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A rising flow of new, expensive therapies is transforming relationships among payers and providers. Manufacturers will have to react nimbly to the changes
Fig. 1. Global sales, per IMS Health.
In the US alone, the medical spending associated with cancer is expected to reach $207 billion by 2020—up from $125 billion in 2010, according to the National Cancer Institute. Many healthcare policymakers look on that trend as unsustainable. Already, cost pressures are driving community oncology practices into integrated health systems. Payers are looking critically at the traditional “buy and bill” model of oncolytic delivery, where individual practices purchase drugs directly from suppliers—even though there is evidence that that delivery method reduces therapy costs. At the same time, more and more cancer therapies are coming on the market, and manufacturers are forced to become more adept at integrating their therapies into common healthcare practices. Key among these is the increasing reliance on “clinical pathways” i.e. formalized protocols driven partly by therapeutic outcomes, and partly by healthcare economics. Competing pathways are offered by insurance plans, specialty distributors, healthcare providers and even private third-party consulting organizations.
Meanwhile, ongoing improvements in the survival rates of some cancers—certainly good news for patients—brings added cost implications, as this shifts the treatment paradigm from that of an acute illness that is managed over a limited duration, to a longer-term chronic illness, which stretches the duration of treatment from months to years.
Similarly, the well-documented demographic shift of care from private, community-based oncology practices to more-costly hospital settings, as the wave of mergers and consolidations seen in recent years continues, has significant cost implications for all stakeholders. Higher oncology treatment costs in hospital settings “is driven by pricing that is often double or triple that of identical service provided in a community outpatient setting, and increased utilization of more expensive therapies and treatments—higher costs that bring no demonstrable difference in clinical outcomes,” says Grant Bogle, MBA, SVP, Pharmaceutical & Biotech Solutions, McKesson Specialty Health and The US Oncology Network (The Woodlands, TX).
Fig. 2. Oncology practice trends.
Source: Community Oncology Alliance
A study of data from the Centers for Medicare and Medicaid Services (CMS) from 2009—2011, released last September by US Oncology Network, the Community Oncology Alliance and ION Solutions (Fig. 2), found that Medicare beneficiaries getting chemotherapy treatment in hospital settings received 9–12% more chemotherapy treatments, using more-costly medications, resulting in per-beneficiary costs that were 25–47% higher, compared to those treated in community oncology practices.
Hospital systems are highly incentivized to continue on their oncology practice acquisition trend, in part because reimbursement rates for hospital-administered drugs under the Medicare Part A medical benefit are more lucrative than reimbursement under the Medicare Part B drug benefit, and because some hospitals are eligible to buy costly oncology drugs at deeply discounted rates (enjoying discounts of 20—50% on drug costs), thanks to 340B pricing rules (Fig. 3). “This gives hospital-affiliated or -owned oncology clinics an advantage, since they are able to acquire drugs at a reduced wholesale acquisition cost (WAC) compared to private oncology practices,” notes Gordon Gochenauer, director, commercial strategies, Kantar Health (Horsham, PA). He notes that “since 2005, there has been more than a three-fold increase in the number of hospital entities and more than a five-fold increase in out-patient treatment sites that are participating in 340B—although some of the increase in the number of sites may be due to new HRSA site-reporting requirements.”
Gochenauer points out that institutions in states that opt in for Medicaid expansion under the ACA are more likely to exceed the “11.75% disproportionate share” threshold that is required to be eligible for 340B drug discounts. Thus, the US Health Resources and Services Administration (HRSA), a department of HHS, estimates that under the ACA, 1,500 more institutions may eventually be eligible for 340B pricing discounts.
“Clearly, there is huge incentive for this consolidation of private oncology practices into hospital-based systems to continue, but this trend is one of the biggest financial misunderstandings in oncology today. Only the hospitals benefit—doctors lose the ability to administer treatments in their office, drug makers get half the profit due to deep discounts in pricing under 340B, and health plans pay 2.5 times more compared to comparable care in community oncology settings,” says Kjel Johnson, PharmD, VP for IMS Health (Plymouth Crossing, PA).
Fig. 3. 340B pharmacies represent a bigger part of prescribing. Source: Kantar Health
“There’s no question that private, community-based practices in oncology can deliver a much more cost-effective care model for cancer patients compared to hospital-based systems, which have much greater overhead and billing rates,” adds Lloyd Everson, MD, CEO, MolecularHealth (The Woodlands, TX).
