The high cost of cancer drugs

Posted May 27th, 2014

The cost of cancer is growing rapidly for both the medical and pharmacy components. Overall oncology spending is growing more than 15 percent every year, while cancer,drug costs (which account for between 10 to 15 percent of total oncology care spending) are rising between 15 and 20 percent per year.1

This chart shows the rising cost of cancer drugs over the last few decades:4

Looking at costs from a national perspective, the most recent US government figures show that adjusted annual direct medical spending on cancer in the United States has doubled in under 20 years.2 Meanwhile, US spending on cancer drugs is rising twice as fast as for health-care costs overall.3

For example, in the 1970’s the standard treatment for breast cancer was an infusion comprising three different drugs. It cost about $250.5 By 2010 the average cost per-dose of cancer medications was more than $10,000 per month and today it is common to see cancer treatments costing over $100,000 per year.4,6

This graph shows how cancer drug costs are consistently about 60 percent paid under the medical benefit:

Where does the money go?

The expanded chart below show all costs for cancer, broken down by where the spending occurs:1,8 In this view we can see that by far the biggest portion of cancer medications are dispensed in a variety of outpatient settings. One of the key cost management strategies employed by OptumRx and UnitedHealthcare is to carefully consider which drug delivery channel makes the most sense for every given patient, condition and drug. Choosing correctly can make a big difference in the ultimate cost to the client’s benefit plan, but also to patient health outcomes and protecting a robust doctor-patient relationship. 

Find out more

See the sections entitled Cost Drivers and Cost Management Strategies (in Part 2 of this series) to learn more about managing delivery channels and what is driving future cancer cost growth in the full Oncology Insight Report.

References

  1. Oncology Journal. The Cost of Cancer Care: Part I. October 23, 2012. Available at: http://www.cancernetwork.com/practice-policy/cost-cancer-care-part-i/page/0/1. Accessed 03.12.2014.
  2. Elkin EB, Bach PB. Cancer’s next frontier: addressing high and increasing costs. JAMA. 2010;303:1086-1087
  3. Nature. Immunotherapy’s cancer remit widens. 28 May 2013. Available at: http://www.nature.com/news/immunotherapy-s-cancer-remit-widens-1.13079. Accessed 03.11.2014.
  4. Memorial Sloan-Kettering Cancer Center; 2013. Monthly and Median Costs of Cancer Drugs at the Time of FDA Approval, 1965-2013. Available at: http://www.mskcc.org/research/health-policy-outcomes/cost-drugs. Accessed 1/22/2014.
  5. Health Affairs 2012 Apr; 31(4):780-5. Changing physician incentives for cancer care to reward better patient outcomes instead of use of more costly drugs. Available at: http://www.ncbi.nlm.nih.gov/pubmed/22492895.
  6. Mayo Clinical Proceedings. 2012 October; 87(10): 935–943. The High Cost of Cancer Drugs and What We Can Do About It. Available at: http://www.ncbi. nlm.nih.gov/pmc/articles/PMC3538397/. Accessed 02/10/2014.
  7. American Cancer Society. Cancer Facts & Figures 2014.
  8. IMS Institute for Healthcare Informatics. May, 2013.