Patent-Protected Oral Cancer Drugs Are Drivers of High Costs

Roxanne Nelson

October 13, 2014

Oral cancer drugs have led to a gradual shift in cancer therapy being administered in the healthcare setting to being administered at home.

But the downside is that these drugs come with a hefty price tag. A study published in the October issue of Health Affairs shows that the average spending on oral cancer drugs increased by 37% over a 5-year period, from $940 million in the first quarter of 2006 to $1.4 billion in the third quarter of 2011.

The study, using data from IMS Health's National Sales Perspectives, evaluated 47 oral cancer drugs, including targeted agents (30%), hormonal products (26%), and alkylating agents (19%).

In 2006, approximately 42% of the average quarterly national spending was for hormonal agents, followed by targeted agents (35%), antimetabolites (11%), and alkylating agents (10%).

In 2011, the spending pattern shifted, and 59% of the spending was for targeted agents, 19% was for hormonal agents, 12% was for antimetabolites, and 8% was for alkylating agents.

During the same period, the average quarterly use of oral agents increased at a much slower pace than spending, at 10%.

The investigators note that the increase in drug expenditures during the study period appears to be driven by brand-name, patent-protected drugs.

During the study period, 43% of the oral cancer drugs were available as generics, the majority of which were alkylating or hormonal agents. Another 45% were available only as brand-name products, and more than half of these were introduced to the American market in 2007 or later.

Generic Status Cuts Cost

Of the brand-name drugs, 11% lost patent protection during the study period and became available in generic form. When this happens, prices plummet to a fraction of their original price.

For drugs that lost patent protection and became generic during the study period, there was a decrease in cost and a significant increases in use, according to investigator Rena M. Conti, PhD, assistant professor of pediatrics and population health sciences at the University of Chicago Medicine.

The investigators estimated that for patent-protected oncologics, average quarterly spending increased by 61% from 2006 to 2011, and average quarterly use increased by 30%. For drugs that lost their patent protection, they estimated that spending decreased by 65% and use increased by 16%.

For generic oral cancer drugs, the investigators observed a "very large decline" of 56% in estimated quarterly spending and a smaller 12% decrease in use.

"Generic entry of these drugs is a huge gain to patients and payers because it is the same safe and effective drug at 10% of the cost," Dr Conti told Medscape Medical News.

She described the case of imatinib (Gleevec), a patent-protected drug. "This drug is expected to undergo generic entry in early 2016, and there are already several generic drug manufacturers that are saying they will make the drug for the American market," she said. Dr Conti explained that "it is important for physicians and insurers to be aware of the benefits of using generic imatinib when it becomes available and talk to their patients about the benefits of using it."

Cost Sharing for Some

Overall, there was quite an increase in spending between the two time periods, she explained. "But it is important to put the levels of spending into more general context. Annual spending on these drugs only amounts to approximately one-quarter of spending on all anticancer drugs, and less than 2% of total national spending on prescription drugs."

The overall cost of cancer treatment in the United States was $125 billion in 2010, which is approximately 5% of that year's total medical care spending. National spending on oncologics alone were $23 billion in 2011, the investigators report, and the therapeutic class of oncologics outranked all other prescription drugs.

In some cases, insurers have imposed high cost sharing for these oral drugs, sometimes leading to poor adherence.

Oral cancer drugs are handled through a patient's "pharmacy benefit," whereas intravenous (IV) chemotherapy is handled through the "medical benefit." The medical benefit usually requires a patient to pay a small flat copayment for care in an outpatient unit, but pharmacy benefits usually have a tiered copayment structure along with other provisions that can increase cost sharing. In an attempt to level the playing field, oral chemotherapy parity laws have been passed in 34 states plus the District of Columbia, and require insurers to cover these drugs under terms that are "no less favorable" than those for IV chemotherapy.

Dr Conti pointed out that most of the oral oncologics are still being reimbursed by Medicare. "The majority of patients insured by fee-for-service Medicare have Medigap insurance, which wraps around the Part D benefit," she said. "There are also generous coupon and patient assistance programs for patients who do not qualify for Medicare insurance."

"I believe it is very important for oncologists and their staff to be aware of these out-of-pocket costs for their patients and help guide patients to all available assistance with these costs as needed," she added.

The study was funded by the National Cancer Institute.

Health Aff (Millwood). 2014;33:1721-1727. Abstract

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