In Complex World of Drug Costs, ‘Who Pays’ May Matter More Than ‘How Much’

In Complex World of Drug Costs, ‘Who Pays’ May Matter More Than ‘How Much’

Dr. Daniel A. Goldstein
Global differences in the price of oncology drugs may serve as a substantial barrier to accessing care, especially as the affordability of health care may be relative to the ability to pay.

A global analysis of drug prices revealed wide disparities in median oncology retail drug prices in India, China, South Africa, Israel, United Kingdom, Australia, and the United States. However, using monthly gross domestic product (GDP) as an indicator of wealth and surrogate marker of ability to pay, the study showed that the monthly median retail price of oncology drugs is often higher than average monthly income (LBA6500).

While average monthly drug price of patented oncology drugs exceeded average monthly GDP in China and India, a similar pattern was also seen in the United States. According to Daniel A. Goldstein, MD, of Rabin Medical Center, Israel, median monthly drug price in the United States, at nearly $9,000, is 192% of monthly GDP per capita (GDPcap), whereas in countries like India and China, where drug price is close to $2,000 to $3,000, it is still 313% and 288% of GDPcap, respectively.

“Despite lower prices in India and China, these drugs appear to be relatively less affordable than in other countries. In the United States, given the higher drug prices, the drugs appear to be less affordable than in other countries,” Dr. Goldstein said during the “Health Services Research and Quality of Care” Oral Abstract Session on June 5.

“We see a similar pattern in generic drugs, although with a lower magnitude. This is mostly driven by the differences in GDP per capita, rather than by differences in drug prices,” he said.

Price Versus Affordability

The value of health care has become an increasingly important metric over the past decade. One goal of recent health care reform efforts in the United States is to achieve greater cost efficiencies, such that economic outlay in health care delivery derives maximal value. Oncology has certainly not been immune to these forces.

“Value has become a major buzzword in cancer care,” Dr. Goldstein said. “Ultimately value boils down to a simple equation: Value is benefit divided by cost.”

However, cost of health care is highly variable, especially in a global context. In addition, with respect to drug prices, the cost of the entity is not necessarily indicative of a population’s ability to afford the therapeutic modality.

Looking at retail drug prices of 23 cancer drugs approved since 1996, including 15 available generically, Dr. Goldstein and colleagues analyzed the estimated monthly drug price as a percentage of GDPcap, with all figures converted to US$ values for comparison. Median monthly patented drug price ranged from US$1,515 in India to $8,694 in the United States (Table 1). Yet, the median monthly percentage of GDPcap for patented drugs ranged from 71% in Australia to 313% in India.

Generic options offered more favorable affordability, with prices ranging from US$120 in South Africa to $654 in the United States. Correspondingly, the median monthly percentage of GDPcap for generic drugs ranged from 3% in Australia to 48% in China.

“This study raises significant ethical, economic, political, and regulatory questions,” Dr. Goldstein said.

Escalating Drug Prices

One factor that may influence a drug’s affordability is that price escalates over time, often in unpredictable patterns and irrespective of typical supply–demand market forces and the influence of competition.

“The median monthly cost of cancer drugs at launch has increased by as much as 10-fold over the past 20 years,” said Noa Gordon, MSc, MPH, of Rabin Medical Center, Israel.

Ms. Gordon pointed out that the monthly cost of imatinib, which has revolutionized the treatment of chronic myeloid leukemia, has tripled in the last decade, despite new-generation kinase inhibitors entering the market as competitors, and despite an increased market size that occurred as a result of increased survival—two factors that might be expected to lower price.

Ms. Gordon said she noted a similar pattern in an analysis of the price trajectory of individual cancer drugs following launch (Abstract 6502). Among drugs indicated and approved for use in treating metastatic colon cancer, prices of bevacizumab and cetuximab, both approved in 2004, remained relatively flat until 2010, but then started to increase together.

“This correlated increase might have been a result of the entrance of panitumumab to the market in 2006,” Ms. Gordon said.

That particular market also has an example of the unpredictable forces that can affect drug price. When aflibercept was launched in 2012, advocacy efforts by the Memorial Sloan Kettering Cancer Center led to the manufacturer lowering its price. By the end of the analysis, bevacizumab, panitumumab, and cetuximab had risen a cumulative 25%, 24%, and 8%, respectively, since the time of their launch; the price of aflibercept dropped by 12% since the time of its launch.

Perhaps not unexpectedly, drugs cycling off of patent protection often exhibit increases in prices. Trend analysis showed that both gemcitabine and docetaxel had a rise in prices before patent expiration, Ms. Gordon said.

