WASHINGTON — Spending on cancer medications has risen dramatically in the past two years as doctors have moved away from small practices toward physicians' groups, according to a report released Tuesday.
That's because hospital out-patient clinics can charge the government as much as double for an injectable drug than can a doctor's office, because hospitals have higher overhead costs, states the study from IMS Institute for Healthcare Informatics.
"Reimbursed costs for hospitals are at least double those in doctors' offices," said Murray Aitken, IMS Health senior vice president. "This is bringing sharply higher costs to payers, particularly over the past two years."
For example, bevacizumab, or Avastin, which is used to treat colorectal, kidney and some lung cancers, costs about $2,500 per dose in the doctor's office and $8,500 a dose in an out-patient clinic. Pertuzumab, or Perjeta, which is used to treat breast cancer, costs about $4,000 in the doctor's office and $10,000 at the hospital.
Single-payer organizations, such as accountable-care organizations, paid less for medications because they carefully coordinate care to make sure each patient receives the best treatment at the lowest cost. That works for some insurers and Medicare systems that have already made the switch. But hospitals have bought out individual doctors, and doctors have moved into physicians' groups, in part to get ready for a shift from Medicare from fee-for-service to coordinated care. This places them in the higher billing category until they actually change from the fee-for-service system.
The increases are also seen in groups that work with underserved populations, such as hospitals whose patients are primarily covered by Medicare or Medicaid, and who are covered by the 340B Drug Discount Program, which requires drug manufacturers to sell drugs to the government at heavily discounted prices, Aitken said. Those groups have taken on more cancer patients, and they typically receive their cancer care in out-patient facilities.
That also means that patients with high-deductible plans will pay more in out-of-pocket costs if their insurer uses a fee-for-service billing system, Aitken said.
A House bill submitted last summer by Reps. Mike Rogers, R-Mich., and Doris Matsui, D-Calif., would have made cancer drug payments the same no matter where a Medicare patient was treated. It was sent to committee.
The study also found:
• Global spending on cancer drugs reached $91 billion in 2013, up from $71 billion in 2008 and $37 billion in 2003. The United States spent $37.2 billion in 2013.
• In the past five years, the compound annual growth rate was 5.4%. From 2003 to 2008, it was 14.2%.
• The average cost for a brand-name cancer drug in the United States is about $10,000 a month, compared to $5,000 a month 10 years ago.
• Twenty-one new cancer drugs were introduced in the past two years.
• New drugs typically add between two and six months to a patient's life.
Aitken said the industry's innovation pipeline is "vibrant and full," and that there's been a move from using a single medication for treatment toward using combinations of medications.
While many cancer drugs will go off-patent soon, opening up the market for generics and bio-similars, he said there are enough new drugs coming on the market that the industry should not see a significant financial change.