 Good afternoon. On behalf of the McLean Center for Clinical Medical Ethics, I'm pleased to welcome you to today's lecture in our series on ethical issues and health care reform. Let me introduce our speaker today, Professor Rina Conti. Rina Conti is an assistant professor of health policy and economics in the University of Chicago's Department of Pediatrics section of hematology oncology and in the Department of Health Studies. Her research interests include identifying the drivers of medical care spending and evaluating both the intended and the unintended consequences of policy efforts to slow spending growth. Professor Conti's current projects involve estimating the economic value of new pharmacological-based treatments for depression, examining the prevalence and costs of off-label medication usage, and investigating the impact of policies intended to incentivize medical innovation. Dr. Conti was named a fellow of the Bureau of Labor Statistics in 2004 and was awarded the Allen Williams Fellowship in Health Economics at the University of York in 2008. In 2008, Professor Conti received a K-Award, as is noted on this slide, from the National Cancer Institute. Today, Professor Conti will be speaking on the topic shown behind me, bending the cost curve in cancer treatment, the ACA and beyond. Please join me in giving a warm welcome to Rina Conti. Thank you very much for the opportunity to come and speak to you today. My interest is really on trying to convey to you the fundamental reforms that are ongoing in the treatment of cancer in the U.S. currently as implemented by the ACA but other subsequent legislation and to think through both the rationales for these types of reforms but also the how. How exactly are these reforms happening? What are the potential intended and unintended consequences of them? And my argument is really that the vast majority of reform has focused on improving access to care but also pulling providers of cancer care into measuring and identifying indicators for quality. But there has been less emphasis on maintaining the incentives for innovation for the treatment of cancer but that is a margin that should be a focus of future reform efforts for the good or for the bad moving forward. Okay as you all know health care spending in the United States is approximately 17 percent of GDP. Currently it is larger than any other OECD country currently as well. Projected U.S. health care spending in less than 10 years will be approximately 20 percent of GDP. That is larger than what we spend on military protection education or any of the other functions that most any other individual functions that in modern economy spends money on. Cancer care spending in the U.S. is approximately five percent of total spending but for commercial insurers such as Aetna, United, WellPoint, etc it actually is almost one-fifth of all spending currently. Therefore the kind of the focus both in the level of spending but also on its rate of rise for both the total policy community but also for commercial insurers and those who are served by commercial insurers is a particular policy in import. In addition the vast majority of individuals who have a cancer diagnosis or are cancer survivors are over the age of 55. Therefore they are covered by the insurance program called Medicare which is essentially a universal program that covers most medical bills for individuals. There is an increased urgency to focus on both the level of spending and also its rise in this population because we know that the emerging aging demographics of the U.S. will contribute significantly contribute to rising cancer incidence of this population and therefore rising spending among the public programs. Not only are cancer care costs high but really they're rising fast. They're rising much faster than overall health care spending and as you note here there's particular components of cancer care notably drugs that are outpacing all other health care costs. Cancer care costs are rising at an estimated two percent growth rate. I'll show you some statistics around what we think spending on cancer drugs the growth rate is but it's because of both the level but really the rise in spending that this focus on bending the cost curve and cancer care has come to the forefront of policy discussions. Why? I would argue that holding constant the demographic the kind of booming demographic changes that we are in the middle of. The big problem is the tension between the truly novel transformational care that has been delivered in the care of certain cancers most notably by the application of new technologies and it's uneven and unequal distribution in the general population or in other words there's the good the bad and the ugly that we must contend with in terms of solving this policy conundrum and we'll probably be dealing with for the next 20 years. The good. We are clearly winning the war on some sorts of some cancers this has clearly been a significant center of innovation and investment by our own cancer center but many other of the noted cancer centers and noted major medical centers across the country. Unlike many other statistics many other areas of health care where you will see statistics such as higher spending does not increase life expectancy. In cancer we actually have some good evidence that yes we spend more money but actually we get more significant survival. Overall across set across 10 cancer sites but also relative to our peers in other OACD countries. Oh I should I should mention that some of this difference is likely due to the the way in which treatments are applied but also likely has to do with the way in which we screen and there are differences between the way we screen for cancer in the U.S. and other other EU countries. Probably one of the most notable success stories in cancer is related to pediatric oncology where there has been a significant rise in survival on