Brand-name Oral Oncologics Drive Spending Trend, Study Says

Spending on 47 currently available oral oncologic drugs has increased from $940 million in the first quarter of 2006 to $1.4 billion in the third quarter of 2011, according to results of a study by Rena M. Conti, PhD, and colleagues, at the University of Chicago. The researchers looked at brand name and generic oral oncologics for the study.

Conti, an assistant professor of pediatrics and population health sciences at the University of Chicago Medicine, said in a news release that "spending on these brand-name oral oncologics is outstripping national spending on all pharmaceuticals and all medical care spending generally."

The researchers said the spending trend is driven by brand-name, patent-protected drugs. Despite the increase, the use of these drugs climbed a comparatively small amount. This suggests that price increases are partially driven by spending trends.

In the study, Conti and her colleagues, Adam Fein, PhD, president of Pembroke Consulting in Philadelphia and oncologist Sumita Bhatta, MD, a former oncology fellow at the University of Chicago Medicine, wrote that when oncologic drugs of all types lose patent protection, patients and society benefit. Even though use of newly off-patent drugs increased by 16%, average quarterly spending on those drugs fell by 65%.

In addition, many newer oral oncologics are targeted agents, a class of drugs that represent significant therapeutic advances with milder side effects than traditional chemotherapy.

"This is an exciting time, an era of breakthrough cancer drugs," Conti said. "Some of these medications have extended the lives of many people with certain types of cancer. Other new drugs may provide cures for patients suffering now."

The findings have particular importance because of current coverage and reimbursement policies associated with Medicare Part D benefits, the authors said. Commercial insurers, including those that provide Part D coverage for prescription drugs, may have some negotiating power over pricing levels and consequently over spending and use trends. Yet this bargaining power may be most efficacious for drugs with brand-name or generic substitutes. Bargaining on prices by these commercial insurers may also be limited since they are required by statute to cover all drugs in six protected classes, including oral oncologics.

The authors believe that this study is also the first to report empirical evidence of spending decreases, utilization increases, and therefore price declines (spending declines that outstrip utilization increases) among generic oral oncologics that lost patent protection and saw generic entry during the study period. Specifically, among oral oncologics that lost patent protection during the study period, the researchers estimated that average quarterly spending decreased 65%, while average quarterly use increased 16% between 2006 and the period between September 2010 and September 2011. This spending result is consistent in magnitude with the findings of previous studies of spending trends on nononcologic oral drugs after the entry of a generic drug into the market.

The study is published in the October issue of Health Affairs.