ASH 2014 Annual Meeting Preview: The Rising Cost of Medical Care

Understanding the Problems and Exploring Solutions

Health-care spending in the United States is a growing problem: in 2011, health-care spending was estimated at $2.7 trillion, more than at any previous time in U.S. history and trumping any other developed nation in the world. The costs of new drugs – and cancer drugs in particular – are rising at a similarly rapid pace. Economists, policy experts, politicians, and practitioners agree that this growth is unsustainable.

The field of hematologic malignancies is experiencing a virtual explosion of innovation with new drugs becoming available every year – but that innovation does not come without a cost. The hematology community must develop strategies to address the financial implications of progress.

In a Special Symposium on Quality on Saturday, December 6, several experts will attempt to answer the questions of why the cost of health care is so high – and how the hematology community can address this problem. ASH Clinical News spoke with a few of the presenters about their talks, as well as the larger problem of maximizing the value of health care.

What Contributes to This Problem

The cost of health care is decided on by many parties, with many competing interests and perspectives. However, Hagop M. Kantarjian, MD, who will present his talk “Hematology Drug Pricing in America: Moving to a Sustainable Model,” offers a simple explanation for the exorbitant prices of cancer drugs: “Pharmaceutical companies alone determine prices, while Medicare is prevented from negotiating prices.”

Dr. Kantarjian, from the University of Texas MD Anderson Cancer Center in Houston, added that pharmaceutical companies justify high prices with claims about the expense of research and development, market forces that will eventually settle prices, and the need to foster innovation – but questions their validity.

He offers some possible solutions for improving care and cutting costs, which will be explored more in his presentation, including:

  • Giving Medicare the ability to negotiate
  • Allowing the personal import of drugs
  • Demanding better results from new drugs
  • Initiating grass-roots movements to advocate for patients
  • Disallowing “pay-for-delay” of generic drugs

“Value means any benefit to a patient – whether it is survival or less toxicity,” Dr. Kantarjian said. ”What drug companies heavily advertise in terms of value may be trivial or incorrect.”

In short, price must reflect worth; but how that worth is defined is also changing. 

Financial Toxicity: The Patient Perspective

Reducing health care costs without compromising treatment efficacy and patient safety constitutes the holy grail of drug development. With such expensive hematologic and cancer drugs, patients are likely to experience “financial toxicity” – which, according to S. Yousuf Zafar, MD, MHS, an assistant professor in medical oncology at Duke University in Durham, North Carolina, may be as dangerous as physical toxicity.

In his talk, “Financial Toxicity: How the Cost of Medical Care Affects Our Patients,” Dr. Zafar represents the patient perspective in this high-cost environment. “Our patients face mounting bills for their cancer care despite having insurance,” he explained. “Because of this growing burden, our studies have shown that patients are often forced to spend retirement savings, cut back on food and clothing, and use credit, all to help pay these bills.”

When patients cannot afford to pay out-of-pocket for therapy, quality of care also suffers. “Many studies have shown that patients are non-adherent, especially to oral chemotherapy, due to cost,” Dr. Zafar said. “I think of financial toxicity as this combined harmful impact on patient well-being and quality of cancer care.”

As much as the problem is multifactorial, so should the solution be. “We need to see change at the level of the patient, the provider, and the health system.”

  • Patients need better education and understanding about costs
  • Physicians need to engage patients in discussions about personal costs before they incur medical debt
  • Health systems need mechanisms to screen patients to identify those at risk for financial toxicity

“Of course, all of these interventions assume that costs will remain high and continue to rise,” Dr. Zafar added. “Sooner than later, we have to address the root cause of financial toxicity: the rising cost of cancer care.”

The Cost of Innovation

According to Alex Bastian, MBA, who will speak about Mr. Bastian, “Pharma Pricing Practices and the Case for Market Self-Correction,” prices should – and do – reflect value to the U.S. public. Of course, this depends on perspective. Patients, physicians, payers, and society have varying desires and perspectives – and each has a different definition of value.

For instance, from the pharmaceutical industry’s perspective, drug development is difficult in the current regulatory environment – in addition to the costs of research and development.

“The system has always balanced itself out,” Mr. Bastian, an analyst at GfK Market Access in San Francisco, said. “Pricing hysteria has been around for at least a century, and monopolies don’t last forever.”

Several forces can impel market self-correction, with the main factors being utilization and time.  “Time, literally, is money in a defined-term monopoly,” Mr. Bastian explained. Oncologists can also vote with their prescription pad: “If you don’t like it, don’t prescribe it. The fact is there is a demand for these agents.”

So, are patients paying the price for medical innovation? There is no doubt that patients are carrying more of the burden of health care, Mr. Bastian noted, owing to many factors, including employers facing higher premiums, the advent of high-deductible health plans, and middlemen who contract with drug manufacturers.

How can all these parties – governments, health-care institutions, and practitioners – work together to maximize the value of medical care in a transparent and balanced manner? It is a question that requires immediate attention.