innovative
precision oncology interventions may play a critical role in sustaining our efforts to improve patient outcomes
at a time of health care cost containment
Extraordinar y advances in science and technolog y are changing the
way we identify, classify, and treat the more than 200 types of cancer,1
and are forming the foundation of precision medicine in cancer care.
There is a pronounced shift toward molecular targeted therapies 3 and
increased fragmentation of oncology as common cancers are being further
classified into molecular subtypes based on their genetic characteristics. 4
The promise of precision medicine in oncology is to individualize prevention and
treatment strategies based on the molecular makeup of the patient and/or the
patient’s tumor.
The field of precision medicine is becoming increasingly important to all
stakeholders in the health care system. Physicians, payers, and industry are
focused on optimizing patient outcomes, while addressing rising health care
costs, by diagnosing disease more precisely in each individual and treating
each patient with only the most appropriate therapy based on molecular
subtype. Additionally, ineffective therapies can harm patients. In 2010, a
5-month study at an intensive care unit (ICU) of a comprehensive cancer center
found that 22.9% of all ICU admissions were due to adverse drug reactions
(ADRs). The average length of stay for each patient was 6.2 days and the
mortality rate was 28%.5
According to the FDA, more than 140 marketed drugs include a pharmacogenomic
biomarker on their label that either recommends or requires genetic testing
for optimal treatment; of these, more than 40 are oncology-specific. 6 The
number of biomarker-driven cancer therapies is expected to rise in coming
years as 100% of the companies surveyed by the Tufts Center for the Study of
Drug Development (CSDD) are utilizing biomarker data to drive drug discovery
and development. 3 Of 36 pharmaceutical and biotechnology companies
surveyed by Tufts CSDD, 80% had established strategic partnerships related
to personalized medicine, 70% had submitted biomarker data to the FDA, and
50% had clinical trials collecting DNA samples from trial participants.7
“Our ability to diagnose and find
targets is more advanced than
our ability to affect these targets.
This is the greatest limitation
[of precision oncology].”
–O
ncologist from a teaching hospital
in New England
8 | The Precision Oncology Annual Trend Report
“With precision medicines, the cost
per benefit will be lower because
we will not be treating the 80% of
patients who will not respond, which
is what we do today with most of
our treatments.”
–O
ncologist from a teaching hospital
in New England
In response to demands for an improved health care system that increases
quality and reduces costs, many organizations (eg, American Society of Clinical
Oncology’s CancerLinQ program 8) and cancer centers (eg, Moffitt Cancer
Center’s Total Cancer Care ®9) are embracing a learning health care system.
The promise of this emerging innovative model is to aggregate, analyze, and
apply evidence-based knowledge to improve patient care. A learning health
care system seeks to “link research and care into a seamless process by
using advances in information technology (IT) to continually and automatically
collect and compile from clinical practice, disease registries, clinical trials, and
other sources of information, the evidence needed to deliver the best, most
up-to-date care that is personalized for each patient.”10
Another trend in cancer care is the shift in medication delivery, away from
intravenous delivery at the oncologist’s office and toward self-administered,
oral therapy in the patient’s home. A National Comprehensive Cancer Network®
(NCCN ®) task force in 2008 estimated that more than 25% of the approximately
400 anticancer agents in development will be administered orally.11 This shift
from intravenous to oral agents may require fewer office visits and may provide
patients with a sense of being in charge of their treatment.
“[The promise of precision medicine]
is to...be more cost-effective in the
use of these new targeted therapies.”
–O
ncologist-Partner from
a Minnesota Hematology-Oncology Practice
All these advances, however, are occurring at a time when the entire health
care industry is under intense pressure to exercise fiscal restraint.2 The cost
of cancer care will continue to escalate in the near future, partly due to an
aging population,12 rising direct medical costs, and expanded access under
health care reform. According to the National Institutes of Health, medical
expenditures for cancer are projected to reach at least $158 billion in 2020—
a 27% increase from 2010.13
Precision medicine interventions for oncology, including targeted therapies
and molecular diagnostics, are not immune to the current pressures facing the
US and other health care systems—notably, the issue of affordability. Given
the above-mentioned economic challenges, there is even greater pressure on
payers to manage costs of care.
“Hopefully patients will not receive
drugs if they have no capacity to
benefit…that is where the waste is.”
