Global Oncology Drug Spending Reaches $107 Billion

Murray Aitken

The global cost of cancer therapies shot up to $107 billion in 2015, an 11.5% rise from the $100 billion 2014 total for oncology therapeutics and supportive care drugs, according to a new report from IMS Institute for Healthcare Informatics.

More than 70 new cancer treatments have been launched in the past 5 years for treatment of 20 tumor types, and the oncology industry is struggling to keep up, said Murray Aitken, IMS executive director.

“This is a surge of innovation that we’ve not seen in the past,” he said. “We can see a tension in the system as payers have to wrestle with these growing levels of cost. Oncologists have to wrestle with a growing armamentarium of treatments and decide the optimal course of care for a particular patient.

"Patients themselves now face more choices than in the past in terms of their treatments. Regulatory agencies have a lot to deal with, as new drug applications are coming through rapidly not only for the original molecule but for subsequent indications. So, everyone in the health system is wrestling with this surge in innovation that’s bringing these remarkable new treatments to patients,” he said.

New therapies are being approved sooner, and regulators are burdened with the task of reviewing not just new agents, but new indications for existing drugs, Aitken said. For example, since December 2014, nivolumab (Opdivo) has been approved for treatment of melanoma, squamous and nonsquamous non—small cell lung cancer (NSCLC) and, most recently, renal cell carcinoma, the report said.

“The pipeline of oncology drugs in clinical development has expanded by more than 60% during the past decade, with almost 90% of the focus on targeted agents. The median time from patent filing to approval for oncology drugs in 2015 was 9.5 years, down from 10.3 years in 2013.”

IMS attributed the FDA’s use of their breakthrough therapy designation, introduced in 2012, as one reason for this acceleration. “In the past 3 years, 3 molecules were approved within 4 years of patent registration,” IMS stated.

“Collectively, manufacturers are advancing nearly 600 new molecules through late-stage clinical development, most frequently for NSCLC and breast, prostate, ovarian, and colorectal cancers,” the report said.

It predicted that the global market will continue to grow in the range of 7.5% to 10.5% each year through 2020, reaching $150 billion. Much of that growth will be driven by immunotherapies. The report said payers will continue to look for concessions from manufacturers and adopt new payment models in an effort to derive greater value from their expenditures on these drugs. As the oncology sector grapples with ways to cope with rising costs, the trend continues toward oncology practice integration, the report said. Only 17% of practices in the United States remain fully independent, down from 28% in 2010, IMS said.

There is tremendous variation by state. For example, 14 states have fewer than 10% of their oncologists in independent practice, and 6 states have more than 30% in independent practice. “In Arizona, Wisconsin, Montana, Utah and New Hampshire, over 95% of oncologists are affiliated with a corporate parent or an IDN,” the report said. The highest percentages of still-independent oncologists can be found in 2 of the least-populated states in the country: Alaska and Wyoming.

In 2014, total average costs for patients with cancer in the United States were $58,000, up 19% from 2013. Out-of-pocket costs for those receiving drugs by injection or infusion in 2014 were $7040, versus 2013 costs of $6991. The average oral out-of-pocket drug costs in 2014 were $3033, versus 2013 costs of $2874, the report said. More programs were available to assist patients with their oncology treatment costs, IMS said. Discount coupon or patient cost offsets were available to more than 25% of patients in 2015, up from 5% in 2011.

Although the IMS report tallied total treatment costs of $107 billion in 2015, that number is based on manufacturer invoicing and not the true amounts paid after discounts, rebates, and patient access programs.

“Pricing concessions by manufacturers—including mandatory and negotiated rebates, discounts and patient cost offsets—are reducing manufacturer-realized net sales across many markets,” the report said. “Net price growth in the United States on existing branded oncology drugs averaged an estimated 4.8% in 2015, compared with 6.4% invoice price growth.”

New drugs continue to be more available in the United States than in most other countries, the report said. Only 6 of 21 relatively advanced countries offered more than half of the 49 new oncology drugs launched between 2010 and 2014, IMS said. “Targeted immunotherapies are available in most developed countries, but none of the emerging markets outside of the European Union has yet registered these treatments.”

Last year, oral targeted therapies represented 39% of $27.8 billion in spending last year, with injectables and infused drug spending accounting for the remaining 61%. The ratio of spending in 2005 was 19% for orals and 81% for injectable/infused drugs. Last year, spending in the $3.4 billion hormonals market was 65% orals and 35% injectables/infused.

In an examination of US oncology drug spending by location, the IMS report said more than one-third of costs in 2015 were from medicines available at retail pharmacies, up from 25% 10 years ago.

IMS Institute for Healthcare Informatics. Global market for cancer treatments grows to $107 billion in 2015, fueled by record level of innovation. http://www.imshealth.com/en/thought-leadership/ims-institute. Published June 2, 2016.