“Liposomal doxorubicin increased as much as 52% before patent expiration. In 2013, prices decreased, but not as much as compared with other generics. This might have been because there was only one generic substitution and because of drug shortage issues,” Ms. Gordon said.

The analysis also showed that the trajectory of drug price from launch outpaced rises in inflation. Overall, the mean annual general inflation rate rose 2%, and the cumulative general inflation rate rose 21% during the 11.5-year period encompassed in the analysis. Yet, the mean annual average sales price of cancer drugs rose 3.75%, and the mean cumulative increase in average sales price was 28%. Even adjusted for inflation, the mean cumulative change in average sale price from time of launch was 15%.  

“When discussing value with patients, stakeholders, and payers, it has to be taken into account that prices are not static,” Ms. Gordon said.

As Cost Goes Up, Who Pays?

Dr. Stacie B. Dusetzina
Stacie B. Dusetzina, PhD, of the University of North Carolina, Chapel Hill, noted that the separate analyses provided intriguing and important insights into the cost of cancer drugs. However, she added that price and cost may be relative to who is paying.

“We need to remember that payers aren’t the only ones paying for health services. The patients are also paying, and depending on how you’re insured or if you’re insured, you may pay a lot,” Dr. Dusetzina said. “When we think about uninsured patients, they pay a lot, and studies have shown that they often pay more for the same treatment as insurance companies, so they have very significant [financial] burden.”

She suggested that the United States may, in fact, be a wealthy nation with a vulnerable population, as national ability to pay is not necessarily equivalent to a patient’s ability to pay if out-of-pocket coverage is typically higher for people with very low incomes.

Even as the ranks of individuals who have health insurance increases, the shift of cost burden to patients under new insurance plans paints a potentially harrowing picture. Dr. Dusetzina said that non-elderly, non–low-income households typically have approximately $4,500 in liquid assets at their disposal per year. Bronze health plans available on the health care exchange, however, have an average deductible of more than $6,800.

“You have to imagine that if you needed years of therapy or if you needed ongoing care, that you would be wiped out financially,” Dr. Dusetzina said. “There is also a trend toward the use of deductibles and co-insurance rather than copayments, and this is for commercial insurance plans. This is one reason why drug prices matter so much, because drug prices are used as a basis for the calculation for the co-insurance. For patients who are paying a percentage of those prices, that really matters for them.”

Additional Barriers to Care

Dr. Yu-Ning Wong
Although gaining appropriate insurance coverage can help alleviate cost burdens, it still may not be entirely sufficient for accessing needed cancer drugs. In a study intended to characterize the effort required to obtain on-label oral anticancer medications (OAMs) in a tertiary cancer center clinic focusing on genitourinary malignancies, Yu-Ning Wong, MD, MSCE, of the Fox Chase Cancer Center, said that dealing with insurance requirements, coordinating pharmacy distribution, and other administrative responsibilities meant patients had to wait a median of 2 weeks to obtain their medication—and in some cases, as long as 45 days (Abstract 6506).

Reviewing the charts of 51 patients with prostate cancer and 65 with renal cell cancer, Dr. Wong said it took an average of 5.2 (range, 0 to 22) and 3.5 (range, 0 to 15) phone calls, respectively, between the health care team and various parties to clear all the obstacles that had been in the way of patients getting their medications. She presented a schema of one patient’s experience in her clinic, which showed that the 15 days between when the prescription was written and when it arrived was filled with incredible complexity.

“Although this is just one patient’s experience, it shows how complicated getting started on oral anticancer medications can be,” Dr. Wong said. “This process not only involves the patient and [his or her] health care provider, but also numerous outside specialty pharmacies and assistance programs, some of which can be more helpful than others.

“All of these interactions are highly influenced by the experience and availability of the office staff, as well as the patients’ own engagement with their health care, health literacy, and even financial literacy,” Dr. Wong continued. “We can hypothesize that this would take much longer in a setting where there is significant staff turnover, if the staff handles multiple disease sites, or if there is a fair amount of off-label drug use.”

What these data point to, said Jonas A. de Souza, MD, of the University of Chicago, who discussed the study, is that as the search for value and cost efficiency continues, at least part of the burden is being passed to patients.

Dr. de Souza likened the total costs of cancer drugs to an iceberg, saying that although there are costs that are apparent to patients, below the surface, cancer care can lead to invisible costs, including, but not limited to, financial burden related to health care reporting of quality of life, cost-sharing implications for patients, and patients losing time from work, losing income, and, in some cases, falling into bankruptcy.

One small example, he said, was in how financially impactful the need for prior authorizations can be. Dr. de Souza noted that interactions with health care plans costs practices $23 to $31 billion annually and exhausts 3 to 8 hours of physician time weekly.

-Bryan Bechtel