IMS Health Study: Cancer Drug Innovation Surges As Cost Growth Moderates

IMS Health Study: Cancer Drug Innovation Surges As Cost Growth Moderates

21 New Oncology Therapies Launched in Past Two Years;
Five-Year Drug Cost Growth Averages 5.4 Percent;
Payers Intensify Scrutiny of Value

PARSIPPANY, NJ, May 6, 2014 – The pace of annual global spending on oncology medicines – which is approaching the $100 billion threshold – has moderated over the past five years, even as a surge in innovative and targeted therapies has brought new therapeutic options to the growing number of patients being treated for cancer and as survival rates for most tumor types continue to increase, according to a new report released today by the IMS Institute for Healthcare Informatics.
Growth in global spending on cancer drugs, including those used for supportive care, increased at a compound annual growth rate of 5.4 percent during the past five years, reaching $91 billion in 2013, compared with 14.2 percent from 2003 to 2008. The recent lower growth rate reflects fewer breakthrough therapies for very large patient populations, as well as patent expiries, reductions in the use of supportive care medicines, and stronger payer management. While oncology spending remains concentrated among the U.S. and five largest European countries – which together account for 65 percent of the total market – the rising prevalence of cancer and greater patient access to treatments in pharmerging nations has propelled oncology to the fifth-largest therapy area in those markets.
Targeted therapies have dramatically increased their share of global oncology sales, from 11 percent a decade ago to 46 percent last year. Payers have intensified their scrutiny of the value of these medicines relative to their incremental benefits over existing treatments. At the same time, the average cost per month for a branded oncology drug in the U.S. is now approximately $10,000, up from an average of $5,000 a decade ago. Concentrated or single-payer health systems, and those utilizing health technology assessments to evaluate the value of treatments, tend to pay less than U.S. prices for medicines. The pricing discount mechanisms used in major European markets typically drive net prices down by approximately 20-40 percent compared with U.S. list prices.
The study – Innovation in Cancer Care and Implications for Health Systems – is the most comprehensive review of current trends affecting the market for oncology medicines, the state of innovation in therapeutics, measures of the value of treating cancer, and pricing dynamics. The report also assesses the potential for biosimilars to reshape the oncology market, and analyzes the changes playing out in the delivery of oncology medicines in the U.S.
"As the cancer patient population mix shifts from mature and developed markets to low- and middle-income countries, oncology is bringing higher levels of uncertainty to health systems across the globe – both in terms of the nature and rate of innovative treatments, and levels of reimbursement for patient care," said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics. "While an estimated 30 percent of cancers are preventable and early diagnosis and treatment can reduce or delay mortality significantly, the reality is that countries struggle to bring together the right combination of preventive measures and clinical interventions including vaccines, diagnostics and therapeutics."    
The report's key findings include the following:
• Global market growth for oncology spending has moderated. The global market for oncology drugs, including those used in supportive care, reached $91 billion in 2013 as measured at ex-manufacturer prices and not reflecting off-invoice discounts and rebates. This compares with $71 billion in 2008 and $37 billion a decade ago. Global growth has been less than 10 percent each year since 2008, and the U.S. market for oncology drugs has grown at a 3.5 percent CAGR over the past five years, reaching $37 billion last year. Biologic products now represent less than half of the oncology market, a slight decline over the past ten years as new drug launches have been concentrated in small molecules, including kinase inhibitors.
• Innovation in cancer therapies is becoming more targeted. New drug development has yielded significant innovation across cancer types and therapeutic approaches, including preventive vaccines. Pharmaceutical company investments remain high and cancer therapies account for more than 30 percent of all preclinical and phase I clinical development products, with 21 new molecular entities being launched and reaching patients in the past two years alone. These new medicines have increased the complexity of treating cancer, leading to more combination therapies and additional lines of therapy. Clusters of innovation based on similar underlying science and multiple development pathways have transformed patient care in areas such as advanced melanoma, as well as sub-populations of cancers with higher prevalence. Although sales for certain recently launched oncology drugs have rivaled those of earlier blockbusters, many new drugs are targeted to small patient populations and face strong competition, resulting in comparatively modest sales levels. While much of the pipeline is focused on lung and breast cancer, tumor types with lower prevalence such as ovarian, leukemia, stomach and liver cancers are also being actively pursued.
• Pricing and the value of treatments face more payer scrutiny. The high number of new targeted therapies launched and available for cancer patients has also escalated payer scrutiny of their value relative to incremental benefits over existing treatments. Judging the additional value of these treatments for individual patients is fraught with challenges due to the high level of variability in patient response, the frequent changes in protocol, and underlying issues of equity and patient care. Newly launched treatments typically bring between two and six months of incremental overall survival, although this can vary by patient. The American Society of Clinical Oncology recently issued recommended targets for meaningful clinical trial outcomes, a useful step to guide those investing in innovation as well as those paying for patient care. In the E.U., there is a trend toward lower list prices at the time of launch compared to U.S. list pricing, and European markets have other discount mechanisms, which may be employed across national, regional and local levels. 
• Impact of biosimilars and non-original biologics is growing. The introduction of regulatory pathways for biosimilars and increased production capacity around the world are driving a new competitive dynamic in the $40+ billion biologics portion of the oncology market. However, the potential role of biosimilars in developed countries will be limited by the expected flow of patent-protected innovative products that will displace older, off-patent products subject to biosimilar competition. These agents already play a role in the supportive care segment of the oncology market in Europe, and are expected to do the same in the U.S. in the near term. In low- and middle-income countries, non-original biologics – those based on an original molecule not introduced by its manufacturer in a particular market – are expected to play a significant role in oncology and already capture 60 percent or more of certain recombinant and synthesized biologics. On a global basis, biosimilars are expected to generate $6-12 billion in oncology sales by 2020, increasing the level of competition but accounting for less than 5 percent of the total biologics market at that time.
• Unique dynamics in U.S. contribute to changes in oncology care. In the U.S. market, which contributes 41 percent of total oncology drug sales, changes in the structure of healthcare delivery are impacting cancer treatment site of care, reimbursement and patient out-of-pocket costs. Physician practices are becoming larger, and healthcare organizations that care for underserved populations and are covered by the 340B Drug Discount Program have expanded their oncology presence, as have Accountable Care Organizations. This is resulting in a shift in patient care from physician offices to hospital outpatient facilities. Since hospitals incur higher costs and overhead for the delivery of care, their reimbursement levels for the administration of drugs are higher than those for physician offices. For typical targeted therapies that are infused or injected by an oncologist, reimbursed costs for hospitals are at least double those for physician offices and have brought sharply higher costs to payers over the past two years. These higher costs are also associated with higher patient out-of-pocket costs depending on insurance plans and benefit designs, and can trigger reduced levels of therapeutic persistence by patients and higher overall cost of care.
The full version of the report, including a detailed description of the methodology, is available at It can also be downloaded as an app via iTunes at study was produced independently as a public service, without industry or government funding.

