3175_SM_OncCombo_Blog (1)Lawrence Lee co-wrote this blog post with Nicolle Hamilton.  

The oncology pipeline is rich with potential combination regimens across both liquid and solid tumor types. Several manufacturers are developing or marketing PD-1/PD-L1 checkpoint inhibitors as a “backbone” for their combination regimen portfolio. Although there are only a few currently marketed regimens with multiple targeted agents (such as Opdivo-Yervoy in ovarian cancer, Tafinlar-Mekinist in metastatic melanoma, and several combos in multiple myeloma), combination approaches may become the standard of care for many tumor types. Indeed, these novel-novel approaches can yield compelling clinical outcomes. For example, Opdivo-Yervoy reduced progression risk by 58% vs. Yervoy alone in melanoma.

But these fine-tuned, multitargeted approaches to fighting cancer will come at a price. While regimen costs averaged $160,000 annually in 2015, pipeline combination regimen costs are expected to exceed up to $350,000, according to ZS estimates. Triplet and quadruplet regimens (such as in multiple myeloma) and next-gen therapies will push prices even higher, especially for one-time treatments such CAR-T therapy.

Financing this innovation is of course a concern for managed care payers, but will increasing regimen costs trigger new norms with respect to utilization management? In late 2018, ZS spoke with five pharmacy and medical directors to get a pulse on payer expectations for managing oncology drugs in the face of expensive combination regimens. Here were our key findings:

  • The price tag of combo regimens still does not implicitly expand a payer’s ability to restrictively manage drug utilization in oncology. Protected class status and PR/litigation risk continue to present significant barriers. Restrictive management is possible only in areas with similarly effective alternatives (like biosimilars/generics or within specific classes such as castration-resistant prostate cancer and renal cell carcinoma). Payers have had success in implementing step therapy for generic imatinib in chronic myeloid leukemia and excluding branded Neupogen (Amgen) in favor of biosimilar Zarxio (Sandoz). However, combination regimens may actually confound the issue of managing across “me too” drugs while with specific monotherapies it may be possible to pick a “winner” (combination data with another drug makes it more difficult to pick a preferred option).
  • Across oncology management, payers tell us that their means of last resort in response to high prices is to carefully hone prior authorization criteria (such as requiring adherence to clinical trial inclusion/exclusion criteria). Pathways remain too broad to produce meaningful savings, although they’re effective in making providers more accustomed to management. Also, a lack of consensus definition for value—or even alignment on the most meaningful clinical endpoints (overall survival, progression-free survival, etc.)—reinforce an environment where payers must defer decision-making to providers.

In a “crystal ball” exercise, the payers we spoke with cited four key levers that may independently or in concert impact the ability to manage drug utilization in oncology (irrespective of mono or combo use):

1. CMS policy or legislation: Since 2018, the administration and the U.S. Department of Health and Human Services have been releasing proposals to address rising drug costs, including Part D price negotiation, shifting some Part B drugs to Part D, referencing Part B prices against an international index and removing “protected class” status (allowing drug exclusions). Whether and how these policies are finalized into law will determine the degree to which they embolden payers to apply more restrictive utilization management in oncology.

2. Value frameworks: In theory, consensus on value could drive more restrictive decision-making, but even the more promising value frameworks have failed to truly drive and underpin value-based decision-making. For example, in 2016 ICER published a cost-effectiveness study of several combination regimens in multiple myeloma. Though all regimens did not express “good value” in the long term, this has not translated into more restricted access. Payers believe that to be impactful, a value framework must be timely and generally accepted industry-wide.

3. Decisive action by a large national payer: Our respondents believe that a large national payer could set precedent by implementing value-based exclusions across their oncology portfolio. However, payers and ZS experts agree that the risk of public backlash over coverage denials makes this highly unlikely in a vacuum.

4. Significant public discord: Lastly, payers theorized that high list prices could cross a threshold that would broadly change public sentiment on oncology drug management. This will also not occur in a vacuum and would require a publicly accepted consensus definition of value. However, fighting cancer and death are deeply ingrained in American culture, making “value” a tenuous notion at best. Even recent political and populist sentiment regarding drug prices seems unlikely to make a dent.

For their part, several manufacturers clearly recognize their role and continue to act on issues of value and potential reforms. Manufacturer actions include exploring clinical elements of value (carefully defined patient populations, fixed treatment duration, etc.) as well as financial/reimbursement elements (such as indication-based pricing models and new or distinct reimbursement mechanics for combination therapies). In addition, presuming the rebate that safe harbor continues, biosimilars are ushering in a new era of contracting in Part B.

Our discussions with payers suggests that in the near term, restrictive management in oncology, specifically combination regimens, will remain unlikely. However, if recent policy proposals are implemented and adopted broadly, oncology drug pricing will face significant pressure, restrictive management will become implicitly more accepted, and the community oncology business model will be forced to evolve. These policies have the potential to dramatically impact cancer care in the U.S., although their ability to drive agreement on “value” in oncology care may be the harbinger of their success.


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Topics: oncology, Drug pricing, pharmaceuticals, payers, combination regimens, cancer care, clinical innovation, pharmacy, oncology pipeline, payer expectations, medical directors, oncology portfolio