The Lynx Group

Seeking Value in Oncology Is Like Chasing an Elephant

May 2012, Vol 3, No 3

Houston, TX—Defining value in cancer care is like a group of blind men trying to define what an elephant is, by touch: it is described according to one’s own experience and perceptions, said Mark Zitter, MBA, Founder and Chief Executive Officer, The Zitter Group, San Francisco, CA.

“Overall, value depends on one’s perspective. No one person can define it,” Mr Zitter said. “The main problem is that we as a society collectively want to consume more healthcare than we collectively want to pay for. Everyone wants the innovation, but no one wants the cost. Before we can make value ‘happen,’ we have to figure out what it is.” In his presentation at the Association for Value-Based Cancer Care annual conference, he described The Zitter Group’s Managed Care Oncology Index findings, a semiannual survey of 100 payers, 100 oncologists, and 100 oncology practice managers.

What Is Value in Oncology?

The elimination of “waste” is thought to improve “value,” but healthcare stakeholders disagree about where to look for waste, Mr Zitter said.

Findings from the Summer 2011 Index show that payers and oncologists believe that end-of-life excessive care is the greatest contributor to “excess costs” in the US healthcare system. Practice managers see administrative issues as the biggest source.

Inappropriate drug use was deemed important by payers and oncologists, and excessive diagnostic testing was deemed wasteful by oncologists and practice managers.

Overall, in determining value, much attention is paid to the high cost of drugs that offer only marginal survival benefits to patients.

The value of the new biologics for cancer has been debated by many. Mr Zitter noted that the drugs that were considered “least valued” or with “too much hype” by oncologists and by payers included bevacizumab (Avastin), sipuleucel-T (Provenge), erlotinib (Tarceva), and cetuximab (Erbitux); payers also listed ipilimumab (Yervoy) in that category.

Oncologists, however, indicated that they would prescribe expensive agents even if they confer less than a 6-month extension in survival, whereas payers and practice managers expect more benefit for such an investment. “We are making these [cost] decisions daily in the healthcare system. We have to come to the conclusion that what we pay for is not completely rational in terms of value,” Mr Zitter said.

Prior Authorization Tops the List of Cancer Therapy Management Tools.
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Payers Pack a Punch

“Payers believe that they are getting better at oncology management,” Mr Zitter said, based on a near-doubling of the percentage of payers (now 46%) who reported that their organization “effectively manages the oncology category” compared with 6 months earlier. They are accomplishing such effective oncology management mainly through prior authorization, which is a management tool in cancer therapy for 86% of payers (Figure). Oncologists (87%) and practice managers (95%) also perceive prior authorization as a key tool for cancer therapy.

Other strategies to manage cancer therapy reported by survey payers include the use of compendia guidelines and quantity limits, tying drug approval to diagnostic tests and biomarkers, the use of specific laboratory or diagnostic values, and the incorporation of clinical pathways (Figure). Payers also seek value through the use of preferred products.

“We have seen a substantial increase in the aggressive and restrictiveness of prior authorizations across health plans and in multiple other ways in which payers are taking a much more active approach,” Mr Zitter noted.

He doubts that companion diagnostics for targeted therapies will enhance value, because these tests are expensive and are not 100% accurate. When a test indicates a 5% chance of response to a given drug, the patient will still want the drug, and the health plan will pay for the drug and the test.

Patients, Too, Are Rethinking Value

Patients are looking more closely at value through cost-sharing and high deductibles, but this ultimately may be compromising outcomes. “The elephant in the room is something very large that no one is talking about. It’s not cost. It’s the impact of cost-sharing on patient access and outcomes,” Mr Zitter suggested. Although cost-sharing does reduce inappropriate care, it also reduces appropriate care.

Patients seek treatment alternatives when monthly out-of-pocket costs are $350, or even less. “You don’t have to have a very high cost to affect patients’ choices of treatment,” Mr Zitter observed. Pharmaceutical companies’ copay support programs have become ubiquitous, because manufacturers realize that “a 20% copay may make their drugs unaffordable,” he added.

Providers Feel the Pressure

The Zitter Group’s surveys show that payers and providers view oncologists as “driving the decisions,” although payers are “squeezing out value” through average sale price reimbursements. This has affected incomes for more than 50% of the oncologists surveyed.

Providers also feel pressure to embrace pathways, which are now being used in approximately 50% of the practices surveyed. Oncologists also feel the need to examine their patients’ benefits when selecting treatments.

“A 20% copay for a drug that costs $65,000 a year is huge. Doctors have to be influenced by this in making treatment decisions,” he said.

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