New Contracting Models to Combat High Costs of Anti-Cancer Therapies

The overall cancer death rate has declined 29% from 1991 to 2017. However, the recent innovation in anti-cancer therapies has led to significant increases in drug spending, which is expected to reach $600 billion in 2023. To sustain access to these innovative therapies, new reimbursement models are needed. During a presentation at AMCP eLearning Days, Bhavesh Shah, RPh, BCOP, senior director of hematology/oncology and specialty pharmacy at Boston Medical Center Health System, and Stephanie Tran, PharmD, consultant pharmacist at the University of Massachusetts Medical School – Commonwealth Medicine, discussed how to balance risk between payers and manufacturers, including the use of innovative value- and outcome-based contracting strategies.

Drug prices are not linked to novelty or clinical benefit. The median improvement for 71 drugs approved for solid tumors between 2002 and 2012 for duration of overall survival (OS) and median progression-free survival was 2.1 months and 2.3 months, respectively. And just nine of 47 drugs (19%) approved between April 2014 and February 2016 met modest American Society of Clinical Oncology standards of meaningful clinical benefit.

In addition, faster FDA approvals of oncologic agents have provided access to more treatments, promoted healthy competition, and offered different mechanisms and technologies for patients. However, safety concerns persist following accelerated approvals, and the drug may not establish an OS benefit.

With the recent FDA approvals, payer management is a challenge. These are complex patients who need choices, and the evidence for some treatments is not mature. Thus, a balance must be struck between innovative treatments and sustainability in costs.

Cancer drug spend in the next five years will be driven by number of new innovative gene therapies, increased utilization of combination therapy consisting of immunotherapy, and approval of novel highly effective targeted agents for known oncogenic molecular aberrations. Value- and outcomes-based contracting can be a successful with dual-sided risk model that not only factors in clinically meaningful endpoints but also safety and quality of life.

For value- and outcome-based contracting, target high-cost or high-impact diseases. Select objective clinical criteria supported by evidence-based medicine that defines positive, durable clinical outcomes, as well as adverse events (AEs)/toxicities within the literature, and align prices with multiple indicates and clinical outcomes. There are various options for structuring value-based contracting. The manufacturer can assume initial risk with repayment on positive clinical outcomes; the payer can assume initial risk and may receive discounts for failure to meet expectations; or there is a shared risk, value-based model. There is also the option for indication-based pricing. Medication costs for each individual indication should be aligned with a degree of clinical benefit. When the drug is used for low-efficacy indications, initial payment for the drug should be low, and the manufacturer has the opportunity to earn back payment based on positive treatment outcomes.

The speakers then gave an example of this type of contracting. Novartis and the Centers for Medicare & Medicaid Services attempted a value-based contract for the chimeric antigen receptor T-cell therapy tisagenlecleucel that was based on disease response at day 28. In the clinical trial, only 40% of patients achieved a complete response, and the 12-month OS rate was 49%. The contract did not address the risk of a common serious AE and complications. Most patients (78%) experienced cytokine release syndrome, 25% required an intensive care unit stay, and 18% experienced grade ≥3 neurological events. The speakers noted that a more successful value-based contract design would share risk based on OS rather than initial response rates.

There are 83 biosimilars in development and registered with the FDA for 38 different biologics. There are also three biologics that represent $19.4 billion in sales in 2018 that will have biosimilars competing for market share soon. Biosimilars could save up to $5 billion in 2020, so early and aggressive adoption of biosimilar can lead to major cost savings.

Presentation: Oncology: Investigating Trends and Elucidating Value. AMCP eLearning Days, April 20-24.