Who Exactly Would Benefit from Lower Cost of Cancer Drugs?

Daniel J. Klein

July 2015, Vol 6, No 6 - VBCC Perspectives


The high costs of specialty medications and the burden they place on individual patients and on the healthcare system overall are the media topics du jour. Cancer drugs are often cited as examples of unrestrained medication costs, so it is not surprising that the oncology community has responded by proposing alternative pricing models for cancer treatments based on the incremental value they provide.

Two value-based approaches for establishing the appropriate price of cancer therapies are the American Society of Clinical Oncology (ASCO) framework for assessing the value of new cancer treatment options,1 and the Memorial Sloan Kettering Cancer Center (MSKCC) interactive pricing calculator, DrugAbacus.2 The ASCO framework compares the relative clinical benefits, side effects, and costs of treatment regimens that have been tested head to head in randomized clinical trials. MSKCC’s DrugAbacus compares the cost of more than 50 cancer drugs with what their prices would be if they were tied to factors such as side effects and extra years of life gained by patients.

Both approaches suggest that the current costs of many cancer treatments should be lowered to bring them in line with the incremental value that they provide to patients.

But who exactly would benefit from a reduction in the costs of cancer drugs? This key question is left out of the discussion. Would the savings from lower drug prices be passed on to the patient and to the ultimate payer (ie, often the taxpayer)? Or would the savings end up adding to the bottom line of giant healthcare systems, insurance companies, and pharmacy benefit managers?

Unfortunately, given the high out-of-pocket costs that are now built into most healthcare plans, it is likely that patients would be the last ones to benefit from lower pricing for cancer treatments.

The Patient Access Network (PAN) Foundation sees no end to the growth in out-of-pocket costs that limit access to quality cancer care for millions of underinsured patients. Value-based pricing may mitigate some of the effect of increased cost-shifting to patients, but it is unlikely to solve the problem for the many patients who cannot afford to initiate, much less continue to use, treatment without the assistance they receive from charitable patient assistance organizations, such as the PAN Foundation.




References

  1. Schnipper LE, Davidson NE, Wollins DS, et al. American Society of Clinical Oncology statement: a conceptual framework to assess the value of cancer treatment options. J Clin Oncol. 2015 Jun 22. Epub ahead of print.
  2. Loftus P. How much should cancer drugs cost? Wall Street Journal. June 18, 2015. www.wsj.com/articles/how-much-should-cancer-drugs-cost-1434640914. Accessed July 7, 2015.