Chief Innovations Officer, Professor, and Vice President of Cancer Services

		John Theurer Cancer Center at Hackensack University Medical Center

President, Regional Cancer Care Associates, LLC

As the holiday season rolls in, one can imagine the conversation around the family table when a loved one expresses grief that they have a serious-to-life-threatening medical problem. Adding to the shock, they tell you that the illness can be effectively addressed with some new drug or procedure but because of their new high deductible and 20% co-pay insurance plan, the care is not affordable.

Situations like this are becoming more common. Consolidation in the insurance industry and the pace of the rise in cost of general and specialty pharmaceuticals are the 2 factors in the healthcare industry that will most affect access and affordability.

A few important facts need be reviewed to put into perspective this problem being shared by a growing number of Americans. In a 2012 edition of the Journal of the American Medical Association, Don Berwick and colleagues published a study of the waste in US healthcare expenditures, by category, for 2011. A staggering $558 billion to $1263 billion was wasted of approximately $3 trillion spent, according to the study. Waste categories included overtreatment, failures in care coordination and delivery, excesses in administrative and healthcare pricing cost, and fraud and abuse.

If this is not bad enough, add to it that health spending per capita in 2013 was highest in the world ($8600) and yet more than 20 other nations had greater life expectancy (US<80 vs >80 years), and some of those countries spent less than half per capita. In fact, had we spent in annual healthcare what the next highest spender per capita (Sweden) did over a 4-year period, the United States could have saved $15.5 trillion.

A new problem is adding fuel to the fire: the rapid rise in cost of general and specialty pharmaceuticals. Recent data from Express Scripts showed that the cost of a 30-day supply of Humulin (insulin) by 2013 had risen by 325% compared to 2010 ($1097 vs $258). New potentially life-saving drugs have entered the market, but the cost may be prohibitive considering deductibles and co-pays. Every new oncology drug approved in 2014 exceeded $120,000 per year, and a hepatitis C medication costs $94,000. Recent estimates show the cost of specialty pharmaceuticals increasing at 2.2% per month.

A famous economist once said that what cannot continue to increase will not. Let’s see—an ever-increasing percentage of GDP and less than the best outcome compared with other nations, now made unaffordable by new less-expensive insurance plans with high deductibles and co-pays.

Something has to give and it has started. Companies like Walmart and Target, not known for expertise in healthcare, have alleviated part of the problem by delivering basic care much less expensively and far more conveniently than medical practices. Also, companies like CareMark CVS and Walgreens are known for drug sales but soon will be known for primary care, and this is just the beginning.

For many individuals, it may seem like a good idea to buy a less expensive insurance plan; however, there may be cause for regret later if they develop costly diseases like cancer. Oncologists are struggling to help their patients. Patient assistance programs, charity care and other measures do not completely fill the gap.

I, for one, cannot believe we have come so close to curing many cancers only to have our patients not be able to afford it. It seems to me like we need a complete overhaul—and quickly. We need to reward elimination of wasteful spending, promote alternative sites of care when clinically appropriate, and have supplemental insurance vehicles for catastrophic care with reasonably priced pharmaceuticals and procedures. Expenditures will not keep rising in healthcare&mdash;they cannot.

Articles

Consolidation in the insurance industry and the pace of the rise in cost of
general and specialty pharmaceuticals are the 2 factors in the
healthcare industry that will most affect access and affordability.

An Age of Exciting New Medicine That Many Cannot Afford

	What has been the impact of the 340B Drug Pricing Program on private oncology practices in the community?

		Average Daily per-Patient Medicare Fee-For-Service Payments, Part B Oncology Drugs

	Are payers responding to this emerging trend with 340B?

	What are your thoughts on the COA report highlighting 340B drug spend that was released in September?

In this interview, Bruce J. Gould, MD, who is the medical director of Northwest Georgia Oncology Centers in Marietta, GA, shares his experience as a private oncology practitioner facing competition from large medical centers with respect to 340B drug pricing. He praises the newly issued Berkeley Research Group report, commissioned by the Community Oncology Alliance (COA), on unbridled growth of the 340B program. The report found that Medicare Part B cancer drug spending rose 123% in 340B hospitals from 2010 to 2013 and fell 5% in community practices during the same period.

: I am in the Atlanta metro area where we have about 120 to 130 oncologists—about 90 or so are now based in hospitals and 60 or so of them are in hospitals that are 340B-based. As a private practice competing against a group of oncologists centered in a hospital that has 340B pricing is an unlevel playing field because we are competing based on what services each group provides. We are competing based on who has the deepest pockets. Obviously, in this case, the hospital-based group has deeper pockets&mdash;they can hire my employees and doctors by providing them with better salaries. In communities where we overlap, especially in smaller communities where there may not be enough business for 2 separate practices, they have been able to drive us out of the market place because they have more sustaining power, again due to the deeper pockets, while private practices have to rethink sustainability options to stay within the community.

: First, especially in smaller communities, where there used to be 2 choices now there’s only 1. So, a patient who’s dissatisfied with the care at one practice does not have the choice to go to another one. Second, physicians are being enticed to go to the hospital because of higher compensation and, whether the hospital has 340B pricing or not, patients are faced with higher copays and higher costs to payers, which ultimately drives up healthcare costs and results in raised premiums for all of us.

