Examining the Total Cost of Cancer Care

Bruce A. Feinberg, DO: From a payer perspective, the very first thing is that it’s about cost. We’ve got the cost of drug, and then we’ve got the cost of everything else that isn’t the drug. We hear about this kind of adverse-event profile that isn’t necessarily differentiating orals as a different beast from infused agents.

There is this notion that precision therapy means [that] if you’re more precise and more targeted that you may be able to incur less adverse events. But, it doesn’t seem that that necessarily is occurring with this initial class of drugs. So, how much, as a payer, are you focused on the global cost? Are you able to get at that global cost, which is going to take into account that adverse-event profile, as well as the potential success of the drug, which could be [the] cost of [the] drug, but mitigated by effectiveness?

John L. Fox, MD, MHA: The challenge in looking at the total cost of cancer care is that, especially in cancer, these patients are elderly and have multiple comorbid illnesses. Attributing a hospitalization to the drug itself is very problematic.

We can look at the total cost of treating a patient with cancer, but understanding what the total cost of cancer treatment is is a little more problematic. Interestingly, in our delivery system, and in our work with oncology practices, a lot of patients get admitted to the hospital, not because they have cancer necessarily, but because they have another illness complicated by cancer. They end up getting admitted because they have the comorbidity of cancer.

I think the side effects of these therapies, whether they be oral or intravenous, are a consequence of the treatment. It’s a cost that we have to bear. As a health plan, we don’t look much at the black box warnings, safety, and the side effects. If the FDA has approved them, and they’re in the NCCN guidelines, we’re going to cover them. It’s really left to the provider and to the patient to decide if the toxicities of one regimen versus another regimen are better suited.

Bruce A. Feinberg, DO: Are you longing for the day when you have the kind of evidence, maybe that real-world evidence, that has matched cohorts so you can look at what that global cost of care to start to make decisions on how you might approach reimbursement?

John L. Fox, MD, MHA: Fair question. If I had real-world evidence that showed that this drug was more cost-effective than another, when looking at the total cost of care, including the medication, the side effects, the hospitalizations, and the whole nine yards, would I be in a position of putting that in a preferred position? Certainly, we could. In our benefit designs, we have preferred and nonpreferred specialty drugs. I don’t think we’ll ever be in a position where we say, “You can’t have therapy X until you try therapy Y.” I think, more likely, what we’ll do, at least that’s what we do today, is say, “You can have therapy Y, but it’s going to cost you more.”

Bruce A. Feinberg, DO: Are you saying that to the patient or are you saying to the physician who’s trying to get reimbursed for the therapy that’s being delivered?

John L. Fox, MD, MHA: It’s really to the patient. It’s certainly both, but the patient is the one that’s going to bear the out-of-pocket costs to that more costly therapy.

Bruce A. Feinberg, DO: But, today, in your experience, is that the case or not? Because as we get into orals and we talk about that co-pay, there isn’t a lot of cost burden for infused agents on the patient. There are other costs. One thing that used to really get me irate is in benefit design. A patient getting Herceptin weekly for 12 weeks would have that weekly co-pay every time they came into the office, which was a potential obstruction to an effective therapy. Now, we see that with prescriptions that are coming out every 30 days (or whatever the frequency is). So now, almost like class care, if you get infusion ,you have no burden, and if you get orals, you’re going to have a burden.

Bruce J. Gould, MD: Well, that’s true and the state parity laws were designed to get around that burden. Basically, these are laws that say that the medical benefit and the pharmacy benefit have to be equal so that the patient’s out-of-pocket for an oral oncolytic is the same as it would be if they were coming in for an infused therapy. Forty states do have oral parity laws.

Bruce A. Feinberg, DO: So 40 states have them. How long have they been in effect, and do we have any data yet to know the impact?

Bruce J. Gould, MD: I’m not aware of any data. They’ve been in effect for roughly 5 to 6 years because that has been the timeframe that these oral oncolytics have really come into the scene. What I was going to say, though, is that these oral parity laws aren’t always what they appear to be, because as legislation is trying to be passed in a state house or senate, there’s compromises. There’s always different parties that have different interests in these laws.

Let’s say a patient’s monthly out-of-pocket expense for an intravenous therapy is $50 to $100. For the oral oncolytics, a lot of times the caps will be $200 to $300—so they’re higher than the medical benefits. But, again, compared to the normal pharmacy benefits where the patient’s out-of-pocket would have been $1000 to $2500 a month, that’s a relative bargain for the patients.

John L. Fox, MD, MHA: I think, though, that we’re really talking about commercial insurance. Medicare doesn’t have any caps.

Bruce J. Gould, MD: Exactly.

John L. Fox, MD, MHA: And in Medicaid, there is very little cost sharing. On the commercial side, under the Affordable Care Act with the maximum out-of-pockets, it really doesn’t matter in the long run because you’re going to hit your out-of-pocket maximum whether or not you’re using an oral drug or an intravenous drug.

Today, in our benefit designs, patients typically have a $2000 deductible with a $4000 out-of-pocket maximum. If you’re getting any kind of cancer chemotherapy, unless they’re generic drugs, which I don’t think are being given much in isolation, you’re going to hit your out-of-pocket maximum. The reality is that these laws, while they require parity between the medical benefit and the pharmacy benefit, they don’t preclude us (at least the proposed legislation in Michigan) from just increasing the cost share on the medical benefit so that there’s parity on the pharmacy side.

Bruce A. Feinberg, DO: So, you’re saying that rather than [providing] relief for the orals, there will be a higher cost sharing on the infused?

John L. Fox, MD, MHA: That’s correct. What’s very interesting on the Medicare side is the affordability of these drugs for Medicare beneficiaries. There probably does need to be some kind of parity law for Medicare. In our benefit designs today, there’s 33% cost sharing on oral oncolytics.

Bruce J. Gould, MD: Speaking to that point about affordability for Medicare patients, the other factor that makes it more difficult to get those patients the drugs is that under a government program, these patients are not able to get co-pay assistance from the manufacturers.

John L. Fox, MD, MHA: Right.

Bruce A. Feinberg, DO: Does that carry over when it’s a Medicare Advantage plan or any time there’s a government payer involved?

John L. Fox, MD, MHA: Yes.

Bruce J. Gould, MD: Yes.

Bruce A. Feinberg, DO: That doesn’t create any relief either.

Bruce J. Gould, MD: Right, because it falls under the anti-kickback laws. The government doesn’t want to encourage the use of these high-cost drugs in these patients by giving them financial relief.

Bruce A. Feinberg, DO: It sounds like it’s the biggest issue for the most vulnerable and those that have the fewest resources and who are particularly targeted by this disease—the bigger picture of cancer, which is a disease of aging.

John L. Fox, MD, MHA: Right.

Bruce J. Gould, MD: Right. In a practice like ours, there is some relief. Usually, the manufacturers have been very good in terms of helping with funding patient advocacy and foundations so that we are able to get money to help these patients in need, whether they’re commercial or Medicare patients. But, it has to come through a patient-care foundation or disease-specific foundation. Not from the manufacturer.