Payers have decided that formularies aren't enough, at least for cancer drugs. As The Wall Street Journal reports, insurers are revamping their reimbursement protocols to strip incentives for pricey meds--and introduce new ones for "preferred" treatments.
WellPoint, one of the biggest U.S. payers, is planning a radical shift in reimbursement. The insurer will offer oncologists a $350-per-month incentive to use its recommended regimens. Doctors will win the reward for each patient put on WellPoint's chosen treatment plans. The cash could quickly add up for busy oncologists.
And the losses could quickly add up for drugmakers not fortunate enough to be part of those recommended regimens. It's the formulary approach on steroids. WellPoint could use those recommendations as leverage to win lower prices from pharma companies--and to shut out meds it deems overpriced. New, expensive oncology drugs could find themselves off the list; just consider what happened to Sanofi ($SNY) and Regeneron's ($REGN) colon cancer drug Zaltrap: After some high-profile doctors shunned it as too expensive for its benefits, Sanofi offered a half-off discount.
What about costly targeted treatments? More and more cancer meds are being developed for subpopulations of patients--from HER2-positive and HER2-negative breast cancers, to wild-type KRAS disease, to EGFR-expressing tumors and more. Those drugs tend to be pricier than generalized treatments, because they're more likely to work in those selected patients--and because the market for them is smaller. In fact, skyrocketing prices for targeted cancer drugs are helping boost the overall cancer drug market toward $100 billion per year, according to the IMS Institute for Healthcare Informatics.
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| Brian J. Bolwell |
Oncologists told the WSJ that they worry WellPoint's recommendations will drive all patients toward the same treatments--even those who would see greater benefit from meds targeted to their types of tumors. And at least one doctor said drugs they use regularly aren't on WellPoint's preferred list. Oncologists can still use whichever drugs they choose--no penalties for straying outside WellPoint's recommendations--but as the chairman of Cleveland Clinic's cancer institute, Brian Bolwell, told the WSJ, the $350-per-month incentive "is not something we'd ignore."
Other insurers are tweaking their cancer payment models, if not as dramatically. Directly in their sights is a longstanding difference in oncology reimbursements. Oncologists buy the drugs at wholesale prices and insurers reimburse the doctors for the drugs used on each patient. Doctors keep the spread--and that gives them an incentive to prescribe more expensive meds.
The WSJ mentions several programs: UnitedHealth's lump-sum, upfront payment for each treatment regimen, designed to remove that financial incentive. Cigna's reimbursement schedules aimed at the same goal; the company has tweaked reimbursement schedules to pay doctors about the same amount for pricier drugs as they do for less-expensive alternatives, provided the treatments are comparable.
Meanwhile, Highmark is targeting the higher fees charged by hospitals to administer the same meds, in the same fashion, as doctors' offices--fees that increasingly apply to doctors' practices bought up by hospital systems.
WellPoint's new incentive program rolls out in July in 6 states, and through its entire network by mid-2015, the WSJ says. At first it will focus on treatments for breast, lung and colorectal cancer. But WellPoint plans to expand that list. WellPoint figures it can save 3% to 4% of its cancer treatment costs, the WSJ says, and with a yearly expenditure of about $5.4 billion, that's a lot of money.
- read the WSJ piece (sub. req.)