: Yes, finally! This trend has been going on for at least 5 to 6 years now and, unfortunately, in my opinion, payers have been very slow to recognize this trend and how much it’s been costing them. But finally, they have awakened to the fact within the past year that there are higher costs involved with care in hospitals versus in private practices. They are now trying to work with us in terms of doing innovative projects and they are also finally increasing our fees whereas over the past few years they had cut our fees. Payers are now doing more to sustain private community oncology practices.

: The thing that impressed me was how well the study was conducted. The growth in the 340B program was studied in a very distinct manner—for the denominator, they looked at the hospital outpatient drug spend rather than what a lot of the reports include, which is the hospital’s entire drug spend. Looking at the hospital’s entire drug spend [when evaluating 340B spending] is not really appropriate because 340B applies only to the hospital outpatient drug spending and considering the entire drug spend would underestimate the actual numbers. And COA even looked at how much of the 340B spending is on oncology drugs and surprisingly a majority is oncology drug spend. This speaks to the fact that hospitals are quite actively recruiting oncologists rather than rheumatologists or infectious disease doctors. This has also resulted in a shift in the site of care, which is of interest to COA. Second, in this study, all the typically used oncology drugs were accounted for. The earlier report by the Government Accountability Office (GAO) left out the top 6 oncology drugs because they did not want to account for these 6 drugs having orphan drug indications. So GAO, in its report, left out a large part of the drug spend. The COA report erred on the other side and included these drugs which account for a significant portion of the 340B spending.

: Well, there’s a lot of interest in trying to rectify this. But my personal opinion is that I am not sure if it will ever be reformed because clearly there are hospitals that have a large interest in keeping the program as is and they have strong lobbying groups. It’ll be a push-pull between the pharmaceutical industry and the hospitals on who will sway the decision makers in Washington, DC, in terms of who gets the regulations changed in their favor.

Bruce J. Gould, MD, shares his experience
as a private oncology practitioner facing competition
from large medical centers with respect to 340B drug
pricing.

Playing Field Tilted Against Small Practices

The swift increase of cancer care costs has created difficulties for independent oncology practices, but the largest of the challenges may be finding a financially sustainable way to provide good care to patients who cannot pay all of their own bills.

The Affordable Care Act (ACA) was designed to get more Americans the insurance they need to cover major medical expenses in full, and the percentage of American adults without insurance has fallen from 20.3% to 13.2% since passage of the healthcare act, according to statistics released earlier this year by the Department of Health and Human Services.

However, many patients who obtained policies through ACA exchanges have limited coverage for cancer care. Others are overwhelmed by the growing copays demanded by the traditional plans they receive through their employer. Still others lose their insurance when they go out on disability, only to find themselves unable to afford continuing insurance.

The Commonwealth Fund Biennial Health Insurance Survey of 2014 found declines in the number of people reporting cost-related access problems and medical— related financial difficulties.1 The number of adults who did not get needed health care because of cost declined from 80 million people, or 43%, in 2012 to 66 million, or 36%, in 2014, the study said. Still, the study found that even among patients with insurance, cost barriers were an issue in obtaining adequate medical care.

All providers thus need strategies for providing good care to underinsured patients without bankrupting themselves. Ample resources are available for bridging the gap between the costs of care and what patients can afford, says Gina Villani, MD, the CEO and medical director of the Ralph Lauren Center for Cancer Care and Prevention in Harlem, which specializes in charity care. “There is always money available somewhere for patients who cannot afford the best treatment for themselves. It’s not always easy to find, but with all the programs both public and private, there is money there for everyone. What’s more, it’s the practice’s responsibility to find it. Sick patients cannot deal with the complexities of medical finance on their own,” Villani says (Figure).

Oncology practices are generally in a better position than their patients to understand who qualifies for what programs—and to fill out the applications for those programs&mdash;but practices that rarely need to find such help for their patients may struggle to do it efficiently. Villani, therefore, offers an unexpected piece of advice to practices that genuinely feel ill-equipped to serve needy patients: direct as many of them as possible to practices, like hers, that specialize in serving the underinsured and disadvantaged.

The result may be that patients end up getting better care than by sticking with the original practice, she says.

“Many facilities clearly have no desire to care for patients who can’t pay. I did a ‘secret shopper’ experiment and tried to set up initial appointments at a variety of different institutions including public, private, and safety net hospitals. Wait times for appointments were significantly longer for uninsured and underinsured patients than well-insured patients. Practices that don’t want particular patients would serve those patients better by sending them to places that do want them, rather than giving them second-rate care,” Villani says.

“Even places that are seriously committed to providing top-quality care to patients with financial issues should think about encouraging those patients to go to places that specialize in underserved patients. Practices that rarely care for underserved patients do not have the sort of expertise that specialty practices have in getting them medical coverage,” Villani says. “They do not have the expertise that specialty practices have in getting truly poor patients support services like nutrition assistance. They do not have the expertise that specialty practices have in getting vulnerable patients to comply with treatment protocols. I know it can seem callous to send a patient elsewhere, but it can be the best thing for the patient because if there’s one thing that’s true of cancer care, it’s that specialization breeds success.”