–M
edical Director from a Northeastern
US Integrated Health System
Precision medicine in cancer care may offer a viable solution to the challenges
facing our health care system; however, challenges to the widespread
implementation and adoption of precision medicine approaches remain.
The creation of policies that support the development, reimbursement, and
widespread adoption of innovative precision oncology interventions may play
a critical role in sustaining our efforts to improve patient outcomes at a time
of health care cost containment.2
Perspectives From Payers and Providers | 9
Thinking ahead…
Payers may want to assess their organization’s abilities to adapt to
developments in precision medicine.
•Do we know the degree of alignment (or nonalignment) between our providers
and us regarding the use of precision medicine technologies?
•Are our insurance (coverage and reimbursement) policies, regulations, and
practices flexible enough to meet the needs of our payer, provider, and patient
stakeholders? Do we need to anticipate new or modified regulatory filings in
upcoming years?
•Do we have private and secure communication channels to support appropriate
patient adherence to oral, outpatient therapies? Do existing systems work, or do
we need to consider new ones?
Methodology
Payers and oncologists are increasingly being challenged to make coverage
and treatment decisions, respectively, for emerging precision medicine
interventions in spite of the above-mentioned challenges (ie, balancing
quality, costs, evidence, oral administration of more oncology drugs, patient
demographic shifts). This trend report seeks to reveal the perspectives of
payers and oncologists on key issues within the field of precision medicine, and
future editions will seek to report on changes in attitudes and practices over
time. Understanding the perspectives of these major stakeholders will provide
insight into barriers to adoption of precision medicine and identify potential
pathways for change that may lead to improved clinical outcomes.
This trend report is based on data obtained from a fielded survey and from
in-depth interviews with subject matter experts. Participants were selected to
represent a mix of government, private, and large employer payers, payers from
regional and national health plans (N=50 for survey; N=5 for interviews), as
well as small and large group health care providers from both community and
large specialized clinics (N=50 for survey; N=5 for interviews) with geographic
balance. The survey and in-depth interviews were conducted with complete
transparency. Secondary research was also conducted to provide a thorough
landscape analysis. (Note: This report uses the terms “survey” or “surveyed”
to discuss findings from the 50 respondents, and “interview” or “interviewed”
to discuss findings or comments from the 5 individuals who were interviewed.)
“A biomarker can identify whom
a drug is for and, even more
importantly, whom it’s not for.”
–D
irector from a Northeastern
US Integrated Health System
10 | The Precision Oncology Annual Trend Report
Precision Medicine in Oncology:
Pathway to Progress?
Key Insights
Most payers and providers surveyed and interviewed believe:
•Precision medicine in oncology is a viable solution to the challenges facing our health care system
•Precision oncology interventions can improve patient outcomes in a cost-effective manner if treatment
decisions are based on the results of molecular diagnostic tests
•The short-term direct costs of biomarker-based diagnostic testing are worth the potential long-term savings in
health care costs, examples of which could include decreased hospitalization, increased work days, decreased
(overall) health care utilization, decreased time to arrive at the appropriate therapy, and decreased diagnostic
testing for patients identified as “precision medicine patients”
The majority of payers and providers surveyed and interviewed believe that
precision medicine in oncology is a viable solution to the challenges facing
our health care system (Figure 1). Specifically, they are in agreement that
precision oncology interventions can improve patient outcomes in a costeffective manner, and that the short-term direct costs of biomarker-based
diagnostic testing are worth the potential long-term savings in health care
costs. Some interviewees stated that the potential of these interventions
to address rising health care costs lies in their ability to avert waste in the
health care system.
The ability of precision medicine to improve patient outcomes in a cost-effective
manner comes with the following caveat from payers: treatment decisions
must be made based on the results of the molecular diagnostic tests.
“Precision medicine offers one
solution to the rising costs of
health care because it can avoid
waste in the system…when you
avoid waste, you save money.”
–D
irector of Pharmacy Operations
from a New England HMO
Figure 1
Payers and oncologists were asked to rate their level
of agreement with each statement.
I feel that precision medicine
in oncology can improve
patient outcomes.
I feel that precision medicine in
oncology can improve outcomes
in a cost-effective manner.
I feel that precision medicine in
oncology offers one of the solutions
to the rising cost of health care.
The higher short-term costs for increased
biomarker-based diagnostic testing is
worth the potential long-term savings.