for many of the for many of the most prevalent cancers including Hodgkin's Lymphoma and non Hodgkin's Lymphoma. The application of new therapies notably new drugs has clearly made an important impact on survival in the adult setting in fact I would argue that the that much of the increase in survival that we see in that paper comparing and those statistics comparing our survival rates to Europe have to do with the application with the treatment of CML and other blood cancers. However the application of screening but also the application of treatment can be characterized as having overuse misuse and underuse coexisting throughout our healthcare system. I'm going to show you some some statistics related to chemo in its application in the U.S. but this equally applies to screening protocols, diagnostic tests and surgical procedures as well. And then the other component of spending is price and we I think all know that there is astronomical prices being charged for many of these new novel therapies some would say they're even pornographic. Okay so just to give you a close-up on the expenditures the spending on cancer therapies for just a handful of these drugs that are listed here we spent approximately 10 billion dollars two years ago on them. Anti-cancer drugs rank first in terms of spending across all therapeutic categories in the path and according to the last report by IMS Health a data vendor that that focuses on the pharmaceutical industry there's been a doubling in spending on these drugs alone in the past six years. What about their application in clinical practice? In a paper that myself and colleagues published last year we examined the on-label and off-label use of several novel chemotherapies that are currently branded in the U.S. market and what we found was that on these 10 drugs alone we spent 23 billion dollars in 2012 and the off-label use of these chemotherapeutics ranged as approximately 20 to 30 percent of all usage all applications. Not all off-label use is non-indicated or non-clinically supported use what we found was approximately half of the use was supported by some guidelines notably the NCCN guidelines that are really the basis for reimbursement for Medicare but also for commercial insurers but the rest was not indicated and non-supported by evidence and when there was evidence it was actually the evidence was of poor quality has also been noted by my colleague Tina Shea. It's not only in drugs. Palliative care I argue is one of the areas of cancer where it is clear that its application is underused in the population. We all know that palliative care's application in in lung cancer but also in several other cancers has been shown to prolong survival but also improve the quality of life and decrease anxiety and depression among patients but also their families in addition in every single trial that has examined the application of hospice care into the community it has shown to be cost savings both for patients and their families facing very large medical bills at the end of their life but also for the insurers that ensure them and yet we know that the application that the use of hospice and also the the discussion of advanced directives in the cancer population appears to be woefully under underutilized relative to targets that have been established by by guideline committees and then the other prices. This is data taken from my colleague Peter Bach at Memorial Stone Kettering where he estimated median and mean monthly prices for an average indicated patient using these all of these drugs for on label FDA approved indications. We've extended his analysis through 2008 all the way through 2013 and what you see is that median cancer and monthly median cancer costs are rising over time. Maybe this is okay because we're getting more value for the money maybe you would argue that well we pay more but we get more we are surviving better okay maybe when we quality adjust for survival alone these drug prices what we find is that prices appear to still be rising even when you take out that quality of care life is improving part and they're rising on average five percent five percentage points a year higher than inflation which is generally around two to three percent a year during this time period and also higher than any other consumer good that we know of in terms of price available in the US. Maybe art is an example that contradicts that but nothing else that is a normal good. If that's not the ugly news enough there is very significant racial and economic disparities in the use of screening access to treatment the application of treatment and fundamentally survival and other types of outcomes that have been noted in in all types of cancer patients. There's a lot of literature on this but I'm going to summarize using the following just look at the difference between whites and blacks in the death rates for all cause cancer mortality among male patients and female patients and I will summarize from the IOM report individuals with private insurance are more likely to receive recommended appropriate cancer screening and treatment than our individuals who have public insurance Medicare or Medicaid and who are racially and a racial or ethnic minorities or who are poor. This is unconscionable. I think these statistics both this high and increased spending the pornographic prices the misapplication and under application of known quality and cost effective treatments has engendered a very broad and deep questioning of value of our cancer system in the U.S. and we see it popping up now in the popular press this is an article that was published in October of 2013 from the New Yorker which is a widely read newspaper kind of periodical in the metro area extolling the fact that these drug drugs clearly can extend life but in particular the second generation of these drugs have maintained very high prices and that the insurers who pay for them