SOURCE: Value & Innovation

Value & Innovation

March 30, 2012 11:32 ET

Cancer Drug Costs Unsustainable, According to Value & Innovation Webinar

Despite Limitations, Cancer Pathways Are the Most Likely Cost-Reduction Tool for US Payers; Major Implications for Drug Companies' Pricing, Drug-Development Strategies

WESTPORT, CT--(Marketwire - Mar 30, 2012) - The current economic model for treating cancer is badly broken, according to senior executives from healthcare insurance companies who discussed the challenges and key solutions in an hour-long webinar led by Value & Innovation, a research and advisory firm focused on healthcare reimbursement issues. (To access the recording and slides, visit

With cancer-therapy costs rising at almost four times the rate of total medical costs, new approaches are sorely needed. This web meeting with industry leaders focused on an emerging strategy called cancer pathways, a method for reducing oncology costs while still maintaining treatment quality and outcomes.

Physicians often employ many different treatments for the same cancer, making clinical decisions based on opinion rather than evidence. Cancer pathways are a method to standardize treatment using guidelines recommended by leading cancer medical societies. This approach minimizes the treatment variations that often increase costs without improving outcomes. One of the key takeaways from the March 20th discussion: while the results are promising, cancer pathways aren't yet the perfect solution.

"Cancer pathways are an important first step. With greater consistency in treatment, we can begin to do real time comparative effectiveness research," said Lee Newcomer, MD, SVP, Oncology, Genetics and Women's Health, UnitedHealthcare.

Added Ira M. Klein, MD, Chief of Staff in the Office of the Chief Medical Officer at Aetna, "They are a move in the right direction," laying the groundwork for new reform mechanisms like bundled payments, patient-centered oncology medical homes, and the creation of oncology-based accountable care organizations.

"It's clear that virtually all large healthcare insurance companies, as well as mid-sized insurers interested in devising new risk-sharing payment mechanisms, should be exploring cancer pathways instead," says Ellen Licking, a senior analyst at V&I. "Given the increasing importance of episode-of-care and other quasi-capitated reimbursement schemes, we don't think they can afford not to participate in these experiments. Otherwise, we believe they will find themselves at a dramatic cost-disadvantage."

The implications for pricing policies at biopharma companies are profound, Licking continued. As payers and Pharma learn to standardize around particular therapies, they will be able to drive significantly better deals on product prices, particularly in categories -- such as prostate and breast cancer -- where multiple therapeutic options exist with little differentiation in clinical outcomes.

"That kind of pricing leverage," said Licking, "could also force big changes in typical 'serial indication' drug-development strategies." Pathway medicine, she explained, will make it harder to secure reimbursement for cancer drugs in multiple indications without providing larger rebates or discounts to the buyer because it's unlikely a given medicine will be on pathway in all indications.

The panel also noted the limitations associated with first-generation pathways. Milayna Subar, MD, VP, National Practice Leader, Oncology, Medco Health Solutions noted that in order to get the most out of pathways they should be designed to encompass "the treatment planning process and the whole patient." For example, pathways should also focus on standardizing the use of expensive diagnostic and radiologic testing.

Nor will pathways work if pathways are too prescriptive, according to Arlene Forastiere, MD, SVP, Medical Affairs at pathway provider eviti. "We need to support the physician at the point-of-care, showing them evidence-based regimens and clinical trial options appropriate for an individual patient, as well as payer network preferences and novel payment schemes."

To access a recorded version of the webinar, visit

Value & Innovation is a member-based research and advisory firm guiding healthcare payers, at-risk providers and pharma and device companies through the ever-evolving complexities of the reimbursement environment. V&I provides its subscribers with written commentary and direct contact with its analysts through phone, email and in-person discussions. For more information on V&I and its first service, Oncology Management Strategies, contact

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