1
2
3
Strongly Disagree
Oncologists
4
5
Strongly Agree
Payers
Perspectives From Payers and Providers | 11
Thinking ahead…
Payers may want to assess their organization’s abilities to adapt to new
developments in precision medicine.
•Should our organization consider “post authorization” tools to follow up as to how
precision medicine information was actually factored into treatment decisions?
Value of Innovation:
In the Eye of the Beholder
“We like certainty. And for that
certainty we almost accept a higher
premium price on the assumption
that [precision medicines] will lead
to better outcomes. We can define
the population and the smaller it is,
the more comfortable we feel we can
manage it.”
–M
edical Director from a Northeastern
US Integrated Health System
Key Insights
What payers and providers surveyed and interviewed believe:
•Half of payers believe that all stakeholders together should define value; 60% of oncologists believe that only
oncologists should define value
•While more than half of payers surveyed believe that less than 25% of targeted cancer treatments have a price that
is justified by the known health outcomes delivered, more than half of providers surveyed believe that greater than
25% of these treatments have a justified price point
•The majority of payers and oncologists are in agreement that the value of innovative precision medicines should be
measured continually, and not just at the time of FDA approval
In our current environment, a key question facing stakeholders—policymakers,
payers, industry, providers—is how to sustain biomedical innovation and
optimize patient outcomes while managing rising health care costs. A lack
of consensus among stakeholders regarding what constitutes value in a new
treatment creates challenges for both industry and payers, as decisions have
to be made about which products to bring to market and how these products
should be evaluated and reimbursed, respectively.
Payers are caught between 2 sets of stakeholders with (sometimes) competing
interests: patients and providers, who may want access to new treatments
regardless of cost; and employers, taxpayers, and underinsured patients or
caregivers, who need to contain spiraling costs. Payers are therefore under
intense pressure to rein in the cost of care without negatively impacting
patient outcomes or taking treatment decisions out of the hands of practicing
oncologists.
“In oncology, we are still not thinking
of the benefits of a drug in terms
of cost, but this may become a
factor when some drugs will not be
reimbursed…In other words, I don’t
place much emphasis on cost for now.”
–O
ncologist from a Teaching Hospital
in New England
12 | The Precision Oncology Annual Trend Report
When asked who should ultimately determine whether an intervention provides
value, payers and oncologists surveyed had differing perspectives (Figure 2).
Half of the payers believe that all stakeholders, including oncologists, payers,
patients, and government, should define value; 60% of oncologists, however,
believe that only oncologists should define value.
“I think [determining the value of
a treatment] should be a decision
shared among patients, payers,
and providers.”
–P
harmacy Director from a Mountain State
Integrated Health System
Figure 2
Who should ultimately determine if a new oncology
intervention provides value?
Government
Payers
Patients
Oncologists
All of the Above
0
10
20
30
40
50
60
70
Percentage of Respondents
Oncologists
“We don’t use quality of life in policy
decision making. That’s nice added
information, but it’s not going to
sway our decision in one direction
or another.”
– Medical Director from a New Jersey Health Plan
Payers
Payers are often at odds with oncologists in terms of what constitutes a survival
benefit in the context of cancer treatment. A 2008 Zitter Group survey found
that while two-thirds of oncologists believe a treatment should extend life by
3 to 6 months to constitute a survival benefit, payers believe a treatment should
extend survival by at least 10 months to constitute a survival benefit.14 The
majority of payers and oncologists surveyed for this report also have different
perspectives on the benefit-cost ratio of targeted cancer treatments that have
been launched within the last 5 years (Figure 3). While more than half of payers
surveyed believe that less than 25% of targeted cancer treatments have a price
that is justified by the known health outcomes delivered, over half of providers
surveyed believe that more than 25% of these treatments have a justified
price point.
Perspectives From Payers and Providers | 13
Figure 3
What percentage of targeted cancer therapies launched within
the last 5 years has a price that you believe is justified by
the known health outcomes delivered?
All 100%
75% to 99%
“Quality of life is not as important in
our decision making because it’s hard
to measure.”
