Cancer Drug Spending Hits $100 Billion

Murray Aitken

Earlier diagnosis, longer treatment durations, and increased effectiveness of treatments helped to boost spending on cancer medicines to the $100 billion threshold in 2014, a rise of 10.3% for the year, and up markedly from $75 billion five years earlier, according to the 2015 Global Oncology Trend Report by the IMS Institute for Healthcare Informatics.

According to the report, overall therapy costs have soared an inflation-adjusted 39% over the past decade, flanked by a concurrent 42% increase in overall response rates and 45% increase in months that patients are on therapy. Additionally, there has been a rising 5-year relative survival rate for patients with most major cancers.

The increase in costs and improvements in outcomes could continue into the future, as many drug pipelines are stocked with promising new therapies that may bring improved survival and lower toxicity. IMS predicted competitive battles would develop over the next five years among companies offering certain types of drugs, such as PI3K/mTOR/AKT inhibitors.

“The increased prevalence of most cancers, earlier treatment initiation, new medicines, and improved outcomes are all contributing to the greater demand for oncology therapeutics around the world,” Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics, said in a statement. “Innovative therapeutic classes, combination therapies and the use of biomarkers will change the landscape over the next several years, holding out the promise of substantial improvements in survival with lower toxicity for cancer patients.”

Targeted therapies now account for almost 50% of total spending, and the outlay in this sector has been growing at the annual rate of 14.6% over the past five years, according to the report.

In developed markets, spending growth has been driven by a sharp increase in the volume of protected brands and major new product launches. As a percentage of total drug spending, the oncology drug outlay has risen only slightly over the past five years—in the United States oncology spending is now 11.3%, up from 10.7% a half decade before.

The report predicts a continuing rise in oncology medicine spending of 6% to 8% annually through 2018 with growing demand and new therapy options offset somewhat by competition from biosimilars and small molecule generics following patent expirations.

As the complexity of drugs continues to increase, fewer have single indications and by 2020 most are expected to have 3 or more, though the variable efficacy of the same medications for different cancers is complicating the business of pricing these medications, IMS said.

Overall, 45 new oncology drugs were launched from 2010-2014 for more than 53 uses. Ten drugs were launched globally in 2014. Those included 5 biologic therapies, 2 new immunotherapies (anti-PD-1 agents nivolumab and pembrolizumab, blinatumomab (first of a new class of bispecific T-cell engagers), ramucirumab, and siltuximab.

Many of these recently approved medications have shown overall survival benefits in clinical trials, including long-term durable remissions in some patients.

“Two-thirds of Americans diagnosed with cancer now live at least 5 years, compared to just over half in 1990,” the report noted. “Although the changes are incremental year to year, cumulatively, more patients are gaining years of life.”

Even so, new therapy breakthroughs are increasingly rare and, when they do occur, apply to only small subpopulations of a disease. “Most progress comes through continuous small improvements in detection and treatment, including refinements in using existing treatments as well as use of new treatments,” the report continued.

Overall, patient out-of-pocket costs associated with intravenous (IV) cancer drugs have risen sharply owing to consolidation of practice centers and an increasing number of patients now receiving their treatment in hospital outpatient facilities. Average out-of-pocket costs for IV treatment were $5643 in 2013, up from $3307 in 2012. For oral medications, the 2013 figure was $2838, up from $2438.