Cost vs. Value: Getting Our Money’s Worth in Cancer Care

Neal J. Meropol, MD

Education SessionRaising the Bar: Setting Standards for Real Progress in

Clinical TrialsAmerican Society of Clinical Oncology Annual Meeting

June 1, 2013

Value and Cost-Effectiveness

• Value = Benefit / Cost• Cost Effectiveness = Cost / Benefit

– Incremental Cost Effectiveness Ratio (ICER) =

COSTnew - COSTstandard

EFFECTnew - EFFECTstandard

Defining Value• Survival• Quality-adjusted survival• Quality of life

– Symptoms of cancer– Side effects of treatment

• Cost

Background:

What is the problem?

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

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).

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

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. 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.

Health Care Expenditures (2009)vs. Life Expectancy (LE)

81

81

8282

81

81

81

LE

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).

NHE Total Expenditures: $2,593.6 billion

Nursing Care Facilities & Continuing Care

Retirement Communities, $143.1

(5.5%)

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.

Projected

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).

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 2013Ryu et al. Health Aff 2013

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

Two Known Risk Factors are Increasing

Population is aging Obesity epidemic+= Rising Cancer Burden

Hoffman JM et al. Am J Health-Syst Pharm 2013

Oncology drugs are expensive

Overall, cancer drug expenditure growth is modulating

Hoffman JM et al. Am J Health-Syst Pharm 2013

1.4% incr.

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

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

Health Insurance Coverage in the US, 2011

Lack of insurance is associated with late diagnosis and death from cancer

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-yrSurvival

MedianSurvival

Higher WTPLower WTP

Patient Financial State May Drive Preferences for Adjuvant Therapy

Annual Household incomePreference <$60,000 >$60,000 p-value

Low cost 33.6% 23.7%0.007High survival 10.7% 24.4%

Low toxicity 55.7% 52.50%Employment

Out of work Not out of work

Low cost 37.7% 28.9%0.04High survival 3.9% 17.7%

Low toxicity 58.3% 53.4%

Wong Y-N et al. ASCO 2012

Out-of-pocket “burden” is higher with cancer than other chronic diseases

Bernard D S et al. JCO 2011;29:2821-2826

Out-of-Pocket Cost of Adjuvant Colon Cancer Therapy

Shankaran et al. JCO 2012

Aromatase inhibitor compliance is inversely associated with co-pay level

Neugut A I et al. JCO 2011;29:2534-2542

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

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 leisure 68%Reduced spending on basics 46%Used savings 46%Sold possessions 17%Borrowed or used credit to pay for meds 42%Did not fill prescription 24%Filled part of prescription 20%Took less than prescribed 19%Purchased OTC meds to replace prescriptions 15%

All cancers are becoming rare cancers

Garraway LA. JCO 2013

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

Unintended Consequences ofPrecision 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

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

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

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

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