50% to 74%
25% to 49%
–P
harmacy Director from a Mountain State
Integrated Health System
<25%
None
0
10
20
30
40
50
60
Percentage of Respondents
Oncologists
Payers
Improved survival and direct cost of therapy are the top attributes that payers
consider when making coverage decisions (Figure 4). After overall survival and
cost, payers and oncologists surveyed are in agreement that the next most
valuable attributes of a new cancer intervention are improved progressionfree survival, improved quality of life, and fewer side effects/hospital visits
(ranked in that order; data not shown). Although payers agree that qualityof-life improvements are valuable attributes of a new cancer intervention,
quality of life is not a key attribute that payers surveyed and interviewed
consider when making coverage decisions for these interventions. According
to those interviewed, part of the challenge lies in the ability to define suitable
quantitative metrics.
Figure 4
Payers ranked in order the attributes that their organization
considers when making coverage decisions for new molecular
targeted therapies (note that survey participants could add
additional attributes if not listed).
“Quality of life is very important to
the patient and doctor. Quality of
life is impacted by toxicities and
comorbidities that are important in
terms of how a patient looks and
feels…and are also important [for
cost control] because it takes a lot
of effort to manage these things.”
–O
ncologist from a Los Angeles HematologyOncology Practice
Ranked in Order of Importance
Improved survival 1
Direct cost of therapy 2
Indirect cost of therapy 3
Direct cost of companion
4
diagnostic test
Improved quality of life 5
0
10
20
30
40
50
60
70
Percentage of Respondents
80
90
100
14 | The Precision Oncology Annual Trend Report
“Quality of life is important because
it determines patient satisfaction
with treatment, and payers are
increasingly demanding improved
satisfaction. Additionally, a good
quality of life improves the
relationship between doctor and
patient and allows them to better
deal with difficult decisions later on.”
–O
ncologist-Partner from a Hospital-affiliated
Oncology Practice
A number of evidence-generation approaches are being used by payers and
oncologists to help assess the value of innovative technologies and care
delivery, including clinical trial data, comparative effectiveness research (CER),
cost-effectiveness analysis (CEA), and health technology assessments (HTAs).
However, these value assessment tools only measure a single point in time
and may become increasingly challenged by precision medicine in oncology.15
The majority of payers and oncologists surveyed rely most on the same 3
primary evidence-generation tools when making policy or treatment decisions,
respectively, for precision oncology interventions: 1) clinical trial data, 2)
clinical guidelines, and 3) peer-reviewed publications. Furthermore, most
payers and oncologists are in agreement that the value of innovative precision
medicines should be measured continually, and not just at the time of FDA
approval (Figure 5).
Figure 5
When should the value of innovative precision oncology
interventions be measured?
Continuously
After a defined period of use
in the real-world setting
“Every patient is unique…and this
is why existing value measurement
approaches are not helpful for
decision making.”
–O
ncologist from a Teaching Hospital
in New England
At conclusion of phase 4
studies
At the time of FDA approval
0
10
20
30
40
Percentage of Respondents
Oncologists
Payers
50
60
Perspectives From Payers and Providers | 15
At this point in time, the majority of payers and oncologists surveyed do not
feel strongly either way that the Patient-Centered Outcomes Research Institute
(PCORI) will prove to support advances in precision medicine in oncology,
or whether precision medicine and comparative effectiveness research are
mutually exclusive (Figure 6).
Figure 6
“[The value of innovative precision
oncology technologies] should be
measured continuously because we
have to make decisions along that
spectrum.”
Payers and oncologists were asked to rate their level
of agreement with each statement.
I feel that the Patient-Centered
Outcomes Research Institute (PCORI)
will prove to support advances in
precision medicine for oncology.
– Medical Director from a New Jersey Health Plan
I feel that Precision Medicine and
Comparative Effectiveness Research
are mutually exclusive.
1
2
3
4
Strongly Disagree
Oncologists
5
Strongly Agree
Payers
To help make the most informed coverage decisions for precision medicine
interventions, payers surveyed need additional information beyond what
existing value assessment approaches provide. Payers would also like more
information on the following:
•Clinical utility data for molecular diagnostic tests
•Economic data (eg, cost per PFS, cost of overall care)
•Long-term, real-world clinical and economic data
•Head-to-head studies/data
Thinking ahead…
Payers may want to assess their organization’s abilities to adapt to new
developments in precision medicine.
•Do our stakeholders have a common definition of success for the implementation
and use of precision medicine….or a designated arbiter?
•Has our organization designated or defined evidence-based measures
for precision medicine?
•Does our organization need to reach out to, and possibly work with, third-party
organizations that could provide such evidence-based measures?
“We don’t want a model to tell us
what is cost-effective. We want this
information to be based on real-world
data.”
