PM360 March 2010

COVER STORY

THE ONCOLOGY TRIAD
By Kevin Patterson and Carlton Sedberry, Sr., Medical Marketing Economics

Oncologists consider clinical, practice, and patient concerns in determining treatment. The steady stream of new agents and new uses for established medicines gives them more therapeutic options than ever before, but their decisions are also influenced by shifts in reimbursement and regulatory uncertainty.

There is no market environment more dynamic than the oncology market. With the advent of new and costly therapies for previously untreatable tumors, the clinical aspects of the market are in flux as physicians and companies work to determine which treatment (or treatment regimen) works best in which situations. Compounding the changing clinical aspects of the market are the tectonic level shifts in reimbursement and drug coverage. The Medicare Modernization Act (MMA) changed the basis for reimbursement of physician-administered drugs from Average Wholesale Prices (AWP) to Average Sales Price (ASP), which, among other things, made a patient’s financial obligation (prior to MMA, it was common that half the patient-level co-pays for these drugs were not collected by providers) much more influential in therapeutic decision making. This increase in the cost burden for patients, and the importance of cost considerations in therapeutic decisions, has added to the confusion in the market and, in turn, has been further compounded by the growing availability of oral agents and the availability of Medicare Part D. Add in the economic downturn, and you have a market in which none of the old rules are valid anymore.

In our work in the field of oncology, we have come to realize that the typical approaches to pharmaceutical marketing are rarely effective. Creative sales materials and aggressive sales presentations are usually frowned upon by oncologists, who often know more about the product under discussion than does the sales representative. Oncologists, more than many other specialists, tend to be aware of new drugs in development, and many community oncology practices routinely are involved in clinical studies, keeping them ahead of the curve in many regards. With new agents and new uses for established medicines coming to their attention all the time, oncologists have never had the number of therapeutic options to bring about positive treatment outcomes for their patients. At the same time, the changes in the marketplace are making the practice of oncology much more difficult. The vagaries of reimbursement, for oncologists as well as their patients, makes treatment decisions more difficult than ever before; a decision that is clinically correct but economically wrong could result in bankruptcy for the patient, or even the practice. Talk about pressure!

CLINICAL CHANGES AND ADVANCES
In the past 10 years, exciting advancements have been made in cancer treatment. New agents have increased response rates, improved the patient’s quality of life, and extended survival in multiple forms of cancer. With the availability of new targeted therapies, the treatment approach for some forms of cancer, such as CML, is on the verge of making a transition from an acute illness to a chronic disease. While this is not a cure, it is definitely progress. Targeted therapies were designed to treat better-defined segments of the oncology population guided by genetic or biologic markers. However, recent clinical experience is demonstrating that, when used in combination with more traditional chemotherapy drugs, targeted therapies often produce benefits across a wider range of patients in combination versus as monotherapy within the first tumor type approved, and subsequently in other tumor types. The use of these drugs as an add-on agent is shifting more quickly from advanced to early-stage treatment, while their expansion to other tumor types continues as before. This often results in more complex decision making and cost of care for physicians, patients, and payers as the new economics of health care continue to evolve.

To increase the complexity, many of the new targeted therapeutic drugs are oral agents, which have introduced several new complicating factors (clinical, administrative, and financial) that the market is still attempting to address. For example, an oral therapeutic agent to treat metastatic breast cancer is combined with an intravenous chemotherapy agent due to recent data showing a survival benefit of the combination. In this case, the new issues immediately created for an oncologist and Medicare patients are significant: in addition to the cost of additional therapy, the provider must manage multiple sites of service (office and patient’s home), multiple reimbursement systems, (Part B and assist patients with understanding Part D), and finally handle new patient management issues for adherence that are no longer directly monitored by physicians and their staff. Lack of oversight by the physician can result in improper dosing or under-recognition of adverse effects. While most patients are diligent about correctly taking medications that can be lifesaving, one study found, for example, that patients treated with imatinib took only 75% of the prescribed dose on average. The Adherence Assessment with Glivec: Indicators and Outcomes (Adagio) study, conducted in Belgium, showed that perfect adherence to imatinib therapy at the prescribed dose occurred in only 14% of patients. As the drug was provided to study participants by the national health system, cost was not a factor. Lack of adherence to oral treatment regimens results in inaccurate dosing and diminished efficacy and untreated toxic effects—and oncologists have virtually no control over this. These dire consequences are not typically associated with intravenous therapies traditionally administered in the physician’s clinic under the direct supervision of trained nursing personnel.

ORAL AGENTS
The availability of oral cancer drugs puts administration of these medications quite literally in the patient’s hands. With oral therapies, patients now must assume primary responsibility for treatment adherence and monitoring for possible side effects, toxicities, and even drug interactions and quickly report any such untoward effects perceived or real to their physician. Additionally, patients must be prepared to address the financial obligations associated with drug coverage from multiple insurance types, with oral therapy frequently resulting in a larger portion of the total cost and significant out-of-pocket expense. Finally, in many cases, patients are required to help coordinate the application and administrative processes for a confusing array of patient assistance programs to help offset the financial burden of therapy covered under separate benefit structures. That is significant pressure, given the new therapy often provides improvement in outcomes measured in months rather than years.