Many industry observers feel that drug companies should pull out all the stops to advocate government leaders to address this gross disparity in drug pricing and insurance reimbursement rates between hospital- and community-based settings for cancer care, and to level the playing field, rather than allowing community settings to be penalized financially. “Drugmakers should also advocate for the removal of the 2% prompt pay discount from ASP calculations,” says Bogle of McKesson Specialty Health. Coupled with the other efforts, this can have a meaningful impact on improving the overall financial health of community care providers—helping them to withstand the pressure to fold into larger, hospital-based entities.
Clinical pathways — here to stay?
Payers are “increasingly cynical about cancer drug pricing,” says Gochenauer of Kantar Health, and continue to seek cost reductions through payment reform (in terms of cost shifting to patients through higher copays and co-insurance), and through tighter drug-management strategies (such as stricter formulary requirements for prior authorization, [PA], and step protocols). He notes: “In the past, PA criteria might simply have been down to FDA label and cancer diagnosis but we are seeing evidence that additional criteria has entered into the PA process, with some advanced payers managing appropriate use closer to the population that matches the Phase III registration trial—which is usually a healthier and younger group than those with the same diagnosis in the community.”
Taking this PA approach further, the use of clinical pathways is on the rise throughout oncology. By definition, clinical pathways are published treatment protocols that are designed to guide physicians and clinicians to select the most standardized and predictable care, based on the best level of evidence that is available related to efficacy, toxicity and cost. They aim to narrow the treatment options in oncology with the hope of reducing the use of costly yet ineffective or unproven therapies in cancer care. Proponents say that having too much choice in prescribing produces uneven results with excessive costs, especially when there are multiple therapy options for the same indication.
Fig. 4. Participation in pathways; OMC is “oncology management company.” Source: Kantar Health
Fig. 5. MCO tools to manage oncology costs.
Source: Genentech 2013 Oncology Trend Report
In some cases, clinical pathways are published by third-party developers (such as US Oncology, Cardinal Health, Via Oncology, New Century Health, Eviti and others). In other cases, they are developed internally by the oncology practice or by the payer. While some adoption has been driven by voluntary commitment by a private or hospital-based oncology practice, the pressure has increasingly come from private payers, many of which aligned themselves with one or more pathways vendors. (Figs. 4—5)
The 2013 Genentech Oncology Trend Report indicates nearly 70% of surveyed oncologists used cancer treatment pathways in 2012, up from nearly 60% in 2009, and 24.3% of oncologists had contracts with payers whereby reimbursement was tied to specific pathways use (versus 13.1% in 2011). Similar data are reported by US Oncology and Cardinal Health. Meanwhile, Via Oncology (Pittsburgh) has seen its customer base double in size over the past year or so, according to CEO Kathleen Lokay.
Despite the growth in financial incentives from some payers, “it is not clear that changing reimbursement alone has been enough to really drive change in physician behavior,” notes Meadow Green, a consultant at Kantar Health (Horsham, PA). “In Kantar’s 2012 and 2013 annual survey of commercial payers, we saw that the tactics that payers are using to drive pathway adherence are being fine-tuned to increase the effectiveness of pathways programs.” These include higher reimbursement for cognitive services and drug administration, higher margins for drugs on pathway, lower patient cost sharing, bonus payments and elimination of prior authorization requirements for pathways-preferred drugs, she says.
Today, proponents cite a growing body of evidence that demonstrates their value. For instance, two separate studies published by US Oncology in the Journal of Oncology Practice show “statistically significant reductions in treatment costs” for patients treated on-pathways vs. off-pathways, says Bogle of McKesson Specialty Health. One of these, a retrospective study (J Oncol Prac, Vol. 6, Issue 1; DOI:10.1200/JOP.091058; http://jop.ascopubs.org), shows average savings of 35% across a cohort of patients being treated over 12 months for non-small cell lung cancer (NSCLC) who were treated on-pathways. One key factor, according to the study authors, is that “patients treated on-pathway also did not receive chemotherapy beyond third line, which may be another reason why costs were lower in this cohort.” Reassessing late-stage treatments is a focus on efforts throughout oncology today.
Interestingly, in this study, the NSCLC study cohorts showed “no observable difference in overall 12-month survival.” While critics of strict clinical pathways adherence may seize upon this finding to undermine the value of imposing standardized-care protocols on oncologists, the study authors point out that this result “suggests that the added cost associated with treating patients off-pathways (including therapy beyond third line) did not translate to improved outcomes”—which offers further justification for embracing a methodology for lower-cost, standardized care.
Other studies have shown that treatment on-pathways can also reduce the duration of therapy, lower the rate of chemotherapy-related hospital admissions, lower the frequency of chemotherapy infusion visits and reduce the frequency of additional medication use, adds Bogle of McKesson Specialty Health, all of which has important quality-of-life and cost implications.