–M
edical Director from a Northeastern US
Integrated Health System
16 | The Precision Oncology Annual Trend Report
Paying for Outcomes: Toward Value-Based
Coverage and Reimbursement
Key Insights
•Multiple coverage models are being tested or implemented by payers interviewed for precision oncology
interventions, including coverage with evidence development, outcomes-based risk sharing, and performancelinked reimbursement
•Many payment models are being tested or implemented by payer organizations surveyed
for precision oncology interventions, the most common of which include fee for service, pay for performance,
and episode or bundle payments
•Most payer organizations surveyed are not currently partnering with product sponsors (eg, manufacturers)
to develop evidence-generation programs for precision medicine interventions
•Almost half of payers surveyed believe that product sponsors should begin interacting with payers during
phase 2/phase 3 clinical trials; almost 40% believe these interactions should begin only after FDA approval
In market response to increasing cost pressures, payers are moving away from
volume-based and toward value-based coverage and reimbursement models.
For example, a coverage model affects how the payer (eg, employer or health
plan) will initially cover and reimburse for the drug while collecting data about
the drug’s performance. This information ultimately leads to better coverage
decisions for specific patient subpopulations.16 Some coverage models
also impact how much an insurer will pay the manufacturer for the drug.17
A payment model affects how the payer will pay providers (eg, hospitals or
physicians). Payments may be tied to quality metrics or cost targets.18 The
goal of a value-based model is to align the level of reimbursement with the
predetermined value achieved. According to payers surveyed, there are multiple
coverage models being tested or implemented by payers for precision oncology
interventions, including coverage with evidence development, outcomes-based
risk sharing, and performance-linked reimbursement (Figure 7). Additionally,
there are many payment models that are being tested or implemented by
payer organizations for precision oncology interventions, the most common
of which include fee for service, pay for performance, and episode or bundle
payments (Figure 8).
Figure 7
Payers were asked which reimbursement models are being tested
or implemented by their organization for precision oncology
(respondents could choose more than 1 response).
Others
Performance-linked
reimbursement
Outcomes-based risk sharing
Coverage with evidence
development
0
10
20
30
40
Percentage of Respondents
50
60
Perspectives From Payers and Providers | 17
Figure 8
Payers were asked what types of payment models are being tested
or implemented by their organization for precision oncology
interventions (respondents could choose more than 1 response).
Other responses included “capitation,” “none,” “DIRPP” (drug
intervention response predictions with paradigm—a probabilistic
graphical model).
“We tried to work with
[a pharmaceutical company] on
a risk-based contract model for
some of their products, but we
could never come to agreement
on what the measured outcomes
were going to be.”
Other
Comprehensive care model
Episode or bundled payments
Pay for performance
–P
harmacy Director from a Southwestern
US Integrated Health System
Fee for coordination
Fee for service
0
10
20
30
40
50
60
70
Percentage of Respondents
Fueled by a mutual interest in improving care quality and lowering costs,
some payers and product sponsors are collaborating in evidence-generation
programs to achieve this vision.19 Most payer organizations surveyed, however,
are not currently engaged in such programs with product sponsors for
precision medicine interventions, and most are not sure whether there will
be an increase in these types of collaborations in the near future (Figure 9).
Figure 9
Payers were asked to rate their level of agreement
with each statement.
I expect to see an increase in
payer-product sponsor collaborations
in the near future (5 years)
My organization is engaged in
collaborative evidence-generation
programs with product sponsors for
precision oncology interventions
1
2
Strongly Disagree
3
4
5
Strongly Agree
18 | The Precision Oncology Annual Trend Report
“Some manufacturers actually engage
us in phase 2 of drug development.
Why? Because if this drug is coming
out five or six years later, what a
shame that we weren’t involved in
helping them understand what the
environment may look like in terms
of defining what value needs to look
like and the end points they should
be considering. When they do come
to market, hopefully they have what
it takes to be covered.”
–M
edical Director from a Northeastern
US Integrated Health System
Payers sur veyed were divided regarding the point during the clinical
development process at which product sponsors should begin to interact with
payers (Figure 10). Almost half believe these interactions should begin during
phase 2 or 3 clinical trials, whereas almost 40% believe these interactions
should begin only after FDA approval.
Figure 10
Payers were asked when product sponsors should
begin to interact with payers.