Villani’s advice may be a workable option for independent practices that rarely encounter patients who cannot pay for care, at least those in parts of the country that are heavily populated enough to have practices that cater to needy patients. Many practices, however, need an economically feasible way to provide good care for such patients in-house, either because there are no specialty practices in their service areas or because so many of their patients struggle financially that it simply makes sense for them to develop expertise.

		Figure. Both Uninsured and Insured Adults Report Having Medical Bill Problems

Had problems paying medical bills, contacted by a collection agency for unpaid bills, had to change way of life in order to pay medical bills, or has outstanding medical debt.

FPL refers to federal poverty level. Income levels are for a family of four in 2013.

: The Commonwealth Fund Biennial Health Insurance Survery (2014).

Different practices have taken different approaches to this. They are moving away from making physicians, nurses or administrators help patients find money and toward hiring people who specialize in payment assistance. Different practices have different titles for these workers, titles that range from “financial consultants” to “patient navigators.”

Texas Oncology, a large practice with offices across the Lone Star State, has social workers at some locations to find help for patients who need it.

“There are so many different programs from federal and state governments and—here in Texas, at least&mdash;county governments as well, along with those offered by pharmaceutical companies and cancer organizations. It is a very complex landscape, but we are fortunate to have a social worker in our office who does an incredible job figuring out which patient qualifies for what assistance and getting them enrolled in programs they need to obtain treatment,” says Debra Patt, MD, who treats patients at Texas Oncology’s Austin Central office and directs health economics and outcomes research for the US Oncology Network.

Practices that cannot afford to devote a single full-time staff member to helping their patients secure coverage for cancer treatment may have to make financial assistance duties a small part of an existing employee’s job. This could mean forgoing the effectiveness that comes with specialization. However, there may be another option that delivers expertise at a reasonable expense. “Practices that cannot hire people who specialize in helping patients who need extra help should set up a meeting with the people who run their local hospitals and see if they can tap some of the experts those hospitals keep on staff,” says Lovell Jones, PhD, a professor emeritus at MD Anderson Cancer Center and associate dean for research at Prairie View A&M University College of Nursing.

Jones has spent much of his career researching best practices for providing better medical care to underserved patients. His research has suggested patient navigators (both medical and financial) improve patient outcomes while reducing total costs. “Underserved populations who receive patient navigation services report fewer disruptions in care and are more likely to complete required treatment,” one of his studies concluded.2

Jones says that the idea of teaming up with hospitals for patient navigation may seem risky from a competitive standpoint, “but it makes sense for everyone. If the hospital declines to provide assistance—or at least rent its experts out for a reasonable cost&mdash;the patients that don’t manage to find coverage through whatever assistance their oncologists can offer will tend to skip appointments, take half as much medication as they should, get very sick, or go to the hospital emergency room and stay there for a long time before failing to pay the bill,” Jones says.

“No organization has a greater incentive to keep poor patients out of the emergency room than the local hospital, so if you can convince them that lending their expertise is a good way to reduce uncovered emergency department bills—and the research I’ve worked on concerning navigators for lung cancer patients suggests that they do save large amounts of money&mdash;then everyone wins,” Jones says. “It may not work every time, but it should probably be Plan A for a lot of practices.”

			Collins S, Rasmussen P, Doty M, Beutel S. The rise in health care coverage and affordability since health reform took effect. The Commonwealth Fund. 2014. http://www.commonwealthfund. org/~/media/files/publications/issue-brief/2015/jan/1800_collins_biennial_survey_brief. pdf?la=en. Accessed September 23, 2015.

			Pereira AN, Enard K, Nevarez L, Jones LA. The role of patient navigators in eliminating health disparities. Cancer. 2011;117(15):3543-3552. http://www.commonwealthfund.org/~/media/ files/publications/issue-brief/2015/jan/1800_collins_biennial_survey_brief.pdf?la=en. Accessed September 23, 2015.

The swift increase of cancer care costs has
created difficulties for independent oncology
practices, but the largest of the challenges
may be finding a financially sustainable way to
provide good care to patients who cannot pay all of their
own bills.

Practices Ill-Equipped for Patient Financial Needs

Thirteen years ago, John Sprandio, MD, was thriving as the president of a network of 26 oncology practices and 2 academic centers when he hit a roadblock. Sprandio wanted to create a patient-centered medical home (PCMH) with full clinical integration and all the attendant benefits—standardization of treatment, greater efficiency, lower overall costs, happier patients, and leverage to negotiate advantageous agreements with payers. However, no one had the electronic medical records (EMR) system such changes would require and the board could not agree on quality metrics. He soon stepped down from his role as president of the network.

Back at his own practice in Drexel Hill, Pennsylvania, Sprandio started from scratch. Inspired by a paper by Alice Gosfield and James Reinertsen, MD, that outlined practical principles for “doing well by doing good,” Sprandio spent a decade gradually refining his information technology, phone triage, and symptom-management systems to clear the “time-stealers” and “pain points” from physician workflows and give patients easy access to help when they needed it. Over time, his reforms produced striking results.

