Update on Cancer Policy Issues

9/17/2014Dr. Peter B. BachDirector, Center for Health Policy and OutcomesMemorial Sloan Kettering Cancer Centerwww.MSKCC.org

Outline

• FDA approval paths• Payment reform proposals•Quality measurement in cancer• Pricing and prices• Shifting site of care for cancer• The Dialogue on cancer

The FDA’s (unconventional) Approval Pathways

• Fast Track– For drugs that treat serious conditions and fill an unmet medical

need.  – Provides more frequent FDA review and correspondence,

accelerated approval, priority review and rolling review.

• Breakthrough Therapy– For drugs that are intended to treat a serious condition with

preliminary evidence of improvement over available therapy.– Fast track advantages (above) plus ‘intensive guidance ‘ from FDA

on an efficient drug development program.

• Accelerated Approval– For drugs that treat serious conditions and fill an unmet medical

need.

– Allows use of surrogate or intermediate endpoints.

• Priority Review– For drugs that would provide significant improvements in the

safety or effectiveness when compared to standard applications.– Directs FDA’s “attention and resources” to application.http://www.fda.gov/forconsumers/byaudience/forpatientadvocates/

speedingaccesstoimportantnewtherapies/ucm128291.htm#summary

Recently Approved Cancer Drugs: costs for a month of treatment at initial FDA approval

Brand name(s) Year of FDA approval FDA Approval Pathway Monthly cost (2013 $'s)

Kadcyla 2013 Priority Review $10,635Pomalyst 2013 Accelerated Approval $11,336Mekinist 2013 Accelerated Approval $8,812Tafinlar 2013 Accelerated Approval $9,411Xofigo 2013 Priority Review $12,455Gilotrif 2013 Priority Review $5,500Imbruvica 2013 Accelerated Approval $10,900Gazyva 2013 Breakthrough Therapy $7,167Zykadia 2014 Accelerated Approval $13,276Cyramza 2014 Priority Review $13,036Keytruda 2014 Breakthrough Therapy $8,725

http://www.mskcc.org/research/health-policy-outcomes/cost-drugs

Payment reform

Bach PB. Reforming the payment system for medical oncology. JAMA : the journal of the American Medical Association 2013;310:261-2.

How we pay matters

CMMI’s Oncology Care Model (OCM) for Bundled Payments

Summary from the Advisory Board Company: http://www.advisory.com/research/oncology-roundtable/oncology-rounds/2014/08/the-new-cmmi-oncology-care-model-key-takeaways-and-questions

CMMI’s OCM: Quality Measures for Performance Payments

Summary from the Advisory Board Company: http://www.advisory.com/research/oncology-roundtable/oncology-rounds/2014/08/the-new-cmmi-oncology-care-model-key-takeaways-and-questions

ASCO’s Payment Reform Proposal

• “The ASCO proposal begins to move away from fee for service, relying instead on five key components to reform payment, maintain viability of community oncology practices, and control costs.”

• 1. New Patient Payment• 2. Treatment Month Payment

– There would be four different levels of Treatment Month Payment to reflect the differences in time and effort involved in treating different patients.

• 3. Non-Treatment Month Payment. – If the patient is still under the care of the oncology practice but

does not receive any anti-cancer treatment (oral or parenteral) during a particular month..

• 4. Transition of Treatment Payment. – When a patient begins a new line of therapy or ends treatment

without an intention to continue.

• 5. Continued FFS Payment for Some CPT Codes..

http://www.asco.org/advocacy/physician-payment-reform

COA’s Payment Reform Proposal: 4 Phases

http://www.asco.org/sites/www.asco.org/files/coa_medicare_payment_reform_model_overview_v10-9-6-13.pdf

Episode payment: What incentive does oncologist face? (lung example)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Cost

per

Mon

th o

f Tre

atm

ent

Administration Fees and Supportive Care CostsChemotherapy Cost

Potential Profit for Physician

Potential Loss for Physician

Metastatic Hormone Refractory Prostate Cancer

Why bundling saves moneyM

edic

are

Cost

/ Pa

tient

Calibrate payment based on average utilization

Program Savings

FFS Initial EBP

Recalibrated EBP

Recalibrated EBP

Payment for Pathway Adherence

• Pathways tell doctors which treatments to use in common conditions•Mostly payer contracts linked to pathways ask for 80% adherence