Other (“after phase 3”)
Upon FDA approval
Pivotal phase 2
Phase 2/3
Phase 1/2
0
10
20
30
40
50
Percentage of Respondents
Thinking ahead…
Payers may want to evaluate their organization’s abilities to adapt to
new developments in precision medicine.
•Are our coverage models and/or reimbursement models aligned with our
organization’s overall goals with respect to precision medicine? Have we
evaluated needs at all levels: customer, payer, provider, and patient?
•Should we seek collaboration with manufacturers, laboratories, or other
organizations to help us characterize and use precision medicine information?
60
Perspectives From Payers and Providers | 19
Molecular Diagnostics:
Making the Value Proposition
Key Insights
•The majority of payers and oncologists surveyed agree that the biggest concern they have with respect to expanding
coverage for molecular diagnostics and incorporating these tests into clinical practice, respectively, is the lack of
data on the tests’ clinical utility
•Most payers surveyed and interviewed are concerned that providers will order diagnostic tests,
but will not use the test results to make treatment decisions
–However, the majority of oncologists surveyed almost always prescribe the molecular diagnostic test before
treating patients with targeted agents, and almost always base their clinical decisions on the results of the test
•Payers and oncologists interviewed would like molecular diagnostic tests to be incorporated into clinical guidelines
•When asked about the level of evidence needed for molecular diagnostic tests, most payers and oncologists
are in agreement that:
–These tests should have to provide the same level of evidence as therapeutics, via randomized, controlled
clinical trials
–FDA should regulate all LDTs
–FDA approval of these tests will increase the likelihood of clinical adoption
•However, according to payers interviewed, reimbursement and clinical adoption may not be guaranteed
even with proven clinical utility
20 | The Precision Oncology Annual Trend Report
“There’s no question that companion
diagnostics allow us to better focus
our therapies.”
–O
ncologist-Partner from a Minnesota
Hematology-Oncology Practice
Targeted, more effective treatments will be unattainable unless providers have
molecular information about their patient’s disease. The majority of payers and
oncologists surveyed agree that the biggest concern they have with respect to
expanding coverage for molecular diagnostics and incorporating these tests
into clinical practice, respectively, is the lack of data on the tests’ clinical utility
(Figure 11a and b). This finding is consistent with a recent survey demonstrating
that 83% of payers cover diagnostics in breast cancer, specifically epidermal
growth factor receptor (EGFR) and human epidermal growth factor receptor 2
(HER2) testing, because of the validated clinical utility of these tests.20
Figure 11a
Payers ranked their concerns about expanding coverage
for molecular diagnostics.
Ranked in Order of Importance
Lack of clinical utility data 1
–M
edical Director from a Northeastern US
Integrated Health System
Ordering of tests by MDs
who do not use the test
3
results to support clinical
decisions
Lack of cost-effectiveness
data 4
The need to test many to
identify the few who will 5
benefit
Overall increased use of 6
diagnostic tests
Increased test complexity 7
0
10
20
30
40
50
60
70
80
90
100
Percentage of Respondents
Figure 11b
Oncologists ranked their concerns about integrating molecular
diagnostics into clinical practice.
Lack of clinical utility data 1
Ranked in Order of Importance
“Sometimes we deal with biomarkers
that are not definitive. If the test is
negative, it means patients may not
benefit as much, but you can’t say
that they won’t benefit at all. We like
to deal with certainty, and certainty is
black and white; you get the therapy
or you don’t.”
Cost 2
Lack of evidence-based 2
guidelines
Obtaining insurance
3
authorization
Cost 4
Provider reimbursement 5
Delay in care waiting for 6
test results
Complexity of testing 7
process
Lack of familiarity 8
0
10
20
30
40
50
60
70
Percentage of Respondents
80
90
100
Perspectives From Payers and Providers | 21
Additionally, most payers surveyed and interviewed are concerned that
providers will order diagnostic tests, but will not use the test results to make
treatment decisions. In these cases, the molecular diagnostic would only add
cost to an already financially overburdened health care system. Consequently,
when making coverage decisions for molecular diagnostics, payers surveyed
claim that they must have clinical utility and validity data, and the test results
must change patient management (Figure 12). Interestingly, the majority of
oncologists surveyed almost always prescribe the molecular diagnostic test
before treating patients with targeted agents—and almost always base their
clinical decisions on the results of the test (Figure 13).