Fig. 6. Payer-mandated use of specialty pharmacies. Source: Genentech 2013 Oncology Trend Report
Some doubts still linger
Critics of clinical pathways charge that any requirement aimed at forcing oncologists to follow standardized treatment protocols is antithetical to the very nature of cancer—which typically shows great variability from patient to patient. Such variability is driven not only by the individual’s overall health, co-morbidities and behaviors with regard to medication adherence, but by genetic differences that are only now starting to be identified and exploited to improve the targeting of drugs in cancer care. “While pathways can certainly help to narrow the choices and perhaps improve the economics overall, they may end up disadvantaging a patient, because in individual cases the more costly drug may be the only one that would have worked on them (and the oncologist may be penalized in reimbursement for choosing that treatment option),” notes Burt Zweigenhaft, president of Onco360, an oncology-pharmacy network.
Acknowledging the drawbacks of a “cookie cutter approach,” pathways advocates say that following the old 80/20 rule to prescribing on-pathways is a suitable approach. “We have found that when you raise compliance from 60% to 80% in terms of prescribing in accordance with pathways, you start to really see the cost savings,” says Michael Kolodziej, MD, FACP, national medical director for Aetna (Hartford, CT). Like others, the oncology pathways developed by Cardinal Health have an 80% compliance threshold to preserve needed flexibility for oncologists to make prescribing decisions that represent clinically appropriate deviations from the pathways guidelines. “The doctor and patient are always allowed pathway deviation if it is the best care option,” says Bruce Feinberg, DO, chief medical officer at Cardinal Health Specialty Solutions (Dublin, OH). Proponents of pathways say that building in the necessary autonomy and flexibility is essential, as overly restrictive pathways will not be as readily embraced by busy oncology practices.
Meanwhile, with the rapid pace of developments in genomic improvement to cancer care, some health specialists are questioning whether pathways make sense in a coming era of personalized medicine; the two approaches seem to be antithetical in nature. However, others argue that structured rules established by clinical pathways will actually help oncologists to both make sense of, and take full advantage of, the new biomarker-driven prescribing capabilities, thereby appropriately limiting certain treatment protocols to only those patients that have the corresponding genetic mutations that would warrant or eliminate the use of a given drug.
“I think most physicians would say that clinical pathways offer benefits, but as you look down the pipe, and the industry continues to seek truly personalized approaches to disease treatments (via genomics and other forms of bioinformatics), I see these guidelines potentially becoming obsolete, or having to become more finely parsed on a patient-by-patient, and not a cohort-by-cohort basis,” says Everson of MolecularHealth.
In late March, MolecularHealth rolled out its proprietary technology platform and service offering, which is designed to help pathologists, oncologists, biopharma and the entire care team gather and translate bioinformatics data into actionable information that can help to tailor the treatment choices for individual patients. It has proprietary TreatmentMAP and SafetyMAP technology to analyze tumor data and potential drug-drug safety interaction issues, and support efforts to work through the insurance issues.
“The use of more-targeted prescribing—especially when it comes to costly oncology drugs—has enormous implications for containing costs,” says Everson. Given today’s growing cohort of cancer patients and increased survival rates, “if you can cut the mismatched prescribing by even 10%, you’ll be saving millions, if not billions, of dollars.”
Standing out in a crowded field
With the proliferation of similar-but-different pathways providers in the marketplace, there has been no standardization in terms of which health plans require which ones, and how the financial incentives and reimbursement schemes are tied to their use. “This is creating real challenges for busy oncology practices, since invariably, most practices see a mix of patients with a range of private insurance plans as well as Medicare and Medicaid coverage,” says McKesson’s Bogle.
“I think all of the clinical pathways vendors are aware of the pressure to differentiate themselves from one another, so all are trying to build in bells and whistles to promote adoption,” says Kolodziej of Aetna. “Some market themselves directly to doctors, convincing them that following their pathways will offer a path of least resistance among all payers. Others market directly to payers, trying to convince them that cost savings will occur,” says Johnson of IMS Health.
Kolodziej notes that some are more rigid (claiming they provide better results or cost savings by imposing narrower treatment options) while others position themselves as being less restrictive (claiming they give physicians greater prescribing autonomy). All are trying to implement varying levels of embedded clinical decision-support tools.