According to Sprandio’s data, his practice’s chemotherapy patients now average .541 emergency department visits per year, down from 2.6 visits a decade ago and well below the national average of 2 visits per year. Overall hospital admissions have been halved. At the same time, whereas medical home initiatives sometimes require more staffing, his has led to less: his workforce decreased 30% over 6 years—from 8.3 per staff oncologist to 5.6&mdash; and his salary overhead fell 14%. In 2012, he estimated his changes were saving insurers $1 million per physician per year 

Sprandio projects that wide adoption of his model could cut $8 billion to $16 billion from the nation’s $125 billion in annual cancer spending. He envisions struggling community practices forming independent practice associations to jointly adopt his improvements and find new leases on life. “To be able to reproduce that model across the country is something I find extremely, extremely, extremely exciting,” Sprandio said. “Not only exciting because we can really change the way care is delivered, but we really could scale it.”

“The goal is really clinical integration. You’re banded together and you follow guidelines. You do it all the same way, measure, and adjust. The practices become accountable for their performance. That allows them to negotiate collectively with payers based on their good work. The IPA model is going to essentially save community- based oncology,” he said.

Payers are increasingly recognizing the value of the work done at Sprandio’s 8-physician, 3-office practice. As of last month, 37%of his practice’s patients subscribed to payers who have agreed to alternate payment methods based on his model, and he said a new payer agreement is bringing the figure up to 52% this month. If he is accepted into the Center for Medicaid & Medicare Services’ Oncology Care Model later this year, his participation rate will jump to 88%.

		Figure 1. Outcome of Clinical Nurse Triage Phone Calls in 2014

Patients of Consultants in Medical Oncology & Hematology, 2004-2014

 Oncology Management Services, Consultants in Medical Oncology & Hematology.

The medical home model, which typically offers wraparound care to improve patient outcomes, is also slowly expanding into oncology practices nationally. The National Committee for Quality Assurance (NCQA) gave its first oncology PCMH certification to Sprandio’s office in 2010 and launched a patient-centered specialty practice initiative 2 years ago, with 10 oncology practices recognized so far. In 2012, the Centers for Medicare & Medicaid Innovation awarded a $19.8 million grant to test community oncology medical homes in 7 practices in 6 states. In addition, the Community Oncology Alliance launched an accreditation pilot program this year, with 10 practices participating. Aetna, which has an alternate payment agreement with Sprandio, has partnered with providers to set up 14 oncology medical homes.

The definition of a medical home can vary. Some models call for practices to add more staff and a broader range of services or require the use of clinical pathways. Sprandio has focused on standardizing procedures, streamlining work flow, creating a customized EMRs system, and better managing the adverse effects of chemotherapy.

Sprandio works to spread his version of the PCMH through his firm, Oncology Medical Services (OMS) of Conshohocken, Pennsylvania. It has consulted with 18 practices in the last few years and is assisting 7 more this year, he said. He has recently been working with 5 providers that are part of a $2-million study funded by the Patient-Centered Outcomes Research Institute (PCORI) and led by NCQA in collaboration with OMS, ASCO, and other organizations.

The providers in the PCORI study include Thomas Jefferson University in Philadelphia. Andrew Chapman, DO, clinical associate professor of medicine and co-director of the Jefferson Senior Adult Oncology Center, said that even before the study, Sprandio’s work with the NCQA inspired Jefferson’s medical oncology department to revamp its processes and obtain its own recognition as a patient-centered specialty practice in December 2013.

		Figure 2. Average Yearly Emergency Department Evaluations per Chemotherapy Patienta

“John very early on recognized and really pioneered the vision that by incorporating standards of a PCMH, that by implementing those standards in his practice, developing reproducible results, and standardizing processes, he was able to show with data that he was able to lower these costs and improve quality,” Chapman said.

“Once we saw the work Joh n was doing, we then set out as a department to explore becoming a PCMH,” he said. “We went through and redid and rewrote and tried to meet every standard and every element by creating processes, by changing standard operating procedures, by developing any type of workflows to meet those standards.”

As part of the revamp, Jefferson developed a psychosocial assessment form that helps a team of social workers identify patients’ needs, Chapman said. A new tracking system ensures translation services by phone are provided to non-English speakers. The department also has a phone triage system that uses symptom-management maps and a same-day clinic that allows patients to get quick treatment and avoid expensive hospitalization. Chapman said he sees the medical home’s model of comprehensive, continuous care as a crucial tool in creating a medical environment hospitable to the rapidly expanding population of older people at risk of cancer.

“Recognizing the complicated care that oftentimes elders require, because of comorbidities, because of polypharmacy, because of all the things that oftentimes make care for the elderly incredibly complicated, it became very clear to me very early on that having coordinated care is going to be most beneficial to elderly patients who need the social support and these things that are so critical for them to navigate through these complicated treatment plans,” he said.

Jefferson’s involvement in the PCORI study keeps the patient-centered focus at the forefront and contributes to the department’s continued evolution, Chapman said. As part of the study, Sprandio visited Jefferson to make a presentation on his work, and he’s run webinars and spoken at bi-annual day-long workshops attended by all the PCORI providers.

