1. Cost vs. Value: Getting Our Money’s Worth in Cancer Care Neal J. Meropol, MD Education Session Raising the Bar: Setting Standards for Real Progress in Clinical Trials American Society of Clinical Oncology Annual Meeting June 1, 2013

2. Value and Cost-Effectiveness Value = Benefit / Cost Cost Effectiveness = Cost / Benefit – Incremental Cost Effectiveness Ratio (ICER) = COST new - COST standard EFFECT new - EFFECT standard

3. Defining Value Survival Quality-adjusted survival Quality of life – Symptoms of cancer – Side effects of treatment Cost

4. Background: What is the problem?

5. The US spends ~18% of GDP on healthcare http://www.pbs.org/newshour/rundown/2012/10/health-costs-how-the-us- compares-with-other-countries.html

6. National Health Expenditures per Capita, 1960-2010 Notes: According to CMS, population is the U.S. Bureau of the Census resident-based population, less armed forces overseas. Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2010; file nhegdp10.zip). http://www.cms.hhs.gov/NationalHealthExpendData/ 5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.1% 16.2% 16.4% 16.8% 17.9% 17.9% NHE as a Share of GDP

7. Per Capita Total Current Health Care Expenditures, U.S. and Selected Countries, 2009 ^OECD estimate. *Break in series. Notes: Amounts in U.S.$ Purchasing Power Parity, see http://www.oecd.org/std/ppp; includes only countries over $2,500. OECD defines Total Current Expenditures on Health as the sum of expenditures on personal health care, preventive and public health services, and health administration and health insurance; it excludes investment.http://www.oecd.org/std/ppp Source: Organisation for Economic Co-operation and Development. “OECD Health Data: Health Expenditures and Financing”, OECD Health Statistics Data from internet subscription database. http://www.oecd-ilibrary.org, data accessed on 01/10/12.http://www.oecd-ilibrary.org

8. Health Care Expenditures (2009) vs. Life Expectancy (LE) 81 82 81 LE

9. Distribution of National Health Expenditures, by Type of Service (in Billions), 2010 Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc. Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2010; file nhe2010.zip).http://www.cms.hhs.gov/NationalHealthExpendData/ NHE Total Expenditures: $2,593.6 billion Nursing Care Facilities & Continuing Care Retirement Communities, $143.1 (5.5%)

10. Average Annual Growth Rates for NHE and GDP, Per Capita, for Selected Time Periods Source: Historical data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, January 2012, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2010; file nhegdp10.zip). Projections from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, July 2011, “National Health Expenditures 2010-2020,” Table 1, https://www.cms.gov/NationalHealthExpendData/downloads/proj2010.pdf. http://www.cms.hhs.gov/NationalHealthExpendData/ https://www.cms.gov/NationalHealthExpendData/downloads/proj2010.pdf Projected

11. However: annual growth in NHE is decreasing Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2010; file nhe2010.zip).http://www.cms.hhs.gov/NationalHealthExpendData/

12. Why is growth in health care spending moderating? The great recession Decreased private insurance and Medicare payments Increased cost-sharing Improved efficiency – less waste Slowdown in new innovations (technology and drugs) Cutler and Sahni. Health Aff 2013 Ryu et al. Health Aff 2013

13. Cost of Cancer Care Factoids Total cost – $124.57 billion in 2010 and $157.77 billion in 2020 (Mariotto et al. JNCI 2011) Out-of-pocket burden is high – 28.8% >10% disposable income spent; 11.4% >20% spent in 2003 (Banthin et al. JAMA 2006) Drug costs comprise a higher percentage of oncology expenditures than in other disease

14. Two Known Risk Factors are Increasing Population is agingObesity epidemic + = Rising Cancer Burden

15. Hoffman JM et al. Am J Health-Syst Pharm 2013 Oncology drugs are expensive

16. Overall, cancer drug expenditure growth is modulating Hoffman JM et al. Am J Health-Syst Pharm 2013 1.4% incr.

17. Why does (should) oncology command (demand) attention? Cancer is life-threatening – access is critical Disproportionate impact on insurers, public payers Diagnostics and treatments are increasingly expensive We (society, oncologists) have accepted (embraced?) innovations of limited value Oncology represents the greatest opportunity to leverage advances in science and technology to improve health