Similarly, many pathways vendors are trying to integrate the functionality of their systems directly into electronic health-record (EHR) systems. Such integration allows oncologists to access the clinical information, and register on- or off-pathways treatment decisions, directly at the point of care, capture the resulting data for analysis or consolidation later and log their treatment decisions as a requirement for favorable reimbursement. “Being embedded within an EHR lets the pathways become a more transparent and integrated part of the physician workflow, but to date, this has not been happening very quickly,” Kolodziej says. “As a result, some pathways vendors have instead developed a Web portal approach, and are working hard to streamline these interfaces—to simplify things and keep it from becoming too time-consuming for the doctor or office staff.”
Examples of well-designed, embedded decision-support tools include prompts that query the oncologist about the appropriate use of radiation along with chemotherapy at various points in the treatment trajectory, and alerts that tell physicians when there is not a lot of evidence to support later-stage treatment—perhaps helping them to avoid costly, late-stage clinical interventions that offer very little chance of clinical impact.
Despite improvements, the sheer number of so many competing protocols is creating confusion and considerable administrative burden for oncologists—especially as many practices must follow several different pathways to meet the requirements of different payers, says Johnson of IMS Health. Many anticipate advocating consolidation, or at least the development of a more-uniform format from pathways to pathways, to ease the burden on busy oncology practices and facilitate adherence.
Meanwhile, the question of whether adherence to one or more published clinical pathways should be initiated by the physician practice, or dictated by various health plans as a requirement for optimal reimbursement, remains hotly debated among stakeholders. “We are big believers that pathways drive standardization for cancer centers, and this standardization begets improved quality, safety and patient flow,” says Lokay of Via Oncology. “However, the only way to achieve these benefits is to allow practices to implement one single set of pathways for all patients,” irrespective of the private or government payer they use. She notes that, “if payers drive the pathways selection, then practices will invariably be forced to use multiple pathways for different patients, depending on which health insurance plan covers the individual patient.” Critics charge that this trend toward oncology groups having to adhere to multiple, competing sets of pathways—with resulting clinical confusion and administrative burden—undermines the original goal of the pathways approach, which is to streamline and standardize cancer care, in search of greater treatment and administrative efficiency and reduced costs.
Pathways: What’s the impact for drug makers?
The growth of pathway-based treatment has big implications for drug manufacturers. “It’s very likely that individual drugmakers may see reduced utilization of their products in areas where other regimens can produce evidence to demonstrate better outcomes, less toxicity or, in the event of comparability among choices, lower costs,” says Lokay of Via Oncology.
This is also where economics can enter the pathways decisionmaking process. “A lower cost (ASP) will help uptake on pathways’” notes Lokay, “but I would discourage [manufacturers] from using rebates on Part B drug coverage to payers as the incentive to put on the payer’s formulary or pathway. These rebates lower ASP and will put private practices out of business as their acquisition price will be above ASP.”
“Inclusion in various pathways is increasingly becoming a key access issue for drug manufacturers, and trials will need to be designed with pathway adoption in mind,” adds Deni Deasy Boekell of Kantar Health. “If pathways start to become more narrow, head-to-head trials with active comparators will be needed, in addition to collection of other non-clinical endpoints, such as resource utilization and quality-of-life data, to support a strong position on a pathways program.” Industry observers agree that developing a strong justification for pathway placement needs to start as soon as possible in clinical development (in Phase I/II).
“Pathway formularies are evidence based, so superior efficacy or lower toxicity are usually rewarded by the steering committees for pathways inclusion,” says Feinberg of Cardinal Health. “Only when therapeutics fail to distinguish themselves clinically will economics play a role in decisionmaking, and if global cost profiling is needed to demonstrate favorability, then well-conducted health economics outcomes research (HEOR) will be critical.”
The impact of oral oncolytics
The growing availability of oral oncology drugs is creating additional clinical and financial challenges in oncology. Today, 40% of the overall drug pipeline is in oncology, and roughly one third rely on oral administration, says Johnson of IMS Health.
Many applaud this paradigm shift in oncology, as the availability of a cancer therapy in pill form has the potential to offer a number of potential benefits for patients compared to the traditional approach of using intravenous (IV) administration of chemotherapy. For instance, as cancer becomes more of a chronic disease for many patients, oral treatment options liberate patients from having to travel to the clinic as often, which saves time and money and can improve quality of life, notes Bogle of McKesson Specialty Health. “However, for patients, orals reimbursed under the drug benefit are often associated with a higher patient out-of-pocket cost compared to drugs covered under the medical benefit,” adds Green of Kantar Health.
