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Stakeholder perspectives on the cost
of cancer care
Economics of Cancer Care:
It’s Everyone’s Problem
Neal J. Meropol, M.D.
Fox Chase Cancer Center
Philadelphia, PA
May 30, 2009
Why focus on oncology?
• Cancer is life-threatening
• Cancer is common
• Treatments and diagnostics are
increasingly costly
• High cost drugs command attention
• Treatments have only modest benefit
in many circumstances
What the media tells us
• “Targeted therapy save lives!”
• “We’re going to bankrupt the
economy!”
• “The pharmaceutical industry is
evil!”
What we should be asking
• What does this mean for individual
patients and their decisions about
treatment?
• What does this mean for how we invest
in, develop, and pay for new cancer
treatments?
The Cost of Care Has Wide Impact
Payers
Producers
Employers
Patients
Providers
What are we spending?
US Health Expenditures and GDP
Adapted from C. Borger, et al. Health Affairs 25(2): w61-w73, 2006;
Reproduced in Meropol and Schulman, J Clin Oncol, 2007
Growth in healthcare spending is
greater than growth in GDP
Healthcare Costs: A Primer, Kaiser Family Foundation, 2007
More spending = Better health
Meropol and Schulman, J Clin Oncol, 2007
Cancer Survival Worldwide
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6.
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100
90
80
70
60
Breast
50
Colon (men) 40
30
Prostate
20
10
0
adapted from Coleman et al. Lancet Oncology,
2008
http://www.oecd.org/document/16/0,3343,en_2
649_34631_2085200_1_1_1_1,00.html
NIH Estimates for Cancer Costs in the
United States: 2007
• Total costs: $219 billion
• $89 billion for direct
medical costs
• US spends ~$2 trillion on
healthcare per year
American Cancer Society
Oncology Drug Contribution to
Spending Growth - 2007
All clinic drug expenditures
Antineoplastics
Growth Rate
9.9%
16%
*Cancer drugs are #1 among hospital and clinic
drug expenditures
*In general, drugs account for only 10% of
healthcare spending
Hoffman JM et al. Am J Health-Syst Pharm, 2009
Cost Effectiveness of Colon
Cancer Drug Treatment
$200,000
I
$180,000
F
$160,000
D
H
$140,000
G
Cost
$120,000
$100,000
E
$80,000
B
C
$60,000
$40,000
A
$20,000
$0
30
40
50
60
70
80
90
100
110
120
Effectiveness (weeks)
A
B
C
D
E
F
G
H
I
not dominated
Wong et al. Cancer, 2009
Cost Effectiveness of Adjuvant Therapy
for Stage III Colon Cancer
British payer perspective
• Addition of oxaliplatin to FU/LV (MOSAIC)
– £ 2970 per QALY gained
• Capecitabine vs. Mayo Clinic FU/LV
– £ 3320 savings per patient
• Extrapolated: FOLFOX vs. Capecitabine
– £ 13,000 per QALY gained
Pandor et al. Health Technology Assessment, 2006
Considerations for Innovators
(producers)
It costs $1 billion to develop a
new drug
Adams and Brantner. Health Affairs, 2006
A double-edged sword
• Biotechnology/oncology is an attractive realm
for investment
• Patients benefit from new drugs
• However,
– Potential for profit-driven inefficiencies in
drug development
– Incentives for marginally better treatments
– Potential disincentive for identification of
predictive markers/personalized medicine
Some assumptions about
targeted/personalized drug development
may not be true
• Certainly true
– Smaller market - bad
– Competitive advantage - good
• Uncertain
– Drug development will be faster, cheaper, more
successful?
– Patients will stay on treatment longer?
– New markets will be identified?
– Pricing premium based on value and novelty will offset
narrowed market
The impact on patients
Prospect Theory: People Care More
About Loss Than Gain
Therefore, cancer
patients may place
high value on
treatments with
“modest” benefit
Weinfurt, K. P. J Clin
Oncol; 25:223-227 2007
Individual patients feel the burden
•
•
•
•
•
Insurance premiums
Co-pays
Co-insurance
Tiered formularies
Part D donut hole
Increased
financial burden
on families
Delay in seeking
treatment
Limit/alter
treatment
The Financial Burden of Cancer
• 29% of families spend >10% of income on cancer
(Banthin, JAMA, 2006)
• KFF/USA Today Survey
–
–
–
–
–
–
Burden of costs on the family – 17% major burden
25% used up all or most of savings
13% borrowed from relatives
11% sought charity
8% delayed or did not get care because of cost
22% lower income
• 10% spent >%18K out-of-pocket in 2003-04
(Goldman, Health Affairs, 2006)
Cost is a component of
decision making for patients
Monetary Costs
Patients Feel Ill-Equipped to
Consider Costs
•
•
•
•
•
•
•
How do I ask about costs, about value?
Will I anger my doctor?
How can I predict costs of treatment?
Where can I get information?
How can I discuss this with my family?
How do I access patient assistance plans?
I don’t have the resources to help me
navigate this
What is the oncologist’s role,
and how do we deal with this
patient issue?
Are oncologists to blame for rising costs?
• Oncologist income is tied to chemotherapy
administration
• Aggressive use of drugs, diagnostics, and
technologies, sometimes with limited
evidence
• Lots of chemotherapy in the weeks before
death
• It’s easy to give drugs; it’s hard to talk about
stopping
On the other hand….
• Who creates demand?
– Patients, society?
• Why focus on oncologists?
– Radiation, diagnostic radiology, surgery
• Other members of the supply chain
certainly seek to maximize profit
– Drug and device makers, pharma, insurers
Oncologists Feel Ill-Equipped to
Consider Costs
•
•
•
•
How do I talk about costs, about value?
How can I predict costs of treatment?
Where do I find the time?
How do I balance my dual responsibilities to
society and my individual patients?
• I don’t have the resources to help me
navigate this
The High Cost of Care Can Widen
Disparities in Cancer Outcomes
Changes in Health Insurance Premiums,
Inflation, and Workers' Earnings, 2000-2007
INSURANCE
EARNINGS
INFL
Ward, E. et al. CA Cancer J Clin 2008;58:9-31.
As healthcare costs rise,
employers will:
• Reduce benefits
• Reduce wages
• Become non-competitive
As healthcare costs rise,
providers will provide:
• Less “off-label” treatment
• Less charity care
Health Insurance Coverage Among
Individuals Under Age 65 Years, 2006
(in Millions)
Ward, E. et al. CA Cancer J Clin 2008;58:9-31.
White
Hispanic
AA
Colorectal Cancer Stage
is Higher Stage Among
Private
Uninsured/Medicaid
Ward, E. et al. CA Cancer J Clin 2008;58:9-31.
White
Private
Uninsured
Hispanic
AA
Medicaid
Colorectal
Cancer
Survival is
Worse Among
Uninsured
Ward, E. et al. CA Cancer J Clin 2008;58:9-31.
Can we afford the cancer care of the future?
• % of GDP spent on cancer care is currently small
• However
– cancer care is an increasing component of healthcare
expenditures
– Cost is an increasing consideration for patients, and
can lead to disparities in care
– Personalized medicine may have unintended economic
consequences for the cancer enterprise
• Policy solutions must integrate various perspectives, and
ultimately address the value of specific interventions and
distribution of finite resources