Although the PCORI study has allowed Sprandio to present his idea to more practices, it still falls short of a full implementation of his system. The same is true of the other practices and health systems he’s consulted for or that have approached him about collaborating. Many, for example, do not have symptom treatment algorithms that allow nurses to immediately respond to a patient’s phoned-in complaints without checking with the doctor first, as Sprandio’s practice does. Crucially, none are using IRIS, a software application he commissioned that overlays his EMR.

“We incrementally solved a whole host of issues, which were really pain points for the physician. They were the time-stealers of our day, the interruptions of our day. The lack of consistent data fields being filled, for example,” Sprandio said. “We’re complex medical decision makers; we’re not data inputters. We created this app that reorganizes data. It’s really a foundation for not only the responsibilities of the care team, but it also serves as a template or a foundation for documentation.

“With IRIS, we take the pertinent data, reorganize, and present it. Within a minute, I can know the 5 symptoms that are present that day, I can know where the patient is in their cycles, I can know if their performance status is changing, I can know if I’m palliating their symptoms efficiently,” he said. “If you can give physicians data consistently, they can synthesize that data in minutes.”

Dissemination of his new model remains piecemeal for several reasons. In some cases, practices that OMS has consulted for are too far away, limiting Sprandio and his colleagues to making a 2-day visit and offering recommendations, with little opportunity for follow-up. Many practices cannot afford to redesign their EMRs and existing EMRs are inadequate, he said. With some big health systems, reorganizing their oncology processes may be too large a task for OMS to take on alone. Other organizations, instead of adapting OMS’s ideas, have chosen to “reinvent the wheel,” developing less efficient, less sustainable models that cover fewer patients and creating new software from scratch, Sprandio said.

That’s why he is particularly excited about a project with Capital Blue Cross and 4 practices in the Harrisburg, Pennsylvania, area that launched in June. OMS is leading a PCMH initiative that will involve a high level of standardization and many site visits, he said. The payment model includes staged increases in evaluation and management (E&M) payments based on achievements toward establishing medical homes and shared savings.

It still won’t immediately bring IRIS to the practices, but Sprandio has high hopes that the Harrisburg initiative and the PCORI study will pave the way for a full technology rollout in OMS’s next set of consultations. OMS is also in discussions with a “major technology partner” to build a commercialized version of IRIS, he said. Eventually, Sprandio said, more payers will recognize the benefits to their patients and bottom lines that a highly efficient, highly standardized, technologically advanced PCMH can provide.

“This whole thing is in its infancy in oncology, really. It’s being dictated by payers who want to minimize the level of support they’re providing because they don’t quite get it yet,” he said. “And some payers, like Capital Blue Cross, get it immediately.”

The medical home model created by John Sprandio, MD, which typically offers wraparound care to improve patient outcomes, is also slowly expanding into oncology practices nationally.

Oncologist-Reformer Pursues Value After Group Rebuff

The door isn’t fully closed on the acute oncology drug shortages of 4 years ago, observers say, though the FDA has established rules for greater disclosure by manufacturers and continues to tweak guidelines that would require far more information about manufacturing processes and production issues.

The FDA sought feedback on its draft quality metrics guidance through an open comment period that continued through the end of September. The changes would require manufacturers to provide more information about drug quality and aid the FDA in heading off potential drug shortages.

Details such as the success and failure of attempts to produce quantities of particular drugs would be required information as well as details on product quality complaints. Also, the FDA has suggested in the draft guidance that it be notified of corrective actions taken and be informed about any involvement by senior management in product reviews. In response, members of the International Society for Pharmaceutical Engineering (ISPE) have advocated for a phased introduction, with just a few of the requirements applying to higher-risk facilities, and with voluntary reporting, initially, to limit the administrative burden on manufacturing companies.

The director of the Drug Information Service at University of Utah Health Care, Erin Fox, says a lack of transparency in manufacturing and product supply has been a key issue in drug shortages of recent years, and in efforts to understand the quality and origin of drugs on the United States market. For this reason, she says the FDA’s quality metrics effort is “a really good step,” though its value to the physician community is limited in that the data provided by manufacturers will not be made publicly available.

“You can go to the store and buy a pack of raspberries and see if they’re from California or from Mexico, but you can’t know that about the medicine, and that’s what’s really frustrating,” she says.

Fox praises a requirement that drug companies notify the FDA of pending shortages, a rule enacted through the FDA Safety and Innovation Act of 2012. “Overall, we have a picture of improvement—significant improvement&mdash;especially if you think back to where we were in 2010 and 2011, when patients were being turned away from chemotherapy,” she says.

Shortages for 2015 reflect first 6 months of year only.

University of Utah Drug Information Service

Even so, now is not the time to ease the pressure on the FDA, says Dan Zuckerman, MD, executive medical director of St. Luke’s Mountain States Tumor Institute in Idaho, a group of 5 treatment centers grappling with ongoing shortages of key drugs.

“What I wouldn’t want to see is a sense that the issue is solved, that we can forget about it for now,” says Zuckerman. “I think that for the foreseeable future it may need to stay on both our radar and the FDA’s radar.”