Cancer Quality Measures

NQF approved• 60 measures in total• 82% (49/60) classified as process measures by the NQF• 8% (5/60) classified as outcome measures by the NQF

PCHQR Measures – currently in use

• Safety and Healthcare-Associated Infection—HAI– NHSN Central Line-Associated Bloodstream Infection

(CLABSI) Outcome Measure– NHSN Catheter-Associated Urinary Tract Infections (CAUTI)

Outcome Measure

• Clinical Process/Cancer-Specific Treatments– Adjuvant Chemotherapy is Considered or Administered

Within 4 Months (120 days) of Diagnosis to Patients Under the Age of 80 with AJCC III (lymph node positive) Colon Cancer

– Combination Chemotherapy is Considered or Administered Within 4 Months (120 days) of Diagnosis for Women Under 70 with AJCC T1c, or Stage II or III Hormone Receptor Negative Breast Cancer

– Adjuvant Hormonal Therapy

• Patient Engagement/Experience of Care – HCAHP

Rising prices of cancer drugs

The Zaltrap story

Zaltrap Avastin

Median survival benefit: 1.4 months Median survival benefit: 1.4 months

Cost per QALY gained: $585,200

3 NYT headlines

ASCO Value Initiative

Year of Approval 2011 2014

ORR 50% (42%, 59%) 61% (52%, 70%)

54.6% (47, 62) 43.6% (36, 52)

Duration of response (months) 9.7 (1.4+, 9.7+) 11.1 (0.9+, 17.7+)

7.4 (5.4, 10.1) 7.1 (5.6, NE)

Reasonable side effect profile YES YESFrequency twice per day once per dayApproval required RCT NO NONumber of approval trials 2 1Total sample size 255 163First in class NO YESCompanion diagnostic codeveloped YES NOWhich should cost more?

Cost ($2013, at approval)

A Tale of Two Drugs

$11,375 $13,276

---

Xalkori ZykadiaDrug A Drug B

Meanwhile, care is shifting

Moran report: US Oncology Network, Community Oncology Alliance and ION Solutions

Site of care: Why and What now?

•Collapsing margins on doc office side (ASP+6 to ASP + 4.2 to ASP +3)• 340B drug discounts make hospitals (only hospitals) far more profitable • Projected consequences:– Added costs for private insurance– Hospital contracted rates high–Market consolidation = Market power

340B

• Federal program intended to allow some hospitals that care for the poor to obtain drugs at reduced prices• Requires drug manufacturers to provide

substantial discounts on drugs administered in the outpatient setting• Unintended Consequences

– Shifts in prescribing behavior to more expensive drugs

– Promotion of consolidation between community based oncology practices and 340B eligible hospitals

– Shifts in the site of care from community practices to hospital outpatient departments

340B: Expansion

Where is the opportunity?

• Reports suggest care costs more in hospital than doctor office– Avalare Health (2012)• Funded by the Community Oncology

Alliance

–Milliman (2011)• Funded by McKesson on behalf of the US

Oncology Network

–Milliman (2013)• Funded by Genentech

Site of care: findings

• Milliman (2011) – costs higher in HOP– Not risk adjusted– Counts total costs– Hospitalization rates higher and survival poorer in

HOP – suggests higher level of acuity

• Avalere – costs higher in HOP– Same issues as 2011 report

• Milliman (2013)– Average costs (all allowed medical claims) for a HOP

chemotherapy episode were 28-53% higher than POV episodes across cancer types.

– Only report broken out by some details of cancer– Seems like potential for cost savings.

Milliman (2013) Report

Anything good about site of care shift?

•Hospitals may be more integrated delivery networks•Hospitals can get bigger drug discounts as larger purchasers •Hospitals can more easily go to salary/staff model•Hospitals have larger balance sheets to take on risk

Analysis and impact of passing through 340B discounts

FOLFOX6HOP total $6,136.53POV discount $478.66340B HOP total $4,247.76340B HOP/POV 75%

FOLFIRIHOP total $4,555.89POV discount $441.79340B HOP total $3,231.57340B HOP/POV 79%

CapeOXHOP total $1,921.57POV discount $138.30

340B HOP total $1,308.69340B HOP/POV 73%

Thank you