1. Stakeholder perspectives on the cost of cancer care Neal J. Meropol, M.D. Fox Chase Cancer Center Philadelphia, PA May 30, 2009 Economics of Cancer Care: It’s Everyone’s Problem

2. 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

3. What the media tells us “Targeted therapy save lives!” “We’re going to bankrupt the economy!” “The pharmaceutical industry is evil!”

4. 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?

5. The Cost of Care Has Wide Impact Patients ProducersProviders PayersEmployers

6. What are we spending?

7. Adapted from C. Borger, et al. Health Affairs 25(2): w61-w73, 2006; Reproduced in Meropol and Schulman, J Clin Oncol, 2007 US Health Expenditures and GDP

8. Growth in healthcare spending is greater than growth in GDP Healthcare Costs: A Primer, Kaiser Family Foundation, 2007

9. More spending = Better health Meropol and Schulman, J Clin Oncol, 2007

10. Cancer Survival Worldwide 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

11. 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

12. Oncology Drug Contribution to Spending Growth - 2007 Growth Rate All clinic drug expenditures9.9% Antineoplastics16% *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

13. Wong et al. Cancer, 2009 Cost Effectiveness of Colon Cancer Drug Treatment

14. 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

15. Considerations for Innovators (producers)

16. It costs $1 billion to develop a new drug Adams and Brantner. Health Affairs, 2006

17. 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

18. 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

19. The impact on patients

20. Weinfurt, K. P. J Clin Oncol; 25:223-227 2007 Prospect Theory: People Care More About Loss Than Gain Therefore, cancer patients may place high value on treatments with “modest” benefit

21. 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

22. 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)

23. Cost is a component of decision making for patients Benefits Monetary Costs Toxicities

24. 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

25. What is the oncologist’s role, and how do we deal with this patient issue?

26. 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

27. 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

28. 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

29. The High Cost of Care Can Widen Disparities in Cancer Outcomes

30. Ward, E. et al. CA Cancer J Clin 2008;58:9-31. Changes in Health Insurance Premiums, Inflation, and Workers' Earnings, 2000-2007 INSURANCE INFL EARNINGS

31. As healthcare costs rise, employers will: Reduce benefits Reduce wages Become non-competitive

32. As healthcare costs rise, providers will provide: Less “off-label” treatment Less charity care

33. Ward, E. et al. CA Cancer J Clin 2008;58:9-31. Health Insurance Coverage Among Individuals Under Age 65 Years, 2006 (in Millions)

34. Ward, E. et al. CA Cancer J Clin 2008;58:9-31. Colorectal Cancer Stage is Higher Stage Among Private Uninsured/Medicaid White AA Hispanic

35. Ward, E. et al. CA Cancer J Clin 2008;58:9-31. Colorectal Cancer Survival is Worse Among Uninsured Private Uninsured Medicaid White AA Hispanic

36. 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