Soaring Drug Prices Bring New Challenges

Tony Hagen @oncobiz
Published: Saturday, Feb 11, 2017
blood cells It’s not getting any easier in the oncolytics dispensary business. Just ask Jeff Liticker, PharmD, of UT Southwestern Medical Center. Not only are drug prices soaring with the arrival of many new therapies, but competition for the drug dispensing and drug infusion business is on the rise, he said in a recent talk about oncology drug issues sponsored by the Association of Community Cancer Centers.

In tandem with the outpouring of new drugs, the proliferation of medical information and its adoption by patients have greatly complicated the role of oncology specialists, Liticker explained. “It used to be that the patient would walk into the physician’s office and the physician would say, ‘Here’s the problem. Here’s what needs to be treated,’ and that was the end of it. Now, we’ve got this thing called the Internet, where patients come in and they tell you what their diagnosis is. They tell you what to treat them with, and you spend more time talking them out of that or trying to point them in the right direction. The information exchange or information explosion has really affected patients and what they expect from us,” he said.

As medical dependency grows longer with the arrival of newer, more powerful therapies, patients often outlive the money they have available for health conditions. “We’re really looking at the way patients are progressing through this, what they’re expecting, and how much more they’re expect- ing from us,” Liticker said.

On the business side, consolidation has become a factor in cost escalation. Private practices find it harder to profit from drug sales and so they join hospital networks, where mainstays like the 340B Drug Pricing Program add to financial stability. This may provide security for physicians, but it also contributes to higher costs of care. “Hospitals are not cheaper places to treat patients,” Liticker said.

Drug proliferation adds to the dif culties of keeping up in the business of oncology. There are 586 new molecule drugs in the late-phase pipeline, Liticker said, citing information from QuintilesIMS. Very few of those are copycat drugs. They’re all highly targeted, and they illustrate that developing a successful drug innovation lab and selling it once it achieves a breakthrough can be a very pro table form of business. “Those of us who have been around medicine long enough realize the best position you could be in is to create your own little company, come up with a miracle drug, and then turn around and sell that miracle drug company to a Bristol-Myers, Merck, or somebody else.”

From patent to approval, the time involved for drug development fell from 10.25 years in 2013 to 9.5 years in 2015, Liticker said. Meanwhile, the cost of treating one patient with cancer for a year rose from $100,000 in 2012 to $150,000 in 2014. The same phenomenon can be observed by other measures. In 2010, the United States spent almost $16 billion on just cancer drugs alone. That number rose to $38 billion by 2015, Liticker said. Those totals do not include the costs of supportive care drugs. “What are these supportive care drugs costing us, and what’s our estimated 2020 expenditure? In the United States alone, it’s almost $80 billion by 2020 for everything looking at cancer,” he said. “That’s a considerable chunk of change, and guess who the primary payer by 2020 will be for these? CMS or Medicare. So, of course, they’ve got a real hand in making sure we spend less on drugs over the next few years.”

Less Clinical Information Is Available About New Drugs

One of the downsides of rapid drug approvals is that considerably less information about adverse events is available at the time the FDA gives its imprimatur for marketing. “We’re looking at almost half the knowledge base when that drug hits the market,” Liticker said. “As trials get designed better, we have fewer patients, so there are fewer reports coming in of side effects. The result is we have patients getting drugs that we don’t know nearly as much about now as we would have 20 years ago.”

In his discussion of hospital revenue streams, Liticker took aim at “percent of bill” charges. “If you look at a hospital charge versus a clinic charge for a drug, oftentimes the hospital charge is 4 to 5 times as much. Why does a hospital charge 4 to 5 times as much for a drug that they can get less expensively than a clinic can? We know that we’re going to pay a dollar for this drug, but if we bill $100 and we get 30% of those bill charges, we’ve made $30 for that $1 drug, so we’ve made a nice little pro t. Who does that hurt? The uninsured and the underinsured to whom we can’t give a discount without giving it to everybody else, so they’re the ones who ultimately have to pay for this, or they don’t come for care.”

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