About the IMS Institute for Healthcare Informatics
The IMS Institute for Healthcare Informatics provides key policy setters and decision makers in the global health sector with unique and transformational insights into healthcare dynamics derived from granular analysis of information. It is a research-driven entity with a worldwide reach that collaborates with external healthcare experts from across academia and the public and private sectors to objectively apply IMS Health's proprietary global information and analytical assets. More information about the IMS Institute can be found at:

About IMS Health
IMS Health is a leading global information and technology services company providing clients in the healthcare industry with comprehensive solutions to measure and improve their performance. By applying sophisticated analytics and proprietary application suites hosted on the IMS One intelligent cloud, the company connects more than 10 petabytes of complex healthcare data on diseases, treatments, costs and outcomes to help its clients run their operations more efficiently. Drawing on information from 100,000 suppliers, and on insights from more than 45 billion healthcare transactions processed annually, IMS Health's approximately 10,000 employees drive results for healthcare clients globally. Customers include pharmaceutical, consumer health and medical device manufacturers and distributors, providers, payers, government agencies, policymakers, researchers and the financial community.
As a global leader in protecting individual patient privacy, IMS Health uses anonymous healthcare data to deliver critical, real-world disease and treatment insights. These insights help biotech and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders to identify unmet treatment needs and understand the effectiveness and value of pharmaceutical products in improving overall health outcomes.