Figure 12
Payers ranked the types of data that are “must haves”
when making coverage decisions.
–O
ncologist from a Los Angeles HematologyOncology Practice
Ranked in Order of Importance
Clinical validity 1
Clinical utility 2
Test performance 3
Test results must change
4
patient management
Comparative effectiveness 5
Cost 6
Cost-effectiveness 7
0
10
20
30
40
50
60
70
80
90
100
Percentage of Respondents
Figure 13
“There are so many molecular
targets for which tests are being
developed that may or may not lead
to decisions about drug efficacy
that it’s overwhelming…I think it’s
becoming increasingly difficult for
practicing oncologists to keep up
with all of this material.”
Oncologists ranked the frequency of each scenario
from never to always.
Q21. How frequently do you base clinical
decisions on the results of a
diagnostic test?
Q20. When treating cancer patients with
targeted agents, how often do you
prescribe the genetic test first?
Q19. How frequently do you order genetic
tests for treatment decision making?
Q18. How frequently do you order genetic
tests for diagnosis?
Q17. How frequently do you order genetic
tests for disease risk?
1
2
Never
3
Sometimes
4
5
Always
22 | The Precision Oncology Annual Trend Report
“We shouldn’t be ordering the test if,
in the end, we’re not going to utilize
the results.”
–M
edical Director from a Northeastern US
Integrated Health System
“One of our biggest concerns with
molecular diagnostics is what to do
with the data. In order for tests to
be useful, they have to be actionable.
If the test is not actionable, it’s a
waste of time and effort.”
–O
ncologist-Partner of a Hospital-affiliated
Oncology Practice
“Are the test results actually being
used and impacting care in some way?
Our biggest fear is to have physicians
order all these tests, but then not do
anything with the data…We want the
data to direct care.”
–D
irector of Pharmacy Operations from a New
England HMO
In addition to the lack of clinical utility data, a lack of evidence-based guidelines
on the use of diagnostic tests is of almost equal concern for oncologists (Figure
11b). Payers and oncologists interviewed mentioned the need for these tests
to be incorporated into clinical guidelines. In 2011, 90% of payers indicated
that clinical guidelines influence their decision to cover an oncology diagnostic
test, with American Society of Clinical Oncology (ASCO) and NCCN guidelines
given equal preference.20
Payers require that precision medicine interventions demonstrate clinical- and
cost-effectiveness similar to other clinical interventions. While the incorporation
of molecular diagnostics into clinical practice may increase short-term costs,
they may provide critical information that can change the course of treatment—
and the course of the disease. Therefore, long-term cost savings for medical
care may be possible if, for example, costly trial-and-error–based medicine
is replaced with precision medicine.21 Additionally, the costs associated with
treating patients who will not respond to treatment may be reduced 22 and
the rate of adverse events and unnecessary hospital admissions may also be
reduced.23 For these reasons, the majority of payers and oncologists believe
such tests are worth the potential long-term savings (Figure 1).
Most molecular-based tests are LDTs.24 Although a few LDTs are FDA approved
(eg, MammaPrint ® and AlloMap ®), the majority of these tests are regulated
under CMS’s authority in accordance with Clinical Laboratory Improvement
Amendment rules.25 Given the considerable growth in volume and complexity
of LDTs—and their growing role in informing critical health care decisions
such as treatment selection, dosing, and exclusion—the FDA would like to end
its policy of enforcement discretion for these tests and is moving to regulate
all LDTs.26 The regulatory framework for LDTs will be risk-based according to
intended use, and a phased-in, long-term approach is planned. When asked
about the level of evidence needed for molecular diagnostic tests, most payers
and oncologists are in agreement that these tests should have to provide the
same level of evidence as therapeutics, via randomized controlled clinical trials
(Figure 14). They also agree that the FDA should regulate all LDTs, and that
FDA approval of these tests will increase the likelihood of clinical adoption
(Figure 14). However, according to payers interviewed, reimbursement and
clinical adoption may not be guaranteed even with proven clinical utility.
Note: MammaPrint is a registered trademark of Agendia BV, Amsterdam.
AlloMap is a registered trademark of CareDX, Inc.
Perspectives From Payers and Providers | 23
Figure 14
Payers and oncologists were asked to rate their level
of agreement with each statement.
I feel the FDA approval of a molecular
diagnostic will increase the likelihood
of clinical adoption.
