Effort to hold down cost of cancer drugs bears fruit

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Six-month trial using protocols last year saved $1 million

Pittsburgh Business Times - March 17, 2006by Kris B. Mamula

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An innovative effort to hold down the escalating cost of cancer drugs while providing the best possible care is yielding early promise.

A six-month trial that ended last fall by medical oncologists at the University of Pittsburgh Medical Center saved $1 million by standardizing the dosing and uses for the cancer drug Avastin, said Dr. Stanley Marks, director of clinical services and chief medical officer, UPMC Cancer Centers. What's more, most of UPMC's 85 medical oncologists have voluntarily agreed to use cancer treatment guidelines, which are specifically written to cut spiraling drug costs while maximizing the effectiveness of treatment.

"We're not telling physicians how to practice," said Marks. "We're giving them guidelines. Frankly, this is the only way to control costs."

Dr. Scott Howell, vice president of pharmacy affairs at health insurer Highmark, a partner in the project, said there is a growing recognition the health care system is straining under the weight of cancer drug costs.

"The common ground here is to try to reduce waste and inefficiency," said Howell. About the results of the effort, he added: "So far, it's very encouraging."

In an effort that is perhaps unprecedented nationwide, Highmark and UPMC teamed about two years ago to find ways of controlling drug costs. Avastin, for example, which was approved by the U.S. Food and Drug Administration in 2004 for colorectal cancer, can cost between $40,000 and $50,000 annually for one patient.

But Avastin may soon also be approved for breast and lung cancer at higher dosages, lifting the annual cost of treating a patient to $100,000. Insurers aren't the only ones feeling the sting: patients must shoulder higher co-payments and out-of-pocket expenses for a new generation of high-priced drugs. Highmark and UPMC are standardizing drug regimens to eliminate use of drugs that have not proven effective for specific tumors and end wasteful variations in dosing.

Negotiations began when Highmark notified oncologists that reimbursement would be cut for administration of drugs in the doctor's office. Oncologists like Marks give 50 to 75 drugs intravenously in the office, from anti-nausea medications to chemotherapy to drugs that boost the number of red blood cells. Because doctors receive a flat fee for treating patients, the drug reimbursement helps offset administration costs and extra time they must spend with each cancer patient, Marks said.

The median annual salary for oncologists in the Pittsburgh area is $234,869, according to Needham, Mass.-based employee compensation outfit Salary.com, at least half of which comes from administering drugs in the office. So, faced with Highmark's cuts, Marks and other doctors came up with a compromise for the insurer: shift the focus to drug costs, which they would help control through standardized treatment guidelines.

In return, Highmark agreed to maintain reimbursement levels for office-administered drugs and last year formed a joint company, Oncology Pathways LLC,with an eye toward eventually marketing the cancer treatment guidelines to other Blue Cross providers and health systems.