New cancer breakthroughs add pressure to control costs

An exciting class of new cancer drugs may boost patients' odds for survival, but healthcare providers and insurers will be under pressure to find savings elsewhere to pay for the high price tags of the new treatments.

Doctors at this week's annual meeting of the American Society of Clinical Oncology heard groundbreaking data on a new class of immune system boosters that some believe will become the main treatment for more than half of all cancers in the next 10 years. They included drugs from Bristol-Myers Squibb and Merck & Co that shrank tumors in patients with advanced melanoma and lung cancer.

Citigroup analysts expect such "immunotherapies" to cost around $110,000 in the United States for a year's worth of treatment and $80,000 in the rest of the world, generating sales of $35 billion a year in the next 10 years. That would represent a hefty proportion of total oncology drug sales, which research firm IMS Health has forecast reaching $88 billion by 2016.

Medicines already account for a higher percentage of oncology spending than for other diseases, but healthcare experts see an opportunity if more effective drugs will help reduce hospitalizations and other costs.

Dr Antoni Ribas from the University of California at Los Angeles Jonsson Comprehensive Cancer Center said the most costly part of cancer care is later in the disease when patients are months from dying. "Even if it looks like we're developing expensive agents, these will eventually be cheap, because it's actually treating people," he said.

The National Cancer Institute estimates that the total cost of caring for U.S. cancer patients will rise to $174 billion in 2020 from $125 billion in 2010 - an increase that will put already strained U.S. health budgets under further duress. The biggest slice of overall U.S. healthcare costs - more than a third - is hospital care, according to statistics compiled by the Kaiser Family Foundation.

Insurers "are paying more attention to the appropriate use of interventions - there are more pre-reviews and less flexibility in 'off-label' use," said Dr Neal Meropol, chief of the division of hematology and oncology at University Hospitals Case Medical Center in Cleveland. He was referring to the practice of prescribing drugs for uses not specifically approved by regulators.

Patients are already being asked to share a greater portion of costs, often through higher insurance co-payments or deductibles, and that share could be higher for treatments less likely to reduce hospitalization or otherwise generate value.

"There will be increased cost sharing for patients based on the relative value of a particular therapy," Dr Meropol said. A treatment shown to be life-saving may cost a patient very little out of pocket, while they may be asked to contribute more for a drug with only a small benefit in extending life, he said.

That will require a huge transformation in the approach to cancer care. A study conducted by Duke University Medical Center in Durham, North Carolina found that oncologists rarely discuss costs with patients, even though many of them are in financial distress and said they wanted to have that conversation.