the providers who purchase them and or you recommend them in their patient population and most notably patients are bending and buckling under the pressure of these very high prices. These type of articles also make me very popular at my parents' dinner parties. Okay the IOM has had a series of mediated discussions and debates and articles that have come out of defining value in cancer care since at least 2008 maybe earlier. I'm going to note the most recent one that was released a couple of months ago and that my colleague Tina Shea was a member of the committee that focused on options for reform and why must we focus on reform and also in what areas should we focus on reform and I'll quote cancer care delivery system in the U.S. is in crisis it's often not as patient-centered accessible coordinated or evidence-based as it could be. Before we get into this form specifics I want you to understand and appreciate the political economy of reform and what I mean by that is that the system has evolved for a reason to be what it is today. There are many natural constituencies that are very focused on maintaining the spending that we have and the application of new therapies and new diagnostics to remain increasing contributing to increased costs. I want you first to appreciate the natural constituencies in the use and the application of these new technologies and then we'll talk about the prices. First there are patients although on average cancer survival has increased and there have been some notable gains in certain cancers many many patients that you all see every day face very significant poor prognosis very significant and are clearly facing imminent death providers have to talk to these patients and face death and the reality of not doing much for them every day and also face significant practice revenue on the order of still 50 to 70 percent of revenue for outpatient care related to the application of physician injected or infused chemotherapies. So there's this natural kind of there's this natural kind of impetus to use these therapies if and when they can potentially be helpful. There's also as you all know increased pressure by providers in the outpatient setting to just simply maintain use and actually expand use because you get paid and or you get quality bonuses and other types of incentives for increasing use increasing rv use driving revenue into the institution or into the practice and because of this we believe that this market is fundamentally rife with physician induced demand for these therapies but also that patients are also pushing providers to provide care that may not be indicated at the margin. What about price? Drug companies are clearly monopolists in the branded space they have every they have a temporary patent right to charge monopoly prices until that patent expires 12 to 20 years after they launched the drug. However monopolists can't charge any price for the drug they must be responsive to a price that relates to underlying demand for their product and there is a series of infrastructure in our system that essentially makes them be able to charge very high prices right now. The first is that patients are very well insured at the margin what that means is that they don't they may you may know of patients who face very significant financial hardship related to the care of their cancer. However on average most patients are not paying $120,000 for their care of their cancer in a given year instead they're paying on average somewhere around $500 or less for the treatment of conditions that require chemo. In addition manufacturers have extended very generous copayment assistance programs to patients that are in need and I would argue that this is one way in which they are able to maintain very high prices. In this system it's not patients that can adjudicate value or even push back because they don't know what the price of their therapy is going to be or the cost of their therapy and even if they do they don't really pay that much of it. So therefore value assessment whether this therapy or not is worth the price is actually left to doctors and hospitals and the truth is that most physicians don't know what the price is the cost implications of treating a patient with a given cancer but also there's no comparative effectiveness and there's no cost in coverage for determining both coverage decisions formulary placement or any other way of kind of adjudicating value in this system on a systematic way and in Medicare there are explicit prohibitions that regarding tiered formulary placement for drugs in covered under the medical under the pharmacy benefit under Part D. And commercial insurers are actually very very loath to go against whatever Medicare has decided to cover because in a small number of cases in which they have tried to push back or tried to ration care in the cancer space they have faced very significant public pressure to reverse those decisions. Here are here are IOM's most recent recommendations for reform. They are mostly focused on improving quality of care with the idea being that we can at least try to reduce the level of spending if not hopefully the the rate of spending. You should notice here that there's very limited discussion of the cancer research infrastructure which I'll come back to in a second. The majority of current reform is focused on three on these three areas. I'll go into more depth in them now. As you all know ACA reforms will have a very significant improvement in access to care many but not all of the estimated 11 million newly insured individuals will be young and healthy. But for those with cancer there are several provisions that will clearly have significant benefit. The first being the lifting of the pre-existing clauses for commercial insurance enrollment that was lifted already in 2010. But also the IOM report suggests that individuals in the commercial market suffering from