New Hampshire Leads Independent Oncology Practice Decline

Murray Aitken

The statistics show you are much more likely to encounter an independent oncology practice in Alaska than in New Hampshire, according to the latest oncology drug market report from the IMS Institute for Healthcare Informatics.

Over 50% of practices in Wyoming and Alaska are independent compared with 15% or less of those in Wisconsin, New Hampshire, Utah, and Montana (Figure 1), according to the report, which based its findings on 2015 data. New Jersey, as congested as it is, surprisingly is up there with Alaska and Wyoming as being among the states with the highest proportion of independents. Florida lands in the center of the distribution—just above the 16% national independent median.

Integrated delivery networks (IDNs) continue to have a rising influence in oncology care. The report said the amount of medical groups owned as part of an IDN grew from 17% in 2010 to 30% in 2015. Corporate-owned practices held steady at 27% of the total, and independents declined to 43% from 56% six years ago.

Drug administration costs can still be significantly higher in hospitals than in physician outpatient clinics. Some of the starkest differences can be seen in administration costs for bevacizumab (approximately $2000 in a clinic vs just under $10,000 for a hospital setting), pertuzumab (just under $6000 vs over $12,000), and rituximab (just over $6000 vs over $12,000) (Figure 2), according to IMS. There were modest differences in administration costs between clinics and hospitals, but none of the 15 drugs measured by IMS was dispensed at the same cost in both clinic and hospital settings.

The global cost of cancer therapies shot up to $107 billion in 2015, an 11.5% rise from the $100-billion total in 2014, according to IMS. That total includes supportive drugs that are not directly considered oncology therapeutics.

More than 70 new cancer treatments have been launched in the past five years for treatment of 20 types of cancer tumor, and the oncology industry is struggling to keep up with the pace of change, said Murray Aitken, IMS executive director.

“This is a surge of innovation that we’ve not seen in the past. We can see a tension in the system, as payers have to wrestle with these growing levels of cost. Oncologists have to wrestle with a growing armamentarium of treatments and decide the optimal course of care for a particular patient. Patients themselves now face more choices than in the past in terms of their treatments. Regulatory agencies have a lot to deal with, as new drug applications are coming through rapidly—not only for the original molecule but for subsequent indications. So, everyone in the health system is wrestling with this surge in innovation that’s bringing these remarkable new treatments to patients,” he said.

On the positive side, accelerated approvals have made it possible for new therapies to become available sooner in their development. On the downside, regulators are saddled with the dual task of reviewing the many new drug applications as well as applications for new indications, Aitken said. For example, since December of 2014, nivolumab has been approved for treatment of melanoma and squamous and non-squamous non—small cell lung cancer; most recently, it was approved for treatment of renal cell carcinoma, the report said. “The pipeline of oncology drugs in clinical development has expanded by more than 60% during the past decade, with almost 90% of the focus on targeted agents. The median time from patent filing to approval for oncology drugs in 2015 was 9.5 years, down from 10.3 years in 2013.” IMS attributed the FDA’s use of breakthrough therapy designation introduced in 2012 as one reason for this acceleration. “In the past three years, three molecules were approved within four years of patent registration.”

“Collectively, manufacturers are advancing nearly 600 new molecules through late-stage clinical development, most frequently for non—small cell lung cancer and breast, prostate, ovarian, and colorectal cancers,” the report said. It predicted that the global market will continue to grow in the range of 7.5% to 10.5% each year through 2020, reaching $150 billion. Much of that growth will be driven by immunotherapies. The report said payers will continue to look for concessions from manufacturers and adopt new payment models in order to derive greater value from their expenditures on these drugs.

In 2014, the total average cost for patients with cancer in the United States was $58,000, up 19% from $46,980 in 2013. The out-of-pocket cost for those receiving drugs by injection or infusion was $7040 in 2014 versus $6991 in 2013. In 2014, the average oral out-of-pocket drug cost was $3033 versus $2874 in 2013, the report said. Despite these increases, more programs were available to assist patients with their oncology treatment costs. Discount coupon or patient cost offsets were available to more than 25% of patients in 2015, up from 5% in 2011, IMS said.

Although the IMS report tallied total treatment costs of $107 billion in 2015, that number is based on manufacturer invoicing and does not reflect discounts, rebates, and cost reducuctions through patient access programs. “Pricing concessions by manufacturers—including mandatory and negotiated rebates, discounts, and patient cost offsets—are reducing manufacturerrealized net sales across many markets,” the report said. “Net price growth in the United States on existing branded oncology drugs averaged an estimated 4.8% in 2015, compared with 6.4% invoice price growth.”

New drugs continue to be more available in the United States than in most other countries. Only six of 21 relatively advanced countries offered more than half of the 49 new oncology drugs launched between 2010 and 2014, IMS said (Figure 3). “Targeted immunotherapies are available in most developed countries, but none of the emerging markets outside of the European Union has yet registered these treatments.”

Last year, oral targeted therapies represented 39% of $27.8 billion in drug spending, with injectables and infused drug spending accounting for the remaining 61%. The ratio of spending on orals in 2015 was 19% versus 81% for injectable/infused drugs. In the $3.4-billion hormonals market, 65% of spending last year went to orals, 35% to injectables/infused.

Pharmacy benefits under insurance plans are covering a rising share of patient costs, the report said. That includes Medicare Part D. Over one-third of cancer drug spending in 2015 went to retail pharmacies, up from 25% a decade earlier. This reflects the trend that oral oncolytics represent a rising share of drugs dispensed through pharmacies.

Reference

1. IMS Health Study: global market for cancer treatments grows to $107 billion in 2015, fueled by record level of innovation [press release]. Parsippany, NJ: IMS Health; June 2, 2016. http://www.imshealth.com/en/about-us/news/ims-health-study-global-marketfor- cancer-treatments-grows-to-107-billion-in-2015-fueled-by-record-level-of-innovation. Accessed June 8, 2016.