Making Anticancer Medications Affordable: Help in the Near-Term and Beyond

The affordability of medication remains a substantial obstacle to care for many patients with cancer. According to the National Cancer Institute, the per-patient annualized average costs of cancer diagnosis and treatment were highest in the last year of life, at $109,727 for medical services and $4372 for oral prescription drugs.¹

A common explanation for the high costs of medications by the pharmaceutical industry points to the high costs of preclinical and clinical research in oncology, holding that lower prices will hamper investment and lead to fewer innovative treatments reaching the market.

Direct Help to Patients

Help with the costs of care is available. Public and private programs offer patients financial assistance, but sorting through the many programs and identifying the most useful support can be daunting for patients and providers alike. The Oncology Practice Management Oncology Guide to Patient Support Services² is a comprehensive listing of sources that healthcare providers can use to help increase access to care for their patients. This guide is organized by pharmaceutical company name and by the drugs and services offered by each company. A second version, the Conquer Patient Guide to Cancer Support Services,³ can be used by patients and lists the available financial assistance programs offered by pharmaceutical companies as organized by cancer type. The Conquer version also provides listings of foundations and nonprofit organizations as well as government assistance programs. These guides are updated annually and are highly useful resources for patients in immediate need of support.

Investigating the Systemic Issues

The underlying systemic issues, however, are a more challenging obstacle. A study by Franzen and colleagues reviewed the literature on possible avenues to address affordability in cancer care and focuses on the pricing environment, such as joint procurement, 2-part tariffs, and transparency; the R&D environment, such as orphan drug reform, public research, and public clinical trials; and the intellectual property system, such as delinkage.⁴

In this review, Franzen and colleagues looked to move from opinion-based approaches to evidence-based policymaking. They state, “We offer a novel perspective and practical recommendations on how empirical evidence could and should be gathered to inform evidence-based policy interventions that lead to sustainable medicine prices in oncology.”⁴ The authors offer the following pathways to a potential solution to the high costs of cancer medications.

Joint Procurement Policies

Joint procurement is the consolidation of multiple payers into a single stronger bargaining group, and it has the potential to increase the contractual power of buyers, leading to lower prices. Some issues to be determined include⁴:

• The size of the effect and whether incentives to invest in R&D will be altered
• The most beneficial type of joint procurement
  • – Grouping of entities with similar purchasing power, or
  • – Organizing payers of heterogeneous financial capacity and separately discussing an equitable and fair distribution of R&D costs
• Whether there will be any buyers excluded from purchasing coalitions

With a 2-part tariff, payers pay a subscription fee to access a medicine. This money is intended to repay the pharmaceutical company for R&D costs and includes an agreed-on profit margin.

2-Part Tariffs

With a 2-part tariff, payers pay a subscription fee to access a medicine. This money is intended to repay the pharmaceutical company for R&D costs and includes an agreed-on profit margin. In addition to the subscription fee, the buyer pays a per-unit price that covers production costs.⁴

Franzen and colleagues point out that a 2-part tariff can potentially solve issues regarding the negative economic consequences of monopolistic industries, in which companies are incentivized to keep prices high and production levels low. A 2-part tariff is theoretically expected to solve these inefficiencies.

Advantages of Transparency

Although transparency laws are in place in many states in the United States, undisclosed discounts and confidentiality clauses continue to obscure real prices paid by buyers in other countries. The debate centers on supporters of having more transparency, who argue that it will improve access to medicines through lower prices, and opponents of transparency, who argue that it will eliminate targeted discounts to poorer countries and reduce R&D investments.⁴

To further evaluate these opposing views, Franzen and colleagues point out that behavioral experiments can preassess the viability of interventions that have outcomes that depend on human decision-making and that such experiments in economics are predictive of real-world outcomes.^5,6 Within healthcare, such experiments are gaining importance, examples of which include research on payment schemes such as pay for performance, fee for service, and capitation.^7-9

Orphan Drug Reform

Turning to potential solutions from an R&D perspective, Franzen and colleagues focused on orphan drug reform.⁴ By way of background, the orphan drug designation is a policy that aims to incentivize the development of medicines for patients with rare diseases. Incentives are intended to improve profits by increasing the period of market exclusivity, tax credits, reduced administrative cost, and grants for clinical trials.

Franzen and colleagues propose quantifying to what extent the orphan drug designation benefits expand R&D investments.⁴ They also propose examining how the orphan drug designation affects drug development and facilitates the rapid introduction of new medicines. Issues surrounding orphan drug development are especially relevant for oncology, where advances in personalized medicine through biomarkers and targeted therapy have led to smaller subgroups of patients per tumor type. This evolving research and treatment environment challenges the disease-driven designation of the orphan drug system.

For additional information on efforts in the US government to identify and mitigate barriers to care, please see President’s Cancer Panel Report: Closing Gaps in Cancer Screening for All Americans.

References

1. National Cancer Institute. Financial Burden of Cancer Care. Accessed July 26, 2024. https://progressreport.cancer.gov/after/economic_burden
2. Oncology Practice Management. Oncology Guide to Patient Support Services. Accessed July 26, 2024. oncpracticemanagement.com/2024-pss-guide
3. Conquer. Patient Guide to Cancer Support Services. Accessed July 26, 2024. www.conquer-magazine.com/pssguide2024
4. Franzen N, Romagnoli G, Ziegler A, et al. Improving the affordability of anticancer medicines demands evidence-based policy solutions. Cancer Discov. 2022;12:299-302.
5. Falk A, Heckman JJ. Lab experiments are a major source of knowledge in the social sciences. Science. 2009;326:535-538.
6. Camerer C. The promise and success of lab-field generalizability in experimental economics: a critical reply to Levitt and List. https://ssrn.com/abstract=1977749
7. Brosig-Koch J, Hennig-Schmidt H, Kairies-Schwarz N, Wiesen D. The effects of introducing mixed payment systems for physicians: experimental evidence. Health Econ. 2017;26:243-262.
8. Hennig-Schmidt H, Selten R, Wiesen D. How payment systems affect physicians’ provision behaviour—an experimental investigation. J Health Econ. 2011;30:637-646.
9. Huck S, Lünser G, Spitzer F, Tyran JR. Medical insurance and free choice of physician shape patient overtreatment: a laboratory experiment. J Econ Behav Organ. 2016;131:78-105.