SINCE MMA
In the not too distant past, the fees from physician-administered drugs were the principal source of revenues and income in oncology. That situation has changed dramatically since MMA. Instead of being a profit center, medications are now seen as a cost center or at best a break-even proposition. Many of the multi-source drugs that are the foundation of several key therapeutic regimens actually cost physicians more to acquire than what they receive as reimbursement, thus creating a fiduciary imperative to collect the patient’s co-insurance responsibility and mandating that the practice come face to face with patients’ ability and willingness to pay for specific aspects of their treatment.

To cope with this, oncology practices have routinely added new staff functions, including financial counselors and “navigators” to help patients understand their options and to inform oncologists of any potential problems they may face with reimbursement for treatment choices. Some practices have added dispensing pharmacies to help incorporate oral chemotherapy into their protocols, and we have found that the presence of such a dispensing function can make a huge difference in the degree to which an oncologist will use oral meds—not because of profit but because the pharmacy can take ownership of the administrative processes and clinical monitoring uniquely required to effectively facilitate oral therapies that involve both practice and patient.

Clearly, more so than in most markets, cost and pricing concerns affect the practice of oncology, and marketers who are not fully aware of these and other changes will find their efforts can be futile or even counterproductive. Is this alarmist rhetoric on our part? Absolutely not. A new study by Tufts University1 found that over 80% of oncologists report that patient-level cost concerns routinely results in therapy changes, and that nearly 60% would like the government to control drug prices in Medicare. An alarming two-thirds report that Medicare’s reimbursement rules limit their ability to treat patients with new oral oncolytics. Fully three-quarters of oncologists believe that patient costs will drive more of their treatment decisions in the next few years.

A goal of health policy to introduce patients into healthcare decisions has worked but not necessarily as intended. As mentioned earlier, MMA essentially eliminated drug margins for oncologists by shifting reimbursement to ASP—but without establishing proper codes and reimbursement for practice costs that previously had been subsidized through drug payments. Under MMA, Medicare’s billing codes and reimbursement for non-drug services have failed to acknowledge a key shift in healthcare delivery. Private oncology practices bore the costs as they moved most cancer care from the higher-priced hospital-based service to the lower-priced, more convenient, and accessible outpatient clinic setting. Private practices still fund the intensive services of physicians, nurses, and administrators with the margins on drug reimbursements. They invested the difference between AWP-based reimbursement and the costs of enhancing their services and expanding access to care. MMA turned all this on its ear, and oncology practices are struggling to adapt to these new rules and conditions, as well as to your new products.

In the past 10 years, outpatient costs (personnel, malpractice and other liability insurance, salaries, supply costs, and inventory carrying costs, including financing costs) have all risen dramatically. With
significantly reduced drug margins resulting from Medicare, and an increasing number of commercial plans utilizing an ASP-based reimbursement methodology, the finances for this “cross-subsidy” have all but disappeared. The resulting financial strain currently manifests itself in a number of ways at the practice level. In addition to the patient and practice financial considerations that have worked their way into the prescribing decision, community oncology providers (where greater than 80% of cancer care is provided) are reporting a general scale back in services, rural practices and satellite offices are closing, and care is shifting back to the more costly hospital setting.

Another unintended consequence of MMA and Part D has been to introduce cost into decision making at a higher level, rather than removing it. Physicians are frustrated with finances creating obstacles for their patients, and this frustration leads them to consider things, such as government price controls, that in the recent past would have been unthinkable. Add a troubled economy, a steady stream of new drugs of indeterminate new benefit, and regulatory uncertainty, and you have a market in need of clear communication about why a product is appropriate and how it can and should fit into practice. Oncologists and their support staff members tell us they are literally losing sleep over these concerns, and they would welcome help.

THE TRIAD
For those who market oncology products, it is important to understand that the good old days are long gone. At one time about the only thing that really mattered in the selection of a medication was how well it worked. While the clinical merits of one drug over another are still the principal considerations in treatment selection, these new financial considerations now affect decisions in a significant way. The diagram above shows what we call the Oncologist’s Triad of Concerns in selecting a treatment. At the forefront is the clinical effect of the drugs, but of crucial concern, as discussed, are the financial factors: Will the use of the product result in financial losses for the practice? Can we afford these losses? What are our other options? Can the patient afford the co-pay? Can we trust them to take their medicines in the proper way? If not, what are my other options?

Once these factors are considered, it is easy to understand why many new oral agents have not been as successful in the market as expected—they may work well in trials, but if patients can’t afford or won’t pay the co-pay, or if the patient is noncompliant, the drug is of little value. If the practice is put at financial risk by using a regimen that may imperil its viability, can they afford to take the risk or should they find another option?
Using this simple triad to anticipate potential marketing problems, a marketer of a new agent in this complex area can craft a more effective program to bring his product to the market. The marketer’s job of effectively communicating a product’s value is more important than at any time in the pharmaceutical industry’s history. Understanding how the market works and knowing what keeps your customers awake at night are critical steps toward that end.

REFERENCE
1. Peter J. Neumann, Jennifer A. Palmer, Eric Nadler, ChiHui Fang, and Peter Ubel, Cancer Therapy Costs Influence Treatment: A National Survey Of Oncologists, HEALTH AFFAIRS 29, NO. 1 (2010): January 2010, 196–202

Kevin Patterson is VP and Partner at Medical Marketing Economics. He can be reached at kpatterson@m2econ.com. Carlton Sedberry, Sr., is Director at the company. His email address is
csedberry@m2econ.com