cancer or who are survivors of cancer will benefit and they'll benefit not just from increased access but also for reduced co-payment amounts at the point of service for both the screening for their cancers, the treatment of their cancers, and also the kind of maintenance therapy and maintenance monitoring of their cancers moving forward. In addition all compliant insurer plans with the ACA provisions must include certain defined benefits which include access to preventive cancer care screening for breast for colorectal and for some others at low or no cost. These are clear improvements and these are also clear improvements directed at reducing the socioeconomic disparity and at least access to screening and also access to some sorts of treatment. In addition there has been this really wonderful movement by providers and many commercial insurers to promote what is considered to be valuable care and to unemphasized care that is clearly valuable at the margin which includes promoting adherence to evidence. As you all know most of the commercial insurers, Wellpoint, United, Blue Cross Blue Shield, are all rolling out pathway programs that for indicated cancer or for indicated treatments for for cancer those will probably be live somewhere in the next six to months to a year. This is in addition to the kind of closed panel programs promoted by U.S. oncology where there's very significant and constrained pathways for the care of many cancers in that network that are now going to be linked directly to provider payment in the next six months. There's also these efforts to identify low value screening and treatment which include the choosing wisely campaign by ASCO and other providers. I just want to mention to you that palliative care appears to be one of the important planks of ASCO's choosing wisely campaign moving forward. There are other reforms that are targeted to reduce wasted spending and improve quality of care more generally. I'm going to focus on the ones that that target pharma drugs spending and also physician care for the following reason which is in a recent paper it was identified that that physician and clinical services and also spending on prescription drugs will be the locus of where ACA reforms will likely push out spending trends in the next several years. So actually understanding what what happens with these services in the outpatient setting where the majority of cancer care is delivered is really important to understanding reform. So first there's sequestration. Sequestration has a very significant impact on outpatient cancer care treatment. Reimbursement by Medicare for the use of all physician administered drugs which is approximately 78 to 80 percent of spending on all cancer drugs currently has been reduced by approximately 28 percent since 2011. This is a very significant pay cut on the fact if you recognize that the majority of outpatient service revenue is coming from these drugs and you can see in a recent report that ASCO suggests that in 80 percent of their practices these cuts are affecting the the financial viability of their practices but also other other care that they're providing to patients. I should tell you that approximately a month ago there was a budget deal and the budget deal by Congress did not lift this pay cut to doctors. They had the opportunity they were lobbied very heavily by oncologists by other types of medical specialists rheumatologists etc neurologists that clearly have a lot of practice revenue coming from the use of these drugs it was not extent it was not lifted and therefore I think in many oncology communities we view this as the new normal. This is the revenue that's going to come from the from the application of these drugs. What about quality of care measurement? Under ACA provisions there was a non-mandatory rollout of certain types of physician quality reported initiatives for physicians and physician group practices in the outpatient setting which in the Taxpayer Relief Act of 2012 makes these reporting requirements mandatory for all care in the outpatient setting oncology and other provision. It requires reporting for at least 50% of patients and includes both process outcome satisfaction type outcomes but also real outcomes related to the care of patients. The mandatory reporting requirements for these quality standards has a carrot and a stick attached to it starting in starting now. There's a small bonus excuse me there's a small bonus for the satisfactory reporting of these measures for physician reimbursement by Medicare and there's a significant stick which is asymmetric notice. There's a avoidance of a 1.5 to 2% reduction in your reimbursement associated with non-participation related to this performance and it requires in order to not get the decrement you must report both on these process outcomes and at least one patient level outcome for 50% of your patients. In 2015 this Republic reporting goes live so this is at the individual provider level it's all doctors who practice in the outpatient setting and these will be these measures will be reported publicly and you will be able you will be identified by name and location. There are 110 measures currently in the PQRS as exist as exists now. Six of them if I can count correctly are related to cancer care. The majority of them as you can see a focus on breast cancer, colorectal cancer, and a handful of liquid tumors. I think that these measures reflect honestly the state of what we know about how to measure quality of care in this in the cancer population but it's clear that more are to follow for other cancers in the metastatic and non-metastatic setting. I would argue that quality measurement in outpatient oncology practice is actually at its infancy. We know a little bit about what are markers for cancer care for some metastatic conditions but not for certainly not for all and in particular we know something about breast