Zuckerman participated in an ASCO lobbying effort in the early part of this decade to raise the profile of the drug shortage problem so that the FDA would take ownership and spearhead a meaningful reform effort. “We’re pleased to see that steps have been taken to address this through the FDA, through the lobbying efforts by ASCO, and by having more visibility on the congressional side.”

Although the drug shortages were acute, a key culprit was Teva’s Irvine, California, manufacturing plant, which was the source of up to 55 products and came to a lengthy standstill after it failed an FDA inspection.

Zuckerman recalls the crisis too vividly to believe that it couldn’t happen again without ongoing vigilance.

“We were really becoming concerned, on too routine a basis, that patients weren’t getting the care they needed, particularly for pediatric drugs,” he says. Obtaining supplies of needed drugs was not always possible, and the pharmacy at St. Luke’s often had to juggle priorities and call around to outside facilities in search of fresh supplies, finding in many cases that those facilities were going through exactly the same difficulty.

The liposomal doxorubicin was in very short supply during that period, Zuckerman recalls. “We sometimes had to delay patients or cancel patients and, frankly, sometimes even use alternative chemotherapies that we had concerns were just not quite effective or were a little more toxic.” At one point St. Luke’s considered importing the drug, but practice managers eventually decided against doing that because they could not be certain about the quality of potential imports. That’s not to say that other practices didn’t make the decision to buy imported drugs, Zuckerman says. Indeed, enabling imports has been one of the FDA’s tools for making scarce drugs available in a crisis, says Fox. Over the past few years, the FDA has granted various foreign-based manufacturers the right to import saline to deal with shortages here. An ongoing shortage of chemotherapy drug thiotepa could not be alleviated the same way because manufacturers were not willing to produce for this market, and so the FDA allowed hospitals here to purchase the product directly from Italy, Fox says. That created a new problem for clinics here, Fox explains. “It’s hard to explain to your purchasing department that you have to arrange for a wire transfer to a Swiss bank.”

		Figure 2. Active Shortages, Top 5 Drug Classes

 University of Utah Drug Information Service

The shortages that peaked in 2011 have abated, but the problem continues. In the case of doxorubicin, supplies still tend to run low. “It’s not as frequent or acute, but it still is happening,” says Zuckerman. “We’re counting milligram doses and vials while we’re waiting for the next shipments. Our pharmacy managers are still wringing their hands over it.”

University of Utah Drug Information Service data show that new drug shortages climbed from a low of 58 in 2004 to 268 at the height of the problem, in 2011. New shortages reached 185 last year and numbered 68 in the first half of this year. In the second quarter of this year, there were 215 ongoing shortages 

One sector of oncology care that is highly sensitive to the impact of drug shortages is pediatrics, says Susan Weiner, founder of Children’s Cause for Cancer Advocacy. “If a company manufactures a drug and has developed and gotten approval for another drug that costs more, there is every reason to stop producing the older, cheaper drug. Because the backbone regimen of treating these kids consists of older drugs, which have become either low price or generic, the threat of shortage is serious, and the effect can be life-altering for kids,” Weiner says.

An example of this is the relatively cheap drug methotrexate. Used in the treatment of cancer and autoimmune diseases and considered one of the world’s most essential medications by the World Health Organization, methotrexate has been around for more than 60 years and yet, owing to manufacturer discontinuance and other issues, the drug has been in short supply.

Among 4 different manufacturers of methotrexate, Sandoz and West Ward Pharmaceuticals have discontinued production of some forms of the drug and Teva has it on back order, according to the American Society of Health-System Pharmacists (ASHP).

Because there are only about 15,000 childhood cancer patients a year, manufacturers have little interest in producing specialized drugs for such a limited market. Precision medicine has yet to penetrate childhood oncology to the extent that it has for adults, Weiner says. “There really are only 3 drugs that were approved first for use in pediatrics. The rest are developed typically for adults first, and then if it may be a useful treatment for children, it is introduced into pediatric clinical trials.”

Drug availability also influences whether clinical trials can be conducted successfully. Childhood cancer patients are vulnerable to variations in protocols because a large percentage of children are treated in National Cancer Institute or institutional clinical trials, Weiner says.

Weiner supports efforts by the FDA to get stricter with manufacturers to ensure the production of high quality drugs. “What worries me is that some ofthese key drugs will disappear. There is no incentive and no requirement for companies to continue to make these small market, off-patent drugs,” she says.

In 2012, 35% of drug shortages were due to quality issues that required facility remediation efforts, whereas 31% were the result of quality issues stemming from problems with product manufacturing; 14% were related to the discontinuation of product; and 8% were due to shortages of key materials. Only 6% were the result of an increase in demand, according to the FDA.

In some cases, shortages are related to federal drug policy, such as the Centers for Medicare & Medicaid Services’ practice of reimbursing average sales price plus 6% on medications and controlling the rate at which those payments can be increased. Critics say that lowers the incentive for manufacturers to enter the market for a drug when a shortage develops.

At the end of the day, drug manufacturing is a business, and the FDA does not have the authority to force a company to make a product, no matter how critical it may be. Many manufacturers are running their production lines at full capacity and don’t have the reserve space to institute production of a drug that is in short supply. The problem of incentivizing manufacturers to produce has therefore been forefront in many discussions about drug shortages. “Ultimately, manufacturers are responsible for ensuring sustainable production of quality drugs,” the FDA said in a recent statement.

