Oncologists Getting 6% of Drug Price Is 'Financial Conflict'

Roxanne Nelson, RN, BSN

March 07, 2018

"No one is immune from $ temptation.... We have a system that rewards oncologists and their chemotherapy offices with more $ for giving more expensive chemo. This has to change," said Vincent Rajkumar, MD, a professor of medicine and a hematologist/oncologist at the Mayo Clinic, Rochester, Minnesota.

He was highlighting a controversial topic — Medicare Part B reimbursement for drugs that poses a "financial conflict" for oncologists in choosing which drug to prescribe.

The point was made in a Twitter thread that began with Rajkumar highlighting the case of a patient with myeloma who was taking a bone-targeted therapy to prevent skeletal-related events (SREs).

"Last week a myeloma patient told me his oncologist had switched him from Zoledronic acid (ZA) to a 'new, easier' option: denosumab. A recent @ASCO guideline in @JCO_ASCO said both were options. ZA is ~$70; Denosumab is ~$2000. The oncologist gets 6% of the drug he/she chooses."

Not surprisingly, the tweet prompted a discussion that included a variety of opinions.

Rajkumar emphasized that his tweet was not about the merits of one drug vs another or what the guideline said or didn't say or finding fault with colleagues. He wanted to highlight the current system. "It's the Medicare reimbursement model that needs to change. For this, laws and regulations need to change," he wrote on Twitter.

Distorted Model

Drugs that are administered by infusion or injection in physician offices and in hospital outpatient departments are covered by Medicare Part B, as are certain products furnished by suppliers.

Under the current system, oncology practices must buy the chemotherapy drugs up front. The cost for drugs may vary; in the United States, Medicare reimburses costs on the basis of the average sales price (ASP) plus 6%. The 6% is meant to cover any variation in the acquisition price, as well as overhead.

As Rajkumar noted in his Twitter thread, that means that providers will be paid more money for prescribing a more costly medication, even if a less costly and equally effective alternative is available — such as the case he highlighted with the myeloma patient being prescribed denosumab (Xgeva, Amgen) in place of zoledronic acid.

Instead of being reimbursed a fixed dollar amount over ASP, the 6% add-on creates a financial conflict, because 6% of a more expensive drug will bring the practice more money than it would have received had a less expensive drug been used, Rajkumar noted.

"We have a system where even if two drugs are equally effective, because of the reimbursement being greater for the more expensive drug, it puts a financial conflict for physicians who have their own dispensing facilities," Rajkumar told Medscape Medical News.

"Whether or not they actually prescribe the more expensive drug in order to get a better revenue, the conflict is still there," he said in an interview.

"And it shouldn't be there," he added. "Their earnings should not be dependent on which drug they choose — that's not how the system should be."

"The current system has physicians earning larger profits when they prescribe drugs that are more expensive," said Peter Bach, MD, MAPP, director, Center for Health Policy and Outcomes, Memorial Sloan Kettering Cancer Center, New York City, who was approached for comment. "This creates an upside down market where drug corporations can garner increased market share by charging higher prices."

Under this system, Medicare and its beneficiaries paid out nearly $21 billion for drugs covered under Part B in 2014. Therefore, it is not surprising that the Centers for Medicare & Medicaid Services has been looking for new models that will reduce its drug spending.

The system in which physician reimbursement is determined on the basis of the ASP plus 6% has come under scrutiny as a target for reducing costs, and in 2016, a new reimbursement model was proposed. Medicare Part B would pay the ASP with an add-on of only 2.5% and a flat fee of $16.80 per drug per day, regardless of the drug's price. The proposal, however, was met with swift and stinging opposition from both the oncology community and the pharmaceutical industry, and it was eventually shelved.

But according to a Managed News Network report, Alex Azar, the secretary of the Department of Health and Human Services, has proposed a new plan that is strikingly similar to what is currently in place, with a few tweaks. Physicians will be paid 3% over the ASP. The reimbursement model would essentially be kept intact, albeit with a lower rate.

Similar Efficacy but Decidedly More Costly

Denosumab is a human monoclonal antibody that targets and binds to RANKL (receptor activator of nuclear factor kappa-Β ligand). Osteoclast-activating factors, such as RANKL, are associated with an increased risk for SREs in patients with multiple myeloma. The US Food and Drug Administration expanded the indication for denosumbab in January 2018 to include measures to prevent SREs in patients with multiple myeloma. The drug had already been approved for this use in patients with solid tumors.

Several studies have compared denosumab with zoledronic acid in a number of settings, and although denosumab has been reported to be noninferior to zoledronic acid, some analyses involving cost have led to questions regarding its pharmacoeconomic value (eg, J Med Econ. 2013;16:19-29).

A recent study that compared the two drugs, which was also one of the first independent analyses to compare a proprietary drug with its generic counterpart, concluded that zoledronic acid was more cost-effective than denosumab in women with breast cancer and skeletal metastases.

This study, which involved an analysis of data from the Cancer and Leukemia Group B (CALGB)/Alliance for Clinical Trials in Oncology trial 70604, was published in the Journal of Clinical Oncology and was reported by Medscape Medical News. Zoledronic acid was administered intravenously once every 3 months; denosumab was administered subcutaneously once a month.

That study found that the mean cost of administering denosumab to prevent SREs was nine times higher over the course of 2 years.