I support the FDA’s decision to regulate
all laboratory-developed tests (LDTs).
I feel that diagnostic tests should have to
provide the same level of evidence as
therapeutics via randomized control trials.
1
2
3
Strongly Disagree
Oncologists
4
5
Strongly Agree
Payers
Thinking ahead…
Payers may want to evaluate their organization’s abilities to adapt to new
developments in precision medicine.
•Do we have access to clinical utilization data from LDTs about precision medicine
(via electronic medical records or other sources)?
•Are we satisfied with the standardization of LDT procedures and data?
“Unlike drugs, where FDA approval
means we cover them, for diagnostic
tests, FDA approval means we’ll look
at them.”
–M
edical Director from a New Jersey
Health Plan
24 | The Precision Oncology Annual Trend Report
Clinical Adoption:
Managing Information Overload
Key Insights
•The majority of oncologists surveyed feel that they have the information and resources they need to effectively
make clinical decisions regarding precision medicines; however, payers need more resources
•Most oncologists surveyed are somewhat to very confident in their level of genetic knowledge to inform clinical
decision making
The advent of vast amounts of clinical, genomics, and outcomes data—as well
as rapid accumulation of evidence for these extremely complex technologies—
is changing the landscape for understanding what is effective and what
treatment approach should be followed. The widespread coverage and adoption
of precision oncology interventions depends heavily on the degree to which the
payer and provider communities are able to manage the volume of information.
Most oncologists feel that they have the information and resources they need
to effectively make clinical decisions regarding precision medicines; however,
payers need more resources (Figure 15). The majority of both payers and
oncologists rely on peer-reviewed publications over all other resources to keep
abreast of advances in precision medicine (Figure 16). Additionally, most
oncologists are somewhat to very confident in their level of genetic knowledge
to inform clinical decision making (Figure 17).
Figure 15
Payers and oncologists were asked to rate their level
of agreement with this statement.
I feel I have the information/resources
needed to effectively make clinical
decisions regarding precision medicine
interventions for oncology
1
2
3
Strongly Disagree
Oncologists
4
5
Strongly Agree
Payers
Perspectives From Payers and Providers | 25
Figure 16
Payers and oncologists were asked what types of educational
resources they use most frequently.
Other
Medical websites
Conferences
Peer-reviewed pubs
0
10
20
30
40
50
60
70
80
Percentage of Respondents
Oncologists
Figure 17
Payers
Oncologists were asked how confident they are in their level
of genetic knowledge to inform clinical decision making for
innovative precision medicine products.
Very confident
Somewhat confident
Not at all confident
0
10
20
30
40
50
60
Percentage of Respondents
Thinking ahead…
Payers may want to evaluate their organization’s abilities to adapt to new
developments in precision medicine.
•Do we have an IT strategy in place to manage and utilize precision medicine
to its full potential?
•Do we have managerial and/or training systems in place to manage and utilize
precision medicine to its full potential?
26 | The Precision Oncology Annual Trend Report
Conclusions
The potential benefits of precision medicine in oncology are promising.
Full implementation of precision medicine will challenge all stakeholders
as they seek ways to create real-world clinical outcomes data, develop a
transparent regulatory framework, and integrate molecular diagnostics into
the reimbursement system.
As precision medicine in cancer care becomes a reality in mainstream clinical
practice, payers and providers will have to work together, continuing to make policy
and clinical decisions, respectively, on the rapidly growing numbers of complex
molecular diagnostic tests, companion diagnostics, and biomarker-guided
therapies. The ability of precision medicine interventions to improve patient
outcomes in a cost-effective manner relies on both the clinical utility of the
diagnostic test and the incorporation of test results into therapeutic decision
making. To achieve this goal, payers and providers must determine whether
the information yielded by each diagnostic test can effectively guide clinical
decision making. Furthermore, correlating patient outcomes of a specific
therapy with specific diagnostic test results should be reinforced and endorsed
in treatment guidelines.
The art of medicine is still alive and well, so clinical evaluation by oncologists
is still necessary. Payers will drive the need for quantitative measures, and
simultaneously, for interventions that optimize quality and costs across a
defined patient population. Advances in validating companion diagnostics,
improvements in information technology, and growing skill among clinicians
in the interpretation of clinical results will be key. All stakeholders will need to
work together to achieve better patients outcomes.
Perspectives From Payers and Providers | 27
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