Oncology 2021: Cost, FDA, and Cancer Care

June 2011, Vol 2, No 3 -


Washington, DC—Oncology and health care are undergoing rapid changes. One thing that does not seem to be changing soon is the long-term prognosis of exploding costs.

The extent to which the US Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS) will consider cost in making decisions concerning drug approval and reimbursement was the subject of a lively debate at the 2011 Association of Community Cancer Centers annual meeting.

Drug Costs and the FDA
Scott Gottlieb, MD, a practicing physician and fellow at the American Enterprise Institute, previously Deputy Commissioner of the FDA, foresees an increasing preoccupation with cost at the FDA, however indirectly. “I don’t think that there will be anything in a regulatory process that will explicitly consider cost,” Dr Gottlieb said, pointing out that European regulators are addressing cost questions much more aggressively.

However, “I think there is a sentiment in the agency that because these drugs are so high-priced and the returns so lucrative in many cases, that it justifies the requests that the agency makes for higher and higher data requirements,” he said, adding that there is an explicit consideration of cost by the advisory committees in their dealing with manufacturers.

Thomas A. Gustafson, PhD, a Senior Policy Advisor at Arnold & Porter, LLP, does not think the FDA will shift its focus to cost control, although he acknowledges that the FDA “gets it that things are expensive” and “wants to make sure that on those decisions particularly they’re doing it right.”

Dr Gustafson was previously with the US Department of Health and Human Services and Deputy Director at the Center for Medicare Man gement, the predecessor to CMS.

Patients Should Share in the Cost Burden
Daniel H. Johnson Jr, MD, a fellow at the Heritage Foundation’s Center for Health Policy Studies, and Clinical Professor of Radiology, Tulane University, New Orleans, called for patients to share in the cost of healthcare as a way to encourage responsible use of the system and push down costs.

“What we have is a system that insulates the people from the cost, including cancer patients,” said Dr Johnson. Some providers in the audience questioned the impact such a move would have on the poor. One physician stated that many of his patients had little money left after paying for the gas to drive to his clinic. Dr Johnson suggested that positive incentives, or rewards for prudent use of healthcare, could also play a role in curbing costs.

New Experiments in Bending the Cost Curve
The healthcare reform law encourages the creation of new delivery systems as a key way to control costs.

According to Dr Johnson, accountable care organizations (ACOs), which hold a group of providers responsible for a patient’s care continuum, are a good idea. But he cautioned ACOs should not be the only option. “The good idea could become a trap, if that’s the only way care is delivered,” he acknowledged.

Similarly, in the medical home, it would be helpful to have someone coordinating overall patient care and reducing the current fragmentation. But, Dr Johnson cautions, “the medical home should not be a prison.”

The jury is still out on ACOs and other new delivery systems. For Dr Johnson, the existence of competing alternative models is crucial to figuring out what works: driving costs down and pushing quality up. Referring to the healthcare reform bill, Dr Gottlieb said that integrated delivery systems are not laboratories for innovation, because “the things in the bill trying to address the Medicare cost issue mostly deal with trying to change around market power.”

The Independent Payment Advisory Board (IPAB) is another central costcontrol component of the new healthcare law—and a major concern to some in the oncology community. The IPAB must cap the rate of growth in Medicare spending to growth in the consumer price index. If Congress rejects an IPAB proposal, it must come up with a way to achieve equivalent savings.

Dr Gottlieb thinks it is unlikely that CMS will directly inject itself into clinical decision-making. Instead, it is likely to rely on price controls. “They’re not going to make individual coverage decisions,” he said, predicting that CMS will cut reimbursement rates, and possibly import Medicaid or Veterans Affairs drug schedules.

The establishment of an IPAB will also allow CMS to “embed more of its own clinical reasoning in what it pays for,” giving them authority “to pay for the least costly alternative option,” said Dr Gottlieb.

Impact of Cost-Containment Efforts on Oncology
The panelists were also worried that the pressure to contain costs could alter the current system of regulating the use and reimbursement of medications for off-label indications in oncology.

In oncology, compendia regulate the reimbursement of off-label drugs and are a crucial site for innovation. Dr Gottlieb called the compendia an “optimum model.”

“I don’t think anything that the government comes up with is going to be more expert than that [compendia],” he said. “The threat in the longer term is that the agencies, as they need to control their own budgets, are going to want to get control over the off-label use of oncology products. And I see CMS starting to try to distance themselves from the compendia process.”

Dr Gustafson cautioned everybody, “In a nutshell, we’re running out of money, and that ought to scare us all.” The only solutions are to reduce benefits, raise taxes, or make medicine more efficient, the panelists suggested. Everyone seems to be pinning their hopes on that last option.