The mean incremental costs per mean number of SREs that were avoided ranged from $162,918 to $347,655 for denosumab. For zoledronic acid given monthly, the mean incremental costs per mean number of SREs avoided ranged from $137,905 to $283,109 over 24 months.

"Our analysis was from the third-party-payer point of view," said lead author Charles L. Shapiro, MD, professor of medicine, Icahn School of Medicine at Mount Sinai, New York City. "We had no patient input."

He told Medscape Medical News that data from other studies have shown that patients who have not received intravenous lines have expressed a preference for subcutaneous injections, which is how denosumab is administered. For those patients who have received a central line, every-3-month zoledronic acid may be preferred.

"The key points raised per SRE avoided was that the proprietary denosumab was orders of magnitude much more expensive than every-3-months generic zoledronic acid," said Shapiro.

However, Shapiro said: "I don't think the primary reasons for using denosumab is 6% reimbursement."

Rather, the primary reason may be that the manufacture has convinced the oncology community that denosumab is the better drug. "However, the most recent ASCO [American Society of Clinical Oncology] guidelines on bone-modifying agents for use in patients with skeletal metastases did not endorse any one drug over the other," Shapiro said. The same guideline did, however, endorse administering zolendronic acid every 3 months rather than monthly; this recommendation is supported by "three large randomized trials, including our own," Shapiro noted.

Rationale for Denosumab?

The latest indication for denosumab is for the prevention of SREs in patients with multiple myeloma. A head-to-head comparison in this patient population found that denosumab was noninferior to zoledronic acid for time to SREs. The findings also suggested an advantage in reducing the risk for renal adverse events.

As previously reported by Medscape Medical News, the authors noted that there were "bone-specific benefits and observed prolongation of progression-free survival, in combination with a better renal toxicity profile," with denosumab. Given these advantages, denosumab had the "potential to be the new standard of care for multiple myeloma–related bone disease."

However, there were no significant differences between the groups in terms of overall survival. Adverse events were also similar between treatment arms, although renal toxicity was higher with zoledronic acid, and hypocalcemia occurred more frequently with denosumab.

Commenting on this head-to-head comparison, Rajkumar pointed out that the study did not mention the huge cost difference. "While it may be that both drugs are noninferior, one is inferior in terms of cost," he said.

Denosumab had shown noninferiority in terms of efficacy in preventing SREs and has an advantage in its side effect profile (with the lower risk for renal adverse events), and so he concluded that it offers another alternative to zoledronic acid.

However, it is not yet time to declare denosumab the new standard of care, he said. There is a big difference in cost, he pointed out — zoledronic acid costs around $70 per month, whereas denosumab costs more than $2000 per month. For "that much increase in cost, I would like to see a survival advantage," he commented. So far, no such advantage has been shown.

He also questioned some of the findings that were reported, such as the finding regarding progression-free survival, which "is not believable," he said.

"It was not a planned endpoint, and it seems much longer than skeletal-related events, which raises questions, since these events are considered a progression event for myeloma," he explained.

The other issue was the better renal profile, because it was mainly related to changes in creatinine levels and not serious renal toxicity, he said. "It is not clear how different the levels would be if you if you compare it to how zoledronic acid is given now."

In the head-to head comparison study, zoledronic acid was administered every 4 weeks, but currently, it is given much less frequently, he noted. "It is usually not given monthly anymore but every 3 months, so it is possible that these differences will also disappear," Rajkumar said. "There is also the idea that you can use denosumab in patients with severe renal dysfunction — but that is not based on their data, because this study excluded people in both arms who had severe renal dysfunction. Patients with renal insufficiency were excluded if they had baseline creatinine clearance below 30 mL/min."

In the twitter feed, David Steensma, MD, professor of medicine at Harvard Medical School, consulting physician at Brigham and Women's Hospital, and a faculty member in the leukemia group at Dana-Farber Cancer Institute in Boston, Massachusetts, noted that he had switched a patient to denusomab from zoledronic acid because the patient's renal function worsened.

But he emphasized that monetary gain did not have anything to do with that decision. "We have the 'luxury' of being on fixed salary so that considerations of practice revenue do not influence choices," he said in his tweet. "For those in private practice, it is more complicated."

Steensma told Medscape Medical News that the "main reason to use denosumab, in my mind, is either renal insufficiency — where bisphosphonates can't be safely given, which is frequent in myeloma — or if for some reason the patient can't tolerate zoledronic acid. The adverse event profile is similar, including a comparable rate of osteonecrosis."

In patients with hormone-resistant prostate cancer, he pointed out, one randomized study suggested that denusomab was a little better than zoledronic acid in terms of time to the appearance of new bone lesions. "There have been some other solid tumor drugs suggesting similar superiority, but in most settings, it is comparable rather than better," he said.

Steensma added that some patients are already taking a bisphosphonate for osteoporosis, and that might be another reason to use denusomab.

Newer Is More Attractive

Sometimes, however, clinicians use a newer drug because it is regarded as the more attractive option. There are data that show that when given the option of two similar drugs, there is a tendency for physicians to give the more expensive one, said Rajkumar.

"Whether there is a real change in practice based on financial reward or not, that is not the main question," he added.

"The real question is this kind of system. No one is immune to temptation, and you can't be second guessing who is and who isn't. That's the whole idea of conflict of interest — not that there is a conflict, but you don't know who is conflicted and who isn't," Rajkumar concluded in the interview with Medscape Medical News.

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