cancer, colorectal cancer, and non-small cell lung cancer, and some leukemia care but not much for the rest of those cancers. We know what predicts some outcomes particularly in the inpatient setting but not necessarily in the outpatient setting. This will be a focus of major investments by research both by our cancer outcomes group but also by others around the country moving forward no doubt. The 50% reporting requirement is clearly a burden for our institution and for other outpatient providers of cancer care particularly for providers who are facing outcome measurement in a population that faces other types of disadvantage. This can be particularly a burden and it's non-trivial to implement this. And then finally there's the individual level provider and it's public reporting. There is some exemptions you can report these measures at the group practice level but I have been very concerned that at the provider level doesn't actually capture the way in which modern cancer care is provided and that's because as you all know there's been very significant burgeon acquisition and affiliation activity since 2004-2005 among outpatient oncology groups with themselves and also with cancer centers and other hospitals. And because of that the individual physician actually may have very limited control over what happens to a given patient because they're following the kind of dictates or the decisions around pathways that are being accepted and promulgated throughout the clinical practice across multiple providers across multiple institutions none of which are captured under the current PQRS system. It's very clear that the PQRS will be used to tie individual payment for individual types of outcomes in the future but there is no currently way of either quality assessment or reimbursement risk adjustment for dealing with the fact that some institutions or some providers take care of very much more complex patients than others. And myself and Dick Larson were just in Germany where I learned that this is that the lack of risk adjustment is also true in Germany and Switzerland and some other countries but they also don't publicly report outcomes and provide that information to patients to make care judgments on. Okay, what about payments tied to quality? I would argue that the old regime of oncologists in the outpatient setting getting revenue reimbursement or significant revenue from chemo administration is likely going away or at least their days are numbered and it's going to be a food fight in congress and in other places on how that gets done. It is also very clear that in order to make oncologists whole when those reimbursements go away you need to bundle care and reform reimbursement in the outpatient setting more fundamentally to reflect the actual care that's provided both in the initial stages of treatment but also its maintenance and monitoring over time. ASCO just proposed their payment reform for the outpatient setting. There are other groups that are also announcing other proposed reforms notably United who has gone public saying that they're bundling the payment in the outpatient setting for certain types of cancers and have had very significant success in reducing cost and improving quality. We'll see on the evidence on that moving forward. We also know that U.S. oncology is already tying payments to quality of care. In the ASCO setting but also in many other of these proposed reform efforts there's very clear additional payment adjustments for quality for pathway adherence and also for clinical trial participation. I would as a consumer of reform efforts and of proposals moving forward I am very cognizant and aware of exactly what will be included and not included in the bundle. What doctors will get paid for and what they won't be getting paid for moving forward. In all of these reforms that I've mentioned not one of them has mentioned really continuing investment in innovation and all of the stuff that has fundamentally transformed the care of cancer at least on average. Again I'll note the IOM's recommendation that does not mention continued investment. This is reflective of a larger political reality which is that NIH funding is essentially stagnant. I think we'll end up with 3.2 billion dollars in NIH appropriations this year. NCI is also budget it's also stagnant. Again I think the final budget deal will be something around 5.2 billion for the next year. This stagnation in level is a clear budget cut from pre sequester levels of 2011 and also let's just be honest fundamentally alters investments. It alters investments in our institution. It alters investments in the clinical trials cooperative groups that we have both in the US but also in international setting and it alters the discussion that we're having which is mostly around the focus on quantifying the true economic benefit of continued public investment in basic science and in more applied science that we pay for but also there has been this interest in the potential application of economics to assessing value for phase three trials and maybe even for phase two trials moving forward to really trade off where exactly should we be spending our money given that our money appears to be very limited and maybe dwindling over time. Then there's the price discussion. It is clear that pressure is building in the US policy circles for the federal government to take action on the price of on the launch price of new drugs. Cancer drugs are the poster child for what's wrong and therefore you will see discussions like the time article like the New Yorker article like there's a recent article in the New York Times around the prices of drugs and how they're onerous to patients and how how to balance that onerousness with remaining incentives for innovation. Most of these discussions have focused on insurer payment so exactly what Medicare will pay or exactly what insurers will other commercial