A More Simplified Health Care System is Needed to Provide Value

Ted Okon

Although scientific advances in hematology and oncology have been extraordinary, the US health care system faces significant challenges in ensuring that patients receive high-quality, cost-effective care, Ted Okon, executive director of the Community Oncology Alliance in Washington, D.C., said during a presentation during the 25th Annual International Congress on Hematologic Malignancies.¹

“We have a Rube Goldberg system of health care that is dominated by consulting middlemen that drive up drug costs. This has created a very complicated system of health care,” he said.

Drug prices, Okon said, have gone up dramatically as the technology has advanced, and he believes the high costs are not always justified. He pointed to several recent studies, including findings presented at the American Society of Clinical Oncology (ASCO) 2020 Quality Care Symposium in October.

Results from 1 study showed that, worldwide, the cost of cancer therapy frequently exceeds a society’s willingness to pay. Investigators compared incremental cost-effectiveness ratios (ICER) of cancer drugs in papers published from December 2012 to December 2017 and found that median ICER was highest in the United States.²

The cost of immune checkpoint inhibitors, in particular, was more likely to be above society’s willingness to pay.2 A study of immunotherapy use in the hospital setting found these agents are associates with much higher costs without providing any clear benefit.³

“Drug prices are a real problem, but at the same time, there is a problem with hospital prices,” Okon said.

As of January 1, 2021, a rule by the Department of Health and Human Services requires hospitals to not only post their charges on prescription drugs but also their contracted prices with insurance companies.

A recent analysis from AllianceBernstein, a global investment management that performs economic and financial analysis, found that hospitals mark up their drug prices by 250% over the average selling price.⁴ Further, hospitals are incentivized to use more expensive drugs and there are significant variations in pricing among the different insurers. Biosimilars, which often cost less than their originator products, are financially unattractive for hospitals. Approximately 30% to 43% of hospitals only carry innovator drugs. Of those that do carry biosimilars, most only carry 1 product. Additionally, administering drugs to patients in commercial plans is 20 times more profitable than with patients in Medicare plans.

“This is the first time we’ve been able to look the hospital side on drug pricing,” Okon said.

Mergers and acquisitions of pharmacy benefit managers (PBMs) and insurers have obscured the flow of money, Okon said. He offered the example of CVS, a drug store that offers specialty pharmacy (where hematology and oncology drugs would be categorized) and mail order services. But CVS also has medical clinics and is a benefit plan sponsor, a PBM, and an insurer with the purchase of Aetna in 2018.

“Consolidation has only raised costs in health care; it has not increased quality,” he said.

The health care system, he said, has created an environment where physicians spend a lot of time on administrative and insurance issues. “We need to foster a much better environment for physicians,” Okon said. “We need to let doctors be doctors and not spend half of their time fighting with insurance companies.”

Demand and Supply Challenges

The demand for health care services will continue to increase, especially as the US population ages and because of American’s unhealthy lifestyles, Okon said. “When you talk about policy at the federal and state level, people don’t talk about the responsibility of Americans. I believe every person has a right to health care but at the same time, everybody has to take personal responsibility for their health.”

An unhealthy population increases the demand for health care. He pointed to the fact that just 2.7% of Americans meet all 4 healthy lifestyle factors—being sufficiently active, eating a healthy diet, being a nonsmoker, and having a recommended body fat percentage.⁵ Furthermore, 34.1 million adults still smoke cigarettes.⁶

Additionally, an aging physician population is putting pressure on the health care system, Okon said. Within oncology, the workforce is more heavily weighted toward retirement age. There are currently approximately 12,940 US oncologists providing patient care, according to ASCO’s 2020 Workforce Information Systems report.Of those, 19.7% are 64 or older and 12.7% are 40 or under.⁷

References

1. Okon T. The future of health care. 25th Annual International Congress on Hematologic Malignancies; February 25-28, 2021; Virtual.

2. Oliveira FA, Oliveira EA, Lopes G, et al. Systemic review and meta-analysis of incremental cost-effectiveness ratio (ICER) for new cancer drugs. Paper presented at: ASCO 2020 Quality Care Symposium. J Clin Oncol, 2020 38; (abstr 66). doi:10.1200/JCO.2020.38.29_suppl.66

3. Araoye MO, Byrne BJ. Effectiveness of immunotherapy given to cancer patients in the hospitalized setting. Paper presented at: ASCO 2020 Quality Care Symposium. J Clin Oncol, 2020 38; (abstr 74). doi:10.1200/JCO.2020.38.29_suppl.74

4. Gal A, Wilkes L, Hambright L, et al. US Healthcare: as hospitals are forced to release real prices, we learn their drug markups average 250% ; will dynamics change. Sanford Bernstein. https://www.bernstein.com/

5. Loprinzi PD, Branscum A, Hanks J, Smith E. Healthy lifestyle characteristics and their joint association with cardiovascular disease biomarkers in US adults. Mayo Clin Proc. 2016;91(4):432-442. doi:10.1016/j.mayocp.2016.01.009

6. Centers for Disease Control and Prevention. Current cigarette smoking among adults in the United Sates. December 10, 2020. Accessed February 27, 2021. https://www.cdc.gov/tobacco/data_statistics/fact_sheets/adult_data/cig_smoking/index.htm#nation

7. Key Trends in Tracking Supply and Demand for Oncologists. American Society of Clinical Oncologists. August 2020. Accessed January 19, 2021. https://bit.ly/2RwnopZ