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In Cancer Cost Debate, It's Oncologist vs. Oncologist

August 03, 2015

The rising cost of cancer care is attributed to skyrocketing drug prices by some oncologists, but an organization made up of community-based cancer doctors argues that providers should be addressing the overall cost of cancer care, not just the price of chemotherapy and medications.

What drives the cost of cancer care? A group of prominent oncologists recently published a manifesto that points to the advent of $100,000 drugs and their impact on patient finances as indicators of out-of-control prices.

The pharmaceutical industry responded with data supporting the calculation that drugs and chemotherapy only account for 20% of the cost of cancer care and 1% of all healthcare spending.

It's a standard talking point for the Pharmaceutical Research and Manufacturers of America, but now, a similar argument is emerging from an unlikely source—other doctors.


Ted Okon

Ted Okon, the executive director of the non-profit Community Oncology Alliance, argues that doctors should be addressing the overall cost of cancer care, not just the price of chemotherapy and medications. His read of the data suggests that drugs make up 25% of the cost of treating Medicare cancer patients, and a larger percentage of private pay patients.

He agrees that the price of cancer drugs is unsustainable and needs to be addressed.

"I believe that the 118 oncologists have every right to raise the issue of drug pricing, (but) they have to realize that the drug price is only part of the equation," he says. Okon thinks the costs associated with hospital care need to be addressed as well.

The oncologists who published their late July statement online in the journal Mayo Clinic Proceedings are affiliated with some of the most prestigious hospitals in cancer care and research, including the University of Texas MD Anderson Cancer Center in Houston, the Dana Farber Cancer Institute in Boston, and Memorial Sloan Kettering Cancer Center in New York City.

Difficult Choices
Faced with high costs and copays, they note that "Patients with cancer then have to make difficult choices between spending their incomes (and liquidating assets) on potentially lifesaving therapies or foregoing treatment to provide for family necessities (food, housing, education)."

The authors note that many of the players in the health care system, including hospitals, "can be financially conflicted when it comes to discussing rational drug prices." They call for a "cancer patient-based grassroots movement" to push for changes to allow Medicare to negotiate drug prices and allow patients to import lower cost drugs from Canada.

The two Mayo clinic authors speaking for the article were traveling and unavailable for comment last week.

In addition to drugs, the cost of cancer care can include surgery, lab tests, office visits, and imaging. In 2014, doctors at MD Anderson treated 127,00 patients, performed 69,506 hours of surgery and ordered 12 million lab tests and more than a half million diagnostic imaging procedures.

Costs for procedures can vary widely and several efforts are underway to make prices more transparent. The California Office of Statewide Health Planning and Development published an online database of surgery costs for a range of procedures. The site reports, for example, that the cost of a bilatetral mastectomy averages about $80,000 and can run as high as $130,000.


45 States Fail on State Price Transparency Laws



Lowell Schnipper, MD

Okon's organization represents oncologists who practice outside of the hospital setting. He says that the hospital-based doctors who signed on to the Mayo article should recognize and address not just the cost of drugs, but the cost of services such as inpatient and emergency department care.

"You have to look at total costs of care and not just a sliver," he said. "You have to look at your own institutions."

Okon's critique also comes at a time when oncologists, like other specialists, are closing private practices and affiliating with hospitals. He also linked his concerns to the long-running debate over the federally mandated 340B drug discount plan for disproportionate share hospitals. The latest development in that fight: A federal government report that found Medicare Part B spending was higher per beneficiary at hospitals with the 340B discount.

Multiple Factors Influence Cancer Costs
The increases are driven by the high costs of medications including those for cancer, according to a General Accounting Office report. The researchers conclude that the hospitals have a "financial incentive to prescribe more expensive drugs to Medicare beneficiaries in order to maximize the revenue generated by the difference between the cost of the drug and Medicare's reimbursement."

Lowell E. Schnipper, MD, clinical director of the Beth Israel Deaconess Medical Center Cancer Center, says the issue of cancer care costs is "really complex. The short answer is that the rising costs associated with cancer care are multifactorial."

Drugs may not be the driving factor in cancer costs, but the price of medications is growing much more rapidly on an annual basis than the cost of any other aspect of cancer care, he said.

Schnipper is the chair of an American Society of Clinical Oncologist's Value in Cancer Care Task Force, which is developing a way to measure the value of cancer drugs by looking at benefits, toxicities, and costs. The goal is to create tool physicians can use with their patients "to discuss the relative value of new cancer therapies as compared with established treatments."


ASCO Aims to Score New Cancer Treatments on Value


For example, patients might be offered a new $10,000 per month treatment that might give them a few extra months of survival.


Len Lichtenfeld, MD

"With a $2,000 or $1,500 a month co-pay, they might decide, 'I am going to take that no matter what.' Or they might decide, 'That's a small bang for the buck in terms of the global picture of my family and my finances or how I want to live my life if I'm sick.'"

The approach takes advantage of two trends that are changing the way cancer care is delivered: shared decision making and value-based payment.

The whole cancer treatment paradigm is undergoing a shift, says Len Lichtenfeld, MD, the deputy chief medical officer of the American Cancer Society in Atlanta. Much of the outpatient care is moving to hospital settings. There, some facilities are still in the fee-for-service mode, while others are looking toward oncology medical homes and accountable care organizations as means to deliver care more effectively and efficiently.

"Whether we are at the tipping point or not, I can't say, but clearly were in a place where cancer care is very expensive and all of us have to be conscious of what we do and how we do it," he says.

The hospitals will have a larger role, and take on more financial risk, with the shift toward ACOs, he says.

"This is something that will require increasing attention from hospital administrators," Lichtenfeld adds. "Cancer care is complex. It requires the technology, the personal, and the resources to be able deliver the care and it requires attention to the quality of that care. We have to move forward in a way that really benefits the enterprise and our communities, and especially out patients."

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