Targeted Treatments Dominate Spending Landscape in Oncology

May 21, 2015
Lynda Seminara

A study published in the Journal of Clinical Oncology, May 18, 2015, details payer cost and use, as well as out-of-pocket (OOP) spending, for privately insured nonelderly patients receiving oral or intravenous (IV) chemotherapy for the treatment of cancer.

Study coauthor: Ya Chen Tina Shih, PhD

US sales of targeted therapies to payers reached $10.4 billion by 2009 and remain on the rise.1A study published in theJournal of Clinical Oncology,May 18, 2015, aimed to determine trends in payer cost and use, as well as out-of-pocket (OOP) spending, for privately insured nonelderly patients receiving oral or intravenous (IV) chemotherapy for the treatment of cancer.2

Medical oncologists have the benefit and burden of most treatment decisions, so it is important for them to understand the changing trends in costs and spending, according to one principal investigator of the study, Fabrice Smieliauskas, PhD who represented the study authors in an interview withTargeted Oncology.“With so many new targeted therapies available for various cancers, patients and oncologists often have the benefit and the burden of choice, and should be prepared to discuss how drug costs—both total costs and patient OOP costs, which depend on oral or IV formulation and specific insurance benefits, might figure into their preferred treatment approach.”

Research Methods

Data for three categories of drugs were examined in the study: targeted oral cancer medications (tOAMs), targeted IV cancer medications (tIVAMs), and an “all others” group.2

The authors retrieved data from the LifeLink Health Plan Claims Database to study and disaggregate cost trends for 200,168 patients. (The database represents approximately 70 million patients and more than 80 health plans in the United States, and includes information on drug claims.) Data for cancer patients younger than age 65 who underwent chemotherapy during the study period (2001-2011) were reviewed for each month of the first year of treatment.2The average age of the study population was 52 years.

Cost Assessments

Thecharge,paid, andallowedcosts were extracted from the database for each patient.Chargedenotes the amount billed to a health plan;paidreflects the amount actually paid by the plan; andallowedis the amount permitted by the plan and includes thepaidamount plus any patient expenses such as copayments. OOP payments were calculated by subtractingpaidfromallowedamounts.3,4

The authors documented cancer drug expenditures per patient per month (PPPM) and the overall first-year drug costs per patient, using paid values for payers and OOP data for patients. The PPPM amount was calculated as the sum of paid or OOP payments associated with the drug, divided by the months of exposure. Cost estimates were normalized to 2013 US dollars using the medical care component of the consumer price index. Statistical significance, defined asP<.05, was determined by Cochran—Armitage testing.2

Sources of Increase

The authors used PPPM costs for the year in which each drug was approved by the US Food and Drug Administration as the proxy for launch price. To discern increases in cancer drug expenditures over time, the researchers considered: (1) increased use of higher-priced targeted therapies relative to nontargeted agents, (2) higher launch prices over time for newly approved targeted agents, and (3) price increases in targeted drugs following launch. To capture the impact of the growing availability of tOAMs since 2005, the increase in expenditures was determined and compared for two subperiods of the study: 2001 to 2005 and 2005 to 2010.2

Key Findings

Monthly per-patient payments by insurance companies for tOAMs more than doubled during the study period, from $3381 PPPM in 2001 to $7370 in 2011 (P<.001), and surpassed those for tIVAMs by the final year. However, patient OOP spending for targeted oral agents was roughly half that of targeted IV therapies.2The latter trend “is surprising and challenges conventional wisdom. This difference continues to grow as hospitals purchase physician practices, which increases billing rates and therefore OOP spending for administering targeted IV drugs. In this light, the push in many states to pass oral cancer drug parity legislation and to equalize patient financial burden for oral drugs with that of IV drugs may be misplaced,” said Smieliauskas. “Although the overall growth in cancer drug prices is well known, the dichotomy between more rapid increases in the total price of oral agents compared to IV agents, and lower OOP spending for oral agents, is important [for medical oncologists] to understand,” Smieliauskas said.

Although OOP costs in the first year of chemotherapy were generally lower for the patients on targeted oral agents, payments for tOAMs grew substantially throughout the study period, from $642 PPPM in 2001 to $2124 in 2010.2

The study also showed a large increase in the use of IV agents and a gradual climb in the use of oral agents. Targeted therapies accounted for a hefty 63% of all chemotherapy expenditures in 2011. Factors contributing to the growth in payer spending included increases in drug prices (both during and after launch) and the substitution of targeted therapies for cytotoxic and other agents.2

Currently, targeted therapies dominate the spending for cancer treatments. Private payers’ expenditures for oncology drugs rose 55% PPPM (to $5187) from 2001 to 2011.2The proportion of patients treated with targeted drugs grew from 13% in 2001 to 43% in 2011, and the allocated insurance payments surged from 22% to 63% in the same period. A comparison of the early and later periods (2001-2005 vs 2005-2010) showed a shift toward the use of more expensive drug classes in recent years.2

Looking Ahead

The shift toward targeted treatments, coupled with inflation throughout the drug lifecycle, emphasizes the need for creative use of value-based managed care tools by private payers to curb the escalating cost of cancer drugs, according to the study authors, who noted that controlling the rapid rise in spending “will require more than current oral drug parity laws, such as value-based insurance that makes the benefits and costs transparent and involves the patient directly in the choice of treatment.”More aggressive management of pharmacy benefits, as well as payment reform for injectable drugs, should aid this effort.2


1. Aggarwal S. Targeted cancer therapies.Nat Rev Drug Discov.2010;9(6):427-428. doi: 10.1038/nrd3186.

2. Shih Y-CT, Smieliauskas F, Geynisman DM, Kelly RJ, Smith TJ. Trends in the cost and use of targeted cancer therapies for the privately insured nonelderly: 2001 to 2011.J Clin Oncol.2015; May 18 [Epub]. doi: 10.1200/JCO.2014.58.2320.

3. Raborn ML, Pelletier EM, Smith DB, Reyes CM. Patient out-of-pocket payments for oral oncolytics: results from a 2009 US claims data analysis.J Oncol Pract.2012;8(3 suppl):9s-15s. doi: 10.1200/JOP.2011.000516.

4. Dorn SD, Wei D, Farley JF, et al. Impact of the 2008-2009 economic recession on screening colonoscopy utilization among the insured.Clin Gastroenterol Hepatol.2012;10(3):278-284. doi: 10.1016/j.cgh.2011.11.020.