Brand Cancer Drug Costs Skyrocketing

The IMS Institute for Healthcare Informatics published a report this month that shows brand-name cancer drug costs have doubled in the last decade, from an average of $5,000 to $10,000 each month. Several physician researchers are showing that patients may skip treatment or suffer severe financial distress from the cost of cancer treatment, even if they are insured.  

The IMS found that cost increases have slowed down recently, but patients are increasingly treated at hospitals as physicians close their practices and join hospital staffs, due to the high cost of operating private medical offices. Hospital reimbursements average 189 percent of the reimbursement for treatments administered in physicians’ offices (for commercially insured patients under age 65) and higher overhead is passed along to the patient as higher copays.  

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Younger Patients Have Higher Bankruptcy Rates

The Hutchinson Institute for Cancer Outcomes Research (HICOR) in Seattle is publishing groundbreaking research on the patient’s economic burden from cancer treatment. Directed by Scott Ramsey, M.D., a health economist and practicing physician, HICOR linked Washington State’s cancer patient registry with federal bankruptcy records, showing that a cancer diagnosis more than doubles the patient’s risk of bankruptcy.

“Younger patients are at higher financial risk, with having fewer assets and lower wages,” Ramsey explained to Healthline. They have a two- to five-fold higher bankruptcy rate compared with older patients, who generally have Medicare and Social Security resources.

According to Ramsey, the cost of recommended therapies varies widely. For example, one course of treatment that costs $900 was compared to another treatment that costs $56,000, but both provided essentially the same result.  

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Patients Don’t Discuss Drug Treatment Costs with Docs

Despite potential financial stress, few patients discuss treatment costs with their physicians. Yousuf Zafar, M.D., an oncologist at Duke Cancer Institute at Duke University in Durham, North Carolina, published an observational pilot study of the financial toxicity of cancer treatment, and showed that even insured patients may take less medication than they are prescribed; may be forced to reduce spending on food, clothing, or leisure activities; and may dig into their savings to pay for treatment. Seventy-five percent of study participants applied for copay assistance to help with out-of-pocket costs.

Why don’t patients talk about drug costs with their physicians? In a forthcoming study, Zafar’s group found that half of the patients want to discuss treatment costs with their doctors, but only a small percentage actually do. Patients may feel that “it was not a big enough problem to discuss, or they wanted the best care regardless of cost, and patients link cost to quality of care; they may think it’s not the doctor’s job, or the doctor couldn’t help, and a small percentage were embarrassed,” according to Zafar. Despite reluctance to talk about costs, “Of the patients who did talk to the oncologist, 57 percent had decreased out of pocket costs,” he added.

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The 35,000-member American Society of Cancer Oncologists (ASCO) plans to meet at the end of May. Working to define value in cancer care, ASCO’s task force intends to promote treatment plans that evaluate clinical benefit, toxicity, and cost, leading to treatment planning that takes the patient’s financial situation and personal goals into account.

The IMS report also includes goals for meaningful improvement in clinical trials of new drugs published by the ASCO, establishing measurable improvements in survival that must be demonstrated to claim that a costly new drug treatment is worth consideration.

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U.S. Patients Pay Higher Drug Costs

According to the IMS study, “Final [cancer drug] prices are between 21 to 38 percent lower in European countries when compared with the U.S.” France, Germany, Italy, Spain, and the U.K. negotiate many regional and local drug price discounts that are usually not disclosed, often using pricing transparency (making it easy to compare prices).

In contrast, the U.S. uses drug rebates, which are negotiated between insurance companies and drug manufacturers and paid after the drug cost is billed through insurance claims. Drug rebate information is a private contract between the manufacturer and insurance company; therefore, uninsured patients do not receive the discount. The U.S. does requires manufacturers to sign rebate agreements with Medicaid, the 340B drug discount program (for low income patients and safety-net clinics), and The Veteran’s Administration.

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