“Many payers prefer covering drugs under the pharmacy benefit because it’s generally thought to give them more control over prescribing (through the use of prior authorization and step edits), and some payers feel these drugs are, in a sense, cheaper, because they are not paid for via the ASP- or AWP-based buy-and-bill reimbursement structure,” says Green of Kantar Health.
Meanwhile, for oncology practices, the additional administrative burdens associated with prescribing an oral vs. an IV oncology agent are time-consuming and these extra requirements are often not reimbursed by insurers—a factor whose impact on practice revenue may overtly or covertly cause oncologists to forgo prescribing them in favor of an IV option in the same therapeutic category. On average, according to data from The US Oncology Network, it takes roughly 50 minutes for a practice to fill oral prescriptions because of paperwork and administrative procedures.
Stakeholders are still struggling to fully understand and address the implications related to clinical considerations, distribution and reimbursement issues associated with oral oncolytics. “Patients tend to prefer oral drugs for the convenience perspective, but they are no less toxic than IV-based chemotherapy and they tend to be very expensive, paid through the pharmacy benefit,” says Kolodziej of Aetna.
“Oral agents are not benign medications and like all therapeutics, these toxic medications only work if taken as directed and have side effects that need to be aggressively managed to prevent sub-optimal treatment, unnecessary hospitalizations and other complications,” adds Bogle of McKesson Specialty Health. Importantly, when receiving IV medications, patients are being closely monitored by their oncologists and the highly trained clinical support staff. By comparison, when patients take their medication at home, the clinical staff isn’t there to monitor adherence or side effects.
“We’re a little anxious in the health plans to be sure the toxicities are being managed as aggressively as possible, and when a patient taking oral medications is seeing their doctor only once a month, compared to weekly for IV treatments, there may not be sufficient opportunity for rapid intervention,” says Kolodziej of Aetna. To address this concern, Aetna included a patient-centered medical home for oncology pilot, launched last November, to reward practices (by paying them a fee) to carry out medical intervention that is specifically aimed at managing the potential toxicities of oral oncolytics.
Meanwhile, “we see issues emerging with the high price of orals, which are increasingly less affordable to patients, particularly Medicare patients, due to high coinsurance rates,” says Gochenauer of Kantar Health. “Patients and physicians are increasingly choosing therapies based on affordability and this can impact prescribing habits and market share.”
Unpleasant side effects can require a patient to go off a prescribed oral therapy, resulting in waste of the expensive product. To address this challenge, Aetna is building a program that allows for split refills—whereby instead of filling a month of prescription for oral oncolytics at a time, just two weeks of medication are sent to the patient, and a specialty nurse provides intensive clinical support, to help monitor and manage toxicities and side effects during home administration. Some oncology-oriented specialty pharmacies are starting to investigate this smaller-dose dispensing option as well.
Zweigenhaft of Onco360 also touts the importance of same-day delivery of oncology drugs by the treatment day, as opposed to delivery in complete cycles that must be stored at the treatment sites until treatment days, and may end up being discarded if not ultimately used by the patient, due to changing diagnosis, therapy change from non-response, side effects or toxicity, or even death. This specialty pharmacy delivery model results in less wasted drug and expense, because if the patient does not respond well, or has an adverse event, or becomes sicker and is moved to a different treatment site, the oncology practice is not stuck with unused drugs. “This not only reduces the need for payers to pay for unused drugs, but helps the practice to eliminate the need to safeguard, warehouse and dispose of stockpiles of highly toxic drugs,” he notes.
This aspect of patient support highlights the value of hub services, offered both by specialty pharmacies, and by service providers hired by manufacturers to assist patients in getting on, and staying on therapy. Genentech’s 2013 Oncology Report shows an expansive list of the types of services being provided (Fig. 5).
There can be a downside to these arrangements, says McKesson’s Bogle. “It removes the physician from directly managing the patient’s care, and the specialty pharmacies do not have access to the detailed information from the patient’s medical record to ensure proper care coordination.” He adds that, “specialty pharmacies do their best to communicate with practices through phone calls and fax summaries of patient interactions, but this is outside the normal workflow of the practice and thus may ultimately result in sub-optimal patient care.”
The increased presence of the specialty pharmacy in oncology puts an emphasis on a relatively new pharmacist specialty: the board-certified oncology pharmacist (BCOP). Onco360’s Zweigenhaft notes that BCOPs helps to provide another level of clinical support associated with drug adherence, minimizing side effects, and managing genetic and biomarker support.
“Preservation of community oncology, preservation of physician autonomy and respect of the physician-patient relationship should be equally embraced by pharma,” says Feinberg of Cardinal Health. “The solution for the crisis in cancer care will require all stakeholders to participate.”