insurers have paid. There's been a lot of discussion in the popular press about what patients actually pay but I anticipate that as we move into the second phase of reform and up through the election we're going to hear more about this from patients perspective. Also it's very clear that these type of discussions may not alter the next wave of cancer drugs that are entering I think there are 900 cancer drugs that are currently in development but many many of them are about to kind of hit our shores a smaller percentage of the smaller amount than the 900 but what it really does is have a negative effect on continued investment these in the earlier phases of development in really kind of where companies are really thinking strategically about where they're putting their money in phase one settings and in killing projects or remaining projects that may have clear economic benefit moving forward where they can actually make the value case. Also I just want to note that manufacturers are very reluctant to give list price concessions on branded drugs in part because they have there's a lot of discounts rebates and patient assistance programs that are very generous already in the system so and also the US market for prices actually determines all price negotiations for all OECD countries moving forward so you change the prices here it has widespread it reeks widespread havoc for their negotiations moving forward for us and everybody else so what you see here is this kind of tension between wanting the things that are just maybe just about to transform care at least on the margin for some patients but also how do we balance incentives for innovation in the in the branded space I don't know stay tuned for what the discussion is one place where I think we could we already have the tools really to start to reduce prices and maybe spending on these drugs is the promotion of cancer therapies that are generic or will about to go or are about to go generic in the US market. The poster child for this is a matnip a matnip glibic it's about to go off patent in 2015 there's six or even eight manufacturers in the market that are saying that they're going to enter the US market and there is some discussion out there by commercial insurers that they may actually break with medicare formulary restrictions in this market for the commercially insured population and employ generic substitution and or tiered formularies for their commercially insured non medicare patients for certain selected cancer for certain selected patient populations who would be eligible for a matnip as being first line therapy for their cancer we will see how that plays out it's going to be very interesting. One of the reasons that generic entry is really interesting and important here is that there's evidence that the price reduction is very significant over we estimate that for in physician injected drugs it's the price discounted somewhere between 70 and 90% off of reimbursement in the branded setting after two years of being available generic and there's been enough competition in the market this trend holds true for oral drugs too in fact it may be even exasperated in the oral drug market and it also appears to reflect what we saw in the SSRI market for the anti depressants in the past in the past decade where remember we had all this discussions around the potential misuse of anti depressants and all the spending that we were that we were applying to them that has largely gone away because there's been so much generic entry into that market and the take up rate in the general population for those generics has also been very significant the only other thing i want to note here is that although Europe has a pathway for biosimilars for biologically based drugs we have legislation but we don't have a final rule on entry and therefore even if we promote the generic use of drugs in certain cancer markets we can't do so right now for with others particularly some of the most novel drugs in the market and we'll again we'll see how that plays out as these price concession discussions move forward okay so um that's the end of my talk i want to summarize by saying that um again any reform effort has to balance these significant and widespread problems with the application of novel therapies for certain patients and for certain conditions with the investments that we already with the gains that we already have from the investments that we've already made in 30 years of the war on cancer um that current reform efforts really focus on improving access and defining quality of care measurement this fundamentally is going to address many of the challenges that we face moving forward but this is also a huge change for oncology and requires a lot of really smart people in a room thinking about how to address some of these changes that are going to be fair to both physicians and to patients as public reporting gets underway and then the question is where is investment in research as a priority in all of this will price control discussions on the branded drug market be paired with um greater incentives for the use of generics but also promotion or entry into the use of generics moving forward in this market um lastly i would like to note um that we have at the university of chicago a cancer economics group um it is led by tina she there are many of us um that are also participate as we all undergo these changes together there will be many questions regarding how to improve quality of care and also how to improve the efficiency of cancer care and the inpatient and the outpatient setting and we have the existing tools um and the existing infrastructure through this mechanism to really use research um to add to answer those questions so i hope you will use as a resource thank you thanks rina for the great talk so we're going to open up for questions and answers right now and while people are thinking of questions i'll