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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 Sl o va ki a Sp ($1 . ai n 3K) Ja ( $ pa 2.5 K n ($ ) U 2.6 A us K K ) ( tr $ 2 al ia .8K ($ ) 3. U S 1K) ($ 6. 7K ) 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