Three Current Policy Discussions Influencing Cancer Drug Development

ACCORDING TO THE CENTER FOR MEDICARE AND MEDICAID INNOVATION, “cancer diagnoses comprise some of the most common and devastating diseases in the United States: more than 1.6 million people are diagnosed with cancer each year in this country.”1

Of these cancer diagnoses, the American Cancer Society estimates 595,690 people will die this year.2 While these trends show us that more work is needed to improve patient outcomes in this disease state, it is encouraging to see increasing conversations, in both the news and policy realms, about the need to confront this challenge and arrive at a positive solution.

In recognizing the Specialty Pharmacy Times annual oncology edition, I thought it would be appropriate to examine 3 of the latest policy conversations involving oncology. The first conversation involves cost containment. CMS surprised the industry with the March announcement3 of its Medicare Part B Payment Model, otherwise known as the Part B demo.

In this demo, CMS proposed a 2-phase model that will test whether alternative drug payment designs will cause a reduction in Medicare expenditures while preserving or enhancing the quality of care provided to Medicare beneficiaries. The first phase would involve changing the 6% add-on to the average sales price (ASP) that we use to make drug payments under Part B to 2.5%, plus a flat fee.

The second phase would implement value-based purchasing tools similar to those employed by commercial health plans, pharmacy benefit managers, hospitals, and other entities that manage health benefits and drug utilization.4 Physicians in phase 1 will be placed in groups based on their zip codes and will receive a flat fee of $16.80.

Phase 2 is expected to limit a patient’s out-of-pocket cost sharing, however, details on this need to be expanded upon. If finalized, the model is expected to last 5 years. The demo was a result of discussions that stemmed from the Medicare Payment Advisory Commission’s (MedPAC) investigation into physician reimbursement for oncology drugs.

The commission, a nonpartisan legislative agency that provides Congress with policy recommendations on Medicare, examined the ASP plus 6% model. The results of the investigation produced skepticism, as the commission believed physicians could make more money by administering the more expensive product that may or may not have an improved effect on the patient’s outcome over the lower-priced drug.

While many groups have come out in opposition to the demo, Avalere has published a report that finds the proposed Medicare payment changes for physician-administered drugs would reduce reimbursement for those that cost more than $480 per day in 2016. The analysis also shows that 7 of the 10 drugs that constitute the largest reduction in reimbursement are used to treat cancer.5

Meanwhile, some primary care physicians, who tend to use lower cost drugs, would be paid more. At this point, it is unclear whether prescribers will be incentivized to fall in line with the goals of the demo and how this CMS proposal will coincide with the agency’s own 5-year Oncology Care Model that will invest in physician-led practices that care for patients receiving chemotherapy.

The second policy conversation centers on the impact of waste. According to a March 2016 study6, titled Overspending Driven by Oversized Single Dose Vials of Cancer Drugs, researchers at Memorial Sloan Kettering Cancer Center estimate that there is nearly $3 billion in wasted oncology medications.

The study, which analyzed the profits of drug manufacturers, oncology physicians, and hospitals, examined the top 20 drugs for multiple cancer types packaged in single-dose vials and for which the dose is dependent on the patient’s weight. Based on the available vial sizes in the United States, the researchers estimated that makers of those 20 drugs will receive an extra $1.84 billion this year from charges for unused medicine, or about 10% of their expected US sales.

The study concluded that insurers and cancer patients will pay at least another $1 billion on unused medicine in 2016, based on the markups hospitals and doctors charge over a vial’s price every time they infuse patients with those cancer drugs7. The problem arises when the packages frequently contain more medication than the patient needs.

While the obvious call to many is to require manufacturers to produce cancer drugs in different vial sizes, policy concerns, such as scheduling for distribution to patients, as well as storage and handling requirements for oncology drugs that are biologics (products engineered from living cells compared to a chemically composed pills) remain. The aforementioned report did not go unnoticed in the policy realm.

Shortly after the release of the report, senators Amy Klobuchar (D-MN) and Jeanne Shaheen (D-NH), wrote a letter to FDA Commissioner Dr. Robert Califf urging the FDA to examine the dosage size of cancer drugs8. On the state level, while several state legislatures have for years attempted to create drug return, reuse, and recycling laws, Washington state, this spring, enacted legislation that seems to find a workable solution to cancer drug waste.

HB 2458, recently enacted and effective January 1, 2017, will allow cancer patients to donate their unused drugs to people in need who may not be able to financially afford them9. The legislation could simultaneously reduce costs and improve patient outcomes. The last policy conversation centers on 1 of many innovative policy solutions.

Vice President Joe Biden has been personally invested in finding a cure for cancer, as during recent budget negotiations, he lobbied for an increase in appropriations for cancer research funding as part of his pledge to find a “moonshot” to end cancer. During President Obama’s last State of the Union address, he officially tasked Biden with overseeing his goal.

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