 “FDA continues to encourage pharmaceutical companies interested in making drugs in short supply to submit applications so that there are multiple manufacturers making these drugs. Spreading the production of a drug over a variety of manufacturers reduces the potential for an over-reliance on one or few manufacturers.”

Meanwhile, manufacturers continue to make market decisions that protect their own interests. An example of a marketplace football right now is carboplatin, an almost all-purpose oncological drug that has been around for decades and which is in short supply. Of 7 manufacturers that produce the drug, 

 have decided not to continue production and others are struggling to meet demand, according to ASHP.

“Carboplatin’s not going to go away. It’s a heavy lifter—for ovarian cancer, for lung cancer&mdash;maybe even in a subset of breast cancer,” says Zuckerman. “Even though it’s an old drug, we’re discovering new uses for it, so I think all of us oncologists are aware that the shortage is not manufacturing failure or that they can’t get a certain chemical, but that it could be a conscious choice by pharma that ‘We’re just not going to invest a lot in that.’”

The threat of such action has the potential to keep doctors awake at night. “That’s scary,” Zuckerman says. “We’ve seen that happen a lot with antibiotic development. That’s a parallel story where we know that for the last 10-15 years, there’s been very little put in, because pharma doesn’t see it as a wise financial investment for health, for country, or for all of us. Yet we still need those things.”

			FDA. Request for quality metrics guidance for industry. 2015. www.fda.gov/downloads/ druRequest%20for%20Quality%20Metrics%20Guidance%20for%20Industrygs/guidancecomplianceregulatoryinformation/ guidances/ucm455957.pdf. Accessed September 21, 2015.

			FDA. Strategic plan for preventing and mitigating drug shortages. 2013. www.fda.gov/ downloads/Drugs/DrugSafety/DrugShortages/UCM372566.pdf. Accessed September 21, 2015.

			Jensen V. FDA actions reduce drug shortages but critical issues remain. FDA. 2014. www.fda.gov/Drugs/NewsEvents/ucm401553.htm. Accessed September 21, 2015.

The door isn't fully closed on the acute oncology drug shortages of 4
years ago, observers say, though the FDA has established rules for
greater disclosure by manufacturers and continues to tweak guidelines
that would require far more information about manufacturing
processes and production issues.

Drug Shortages Persist Despite FDA Push for More Information

The attempt by Turing Pharmaceuticals to boost the price of the anti-parasitic pyrimethamine (Daraprim) 5500% is now under reconsideration, but it shows up the flaws inherent in a fragmented payment system, says Zachary Landman, MD, a senior institute associate at the Institute for Strategy & Competitiveness at Harvard Business School.

“The Daraprim case is an example of a flawed reimbursement system, in which each part of the care cycle is paid for independently of one another. Those willing to exploit inefficiences and distribution barriers are able to seize incredible profits without driving meaningful improvements to patient outcomes. This is an example of the zero-sum competition that Michael Porter described in Redefining Health Care, in which in this case, is clearly a shifting of cost to the consumer. Those paying for and receiving the treatments (ie, patients) are the losers whereas the pharmaceutical company is the winner, reaping the resulting profits,” Landman says.

“In order for our health system to succeed, we need to move away from zero-sum competition to value-based competition, therapies are evaluated in the context of the broader care cycle and are paid for accordingly by their ability to drive value to the patient—improve condition-specific outcomes or reduce those costs to deliver those outcomes,” he says.

	Daraprim, useful for those with weakened immune systems such as cancer and AIDS patients, saw its per pill price raised from $13.50 to $750 in August after Turing Pharmaceuticals purchased US rights to the drug from Impax Laboratories. In India and the United Kingdom, the drug is available for far less than a dollar a pill.

	“Unfortunately, Daraprim isn’t a commodity that you can choose to buy or not to buy,” says Erin Fox, director of the Drug Information Service at the University of Utah. “There really aren’t good alternatives for some of these drugs we have seen major price increases for—and patients, hospitals, and clinics end up in the middle.”

	Landman, who is delivering a talk on value-based oncology at the upcoming Chemotherapy Foundation Symposium in New York in November, says Daraprim is an example of the need for a broad discussion on how drug development costs should be funded. He adds that a system of aggregating medical costs in the form of bundled care can exert leverage to bring down the high cost of medicine.

	“What is clearly needed in order to address the broader issue of drug price escalation is both a social and political conversation whether the healthcare system can continue to subsidize the global pharmaceutical R&D budget and whether that will require legislative involvement, and secondly, how we pay for healthcare more broadly. We must move away from a piecemeal payment system to bundled payments which aggregate both the costs and outcomes over a broader care cycle. These two levers have the power to diminish the bargaining power as demonstrated by the Daraprim.”

	Presidential candidate Hillary Clinton saw the Turing moment as an occasion to announce a package of drug pricing reforms that she would attempt to enact if elected.