i'll take advantage of the first one here that uh you mentioned on one of your slides of the word value being a key word now and i'm wondering as a health economist what kind of value measures would you use under two circumstances one where you can't include costs because congress doesn't want us to include costs in a lot of different times and the second under conditions where you could include costs what kind of value measures would you use it's a great question um so i think that comparative effectiveness of the existing technologies across all its modalities so drugs and surgery and radiation um is again in cancer is again at its infancy and really we we haven't we don't have the information to arm doctors to adjudicate value across all of these different modalities or across even within modality or even within therapeutic class at the stage for certain types of conditions to make that concrete we have five different tkis now on the market they are all priced somewhere between 90 and 120 thousand dollars per year um there is no as far as i can tell straight head-to-head comparative effectiveness data that can fully inform doctors as to how to treat um cml with all of these different treatment modalities and which is actually going to provide the most cost effective or even quality effective care in a in a reasonable time frame under costs um i um um um um we have infrastructure already in place that assesses um the value of pharmaceutical interventions relative to their costs they're called pharmacy benefit managers and plus insurance providers um i am convinced that although we do not use that technology now or those tools now in the cancer space um there is no reason that pharmacy benefit managers in um consultation with ncc n or other types of provider groups could not go through and start to adjudicate value relative to costs but also negotiate very significant price concessions for some of these drugs particularly when there's a generic already available in the therapeutic space or where there are multiple treatment options to be honest european countries are already doing some of this um and there's no reason why we couldn't do it other than the fact that our our plans aren't structured that way now um the pharmacy benefit which has those formulary replaced has those formulary adjudications isn't um doesn't really apply to cancer drugs and there is no body if you will that sits over and adjudicates value and or costs and or negotiates value and cost with insurer with sorry with with manufacturers for the physician administered drug market unless you're in a u.s. oncology market or you sit in a group that has very significant power to price negotiate already question from an economic standpoint we're starting to see the characteristic approach coming in you know certainly through uh the expert relief act and now through sgr legislation uh what we're looking at sort of 10 percent bonuses or or cuts do we know what level it should be to change behavior because obviously from an institution standpoint there's a cost of doing business right for us to invest to change quality is going to require up from investment so at what point are the characteristics enough and what does the economic literature say that you'll actually change our behavior versus us just saying you know at two percent cut it's not worth it for me to invest in you know a set of nurses to make sure they're calling patients so they didn't end up in the ER so i mean i think it is the question um honestly and i'm looking at my colleague tomorrow canetska who's really the expert in in public reporting of outcomes and also provider comparisons in these outcomes um what i think we know is that we should measure provider performance on things that they can actually control and not on things that they can't actually control and um that the incentives shouldn't be for cost cutting or efficiency shouldn't be so strict um that we actually worry about stinting and care or actually the adverse selection or the the shunning of certain types of patients um one of the things that i that i bring one of the reasons that i bring up the lack of risk adjustment for in in this space is that um we have no mechanism right now for um adjusting quality outcomes based on the severity of the patient um and we all know that we face patients with very significant comorbidities that don't look like clinical trials um or those enrolled in clinical trials and therefore are not going to have outcomes that look that are consonant with the clinical trials data and um so how do we actually make comparisons that are actually apples to apples at the provider level um given this comorbidity or this complexity i i don't know but it's a really it's a really it really is worrisome to me because you can have a lot of bad behavior at the margin um with the um um with the ways in which these measures are conceptualized now is there anything else i should add tomorrow on that a lot of the data she's pretending obviously was important looking at kind of clinical pathways have you looked at next gen sequencing as way to reduce someone's cost and looking at the portable care act at all i'm embarrassed to tell you that i don't know what that those words mean i'm so sorry can you explain yeah so basically you're looking at the entire genome and how the drug reacts for clinical pathways so it's looking more targeted approach to looking at pharmaconetics and what it does is instead of looking at experimental drugs you can target that specific or a disease state like um myelomacy like that and have a drug to create the effect you need to get for investigators um yeah thank you i've thought about this a little bit um my view is that that technology will be a very significant gain to manufacturers and other people who are invested in development of new technologies um but note that when you can predict how a drug will actually