18. The high cost of cancer care threatens to increase disparities in care and outcomes Uninsurance Insurance premiums Co-pays/co-insurance Tiered formularies Part D donut hole Delay in seeking treatment Limit/alter treatment Less charity care

19. Health Insurance Coverage in the US, 2011 Lack of insurance is associated with late diagnosis and death from cancer

20. Wong Y et al. The Oncologist, 2010;15:566-576 Patients are willing to pay more out-of- pocket for higher value treatments Cure 2-yr Survival Median Survival Higher WTP Lower WTP

21. Patient Financial State May Drive Preferences for Adjuvant Therapy Annual Household income Preference<$60,000>$60,000p-value Low cost33.6%23.7% 0.007 High survival10.7%24.4% Low toxicity55.7%52.50% Employment Out of work Not out of work Low cost37.7%28.9% 0.04 High survival3.9%17.7% Low toxicity58.3%53.4% Wong Y-N et al. ASCO 2012

22. Out-of-pocket “burden” is higher with cancer than other chronic diseases Bernard D S et al. JCO 2011;29:2821-2826

23. Out-of-Pocket Cost of Adjuvant Colon Cancer Therapy Shankaran et al. JCO 2012

24. Aromatase inhibitor compliance is inversely associated with co-pay level Neugut A I et al. JCO 2011;29:2534-2542

25. Cancer and Bankruptcy Linked SEER and bankruptcy data in Washington State, 1995 - 2009 Cancer patients 2.65X more likely to file for bankruptcy Ramsey S et al. Health Aff 2013

26. How do insured patients deal with high out-of-pocket expenses? (Zafar et al. The Oncologist, 2013) Convenience sample (N=254) – 190 identified from co-pay assistance program % Reduced spending on leisure68% Reduced spending on basics46% Used savings46% Sold possessions17% Borrowed or used credit to pay for meds42% Did not fill prescription24% Filled part of prescription20% Took less than prescribed19% Purchased OTC meds to replace prescriptions15%

27. All cancers are becoming rare cancers Garraway LA. JCO 2013

28. The Promise of Precision Medicine: More Effective and Less Costly Cancer Care Avoid treatment of patients unlikely to benefit Improve outcomes of those most likely to benefit Identify patients with pathway activation that might benefit from targeted approaches

29. Unintended Consequences of Precision Medicine Oncology less attractive for pharma – Smaller market for rare diseases – Diagnostics may not command “innovation premium” – Value depends on cost of diagnostic Longer survival = higher societal costs Decreased practice efficiency – Patient education – Specimen processing, treatment delay – Payer approval

30. Unanswered Questions Is current drug approval paradigm obsolete? – Based on histology, requires large studies Is current payment paradigm obsolete? – How to deal with “biologically plausible” treatment recommendations? – How to define clinical utility of a genomic screening diagnostic test? Is current clinical trial paradigm obsolete? – Patient seeks site with drug study vs. study available on-demand – Precision medicine requires greater centralization of study administration, diagnostic infrastructure

31. What can we do to ensure value and access to high quality cancer care? At the Societal Level Demand value Align incentives to promote quality Support research Consider costs and benefits Payment reform, e.g. –Bundled payments –Value-based insurance design –Pay for care and outcomes, not procedures Support evidence development

32. What can we do to ensure value and access to high quality cancer care? At the Bedside Select treatment based on value and evidence Integrate patient values Support research Evidence-based practice Care pathways –Reduce variation, waste, cost –Improve outcomes Develop communication skills Support clinical research

33. What can we do to ensure value and access to high quality cancer care? At the Societal Level Demand value Align incentives to promote quality Support research At the Bedside Select treatment based on value and evidence Integrate patient values Support research High Value Cancer Care Simple Concepts