	Those include eliminating tax breaks for consumer advertising, limiting out-of-pocket drug costs to $250 per month for patients with certain chronic or serious health conditions, promoting generic drug production by trimming the amount of time companies can exclusively produce new treatments, allowing Americans to import drugs from Europe if the safety standards are similar, and giving Medicare negotiating power, especially for drugs with limited competition.

	Similarly many individual states have begun efforts to increase drug pricing transparency by instituting reforms. New York is among them, with a bill introduced in the state Senate in May that would require drug cost disclosures for prescription products with wholesale acquisition costs of $10,000 or more annually or per course of treatment, so that consumers, payers and others would be able to understand how market prices were determined.

	“Pharmaceutical companies have long maintained that the exorbitant prices are needed in order to cover the costs associated with research, development and clinical trials. However, neither the consumers who need these prescriptions, or insurance companies, including Medicare nor Medicaid who pay for them, have any idea if what the pharmaceuticals contend is actually true,” states the bill, which is one of several introduced in state legislatures around the country over the past year.

	John Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of American (PhRMA), said Clinton’s initiative would stifle innovation and reduce patient access. “The sweeping proposals outlined in Secretary Clinton’s plan to regulate prescription drug prices would restrict patients’ access to medicines, result in fewer new treatments for patients, cost countless jobs across the country and could end our nation’s standing as the world leader in biomedical innovation,” he wrote in a blog post.

	PhRMA’s objections to the specifics of Clinton’s plan do not address the overwhelming public frustration with high drug prices; the sentiment is not limited to consumers but has extended to physicians who cannot get patients to stick with medication due to cost. Meanwhile, President Barack Obama has called for giving Medicare negotiating power in the 2016 budget and HHS Secretary Sylvia Mathews Burwell has made similar pleas in public remarks.

American Journal of Managed Care Editor Mary Caffrey contributed to this report.

The attempt by Turing Pharmaceuticals to boost the price of the anti-parasitic pyrimethamine (Daraprim) 5500% is now under reconsideration, but it shows up the flaws inherent in a fragmented payment system.

Bundled Care Has Power to Rein In Drug Price Escalation

The 340B drug discount program is bigger than any Jurassic Park monster that ever broke out of its cage, and arguably bigger than any California wildfire that ever burned up the Sierras. Now, some revisions that could make a sizeable dent in the runaway spending are in store for this multi-billion dollar government program.

As the federal government continues to accept comment on draft revisions through the end of October, the Community Oncology Alliance has weighed in with a report on the explosive growth of the 340B program. Payers, drug manufacturers, and independent oncology practices all have been at the losing end of this deal that allows 340B certified institutions to reap full payment for drugs that they obtain at a deep discount.

Previous measures of the growth of 340B have fallen short of the true mark, says the new report by Berkeley Research Group and commissioned by the Community Oncology Alliance (COA). For example, the report indicates that from 2010 to 2013, Medicare Part B cancer drug spending rose 123% in 340B hospitals, climbed 31% in non-340B hospitals, and dropped 5% in community practices.

In the October issue of Oncology Business Management, we report that COA sees something positive in that trend: drug spending is stable at community oncology practices where the transition to value-based care is well under way.

We also show that some who have eyeballed the voluminous, 90-page revision document find that the problem of contract pharmacy proliferation has not been addressed.

Pharmacy arrangements make 340B discounts available over a wider territory than hospitals can manage alone, but they often do it in areas where people are generally affluent and there is no justification for the application of 340B discounts.

“We think it’s a real challenge to the long-term sustainability of the 340B program and a very serious part of why the program isn’t working as it was intended to,” Stephanie Silverman, spokeswoman for the reform group AIR340B, told 

. According to the Berkeley report, there are over 3000 retail pharmacies and mail order/specialty pharmacies contracting with 340B entities this year, up from less than 1000 just five years ago. Did anybody ever see a charity program grow that fast and sustain such momentum based on the spirit of giving alone?

 also looks at the walkaway patient—the patient who shows up for care but doesn’t continue, or who gets to the pharmacy counter and undergoes sticker shock when it comes time to hand over the credit card or some hard cash. These patients need and deserve care just like anyone else, though often they require special assistance to bridge the gap between their resources and the soaring cost of medicine.

In another feature we examine the status of drug shortages. These gained a high profile in late 2010 and 2011, partly owing to a production shutdown at Teva’s Irvine, California plant, where dozens of drugs are produced. New shortages have declined significantly since then, though they remain a concern for oncologists and, in particular, pediatric oncologists.

With production lines running at full steam and manufacturers turning to the most profitable drugs, there’s nothing to ensure that older standbys, still highly valuable in oncologic treatment, will be produced. “What most worries me is that some of the key drugs will just disappear,” Susan Weiner, founder of Children’s Cause for Cancer Advocacy, told 

There’s more in this issue, including a story about efforts to improve interoperability of health record technology. Getting computers to communicate essential health information across platforms remains an issue even in 2015, but there’s a related problem in the form of “information blocking,” where key information is deliberately dammed up by companies hoping to extract a fee for usage.

It gets “curiouser and curiouser,” and it’s all in the October issue of 

The 340B drug discount program is bigger than any Jurassic Park monster that ever broke out of its cage, and arguably bigger than any California wildfire that ever burned up the Sierras.