function in a patient you should be able to charge more for it and so i think that the the promise of personalized medicine is that we'll have match therapies for individuals and patients but also we are seeing already in some examples where the prices are very high prices are being justified based on that personalized approach um the other the only thing i will mention here is that in theory it would be great to be able to know a lot of this genomic information in order to tailor therapies or even tailor screening programs but that would require an insurance system that actually is invested in patients in the long term and maybe we're getting there um um you know some closed door insurance plans already are getting there Kaiser for example um has been there for a long time um but i think we're gonna live through iterations of insurance um that may not be um so invested in the long-term performance or optimization of therapy even if it's in the patient's interest or in society's interest great job Rina i was curious um about the trade-off between having a patient sort of face more of the costs of some of these high cost cancer drugs um which might lead to less overutilization in some cases might lead to lower prices for some of those drugs versus something which i think is a big policy concern right now which is adherence to therapies and the ability of these pharmaceutical companies to provide patient assistance programs and as well possibly some public assistance programs to reduce the cost of care do you have any sense is there a way to thread the needle and get sort of the perfect trade-off there between those some of those two competing goals of reducing costs or increasing the cost of care and implication for quality and cost um thank you for the question for briefs who's also a health economist who also studies cancer care i um so basically there's a tension between rationing on the demand side by making patients pay more um for certain types of care and rationing on the supply side through physicians um choice insured choice coverage and reimbursement decision making um i um and there's a reasonable i am was um i am very concerned that patients are already facing very high costs um for the for the for their cancer care therapy and there's some recent evidence that adherence rates even for the treatment of um of cml where um again a matinee has really transformed this disease to be a chronic condition you can live 20 years with this disease now um it is very low with the existing incentives in place um so i i guess i really worry that we want patients to know something about the cost of their care but we also may not want um the care to be so prohibitively expensive to them um or for them to really be the ones who have to adjudicate value here they really don't have the tools to do it um i would argue that doctors and hospitals um other types of professionals um and honestly again um the apparatus that already exists um in pbms and gpo's know much more about how to adjudicate value and how to price negotiate than patients do oh i should also argue that in europe um there is no co-payment for cancer care there's no co-payment for cancer care patients on the margin are completely insured they are at the mercy of their doctor their health care system to make the choices for them and there's no sense that they have a role to play in adjudicating value they get what doctors and the health system thinks is i think is the most appropriate care um i just wanted to ask for clarification on three specific statistics um that you use in your presentation the first one is that you said there were 1.6 million cancer diagnoses and the question is whether that's an incidence number or a prevalence number um i'm i'm sorry can you repeat the question um you said 1.6 million cancer diagnoses is that an incidence number per year or is that a prevalence number of the total number of people in the country? I think it's an incidence number and it's actually not my statistic i took it from the iom report. The second one is um you showed the difference in survival between new yorkian countries and united states and the question is do you know how much of that is due to perhaps an earth that most despises the united states? Yeah it's a great question um so i published that paper with my colleague Tomas Phillipson because at the Harris school and we had a lot of arguments about how to actually interpret that difference um and i will not fall on my sword in front of you to say that even though we did some falsification test to make sure that we're trying we're trying to compare incident diagnosed cases by stage and by line across the u.s and the other oacd countries that were in our report it's clear that the detection rates are very different um it's also clear that just the availability of screening is very different across these different countries and it's very hard to statistically adjust for all of that um in our analysis. So in the end are you convinced that the difference is true or not? I'm convinced that it's probably not real for CML and the treatment of some pediatric cancers but maybe realer for metastatic non-small hauling cancer and a handful of other cancers. And the last statistic that i wanted to ask you about um actually there's two more um one is that um you said that with the pqrs requirement it's with respect to half of patients is that with respect to half of patients patients visits or with respect to half the people that you actually see during the course of the year many some of them you see many times. Yeah it's half of patient visits and there's actually some eligibility requirements regarding the patients. This is a requirement that's not only about cancer care it's a requirement for all outpatient care. So i can i provided the reference for you to look up this specifics. And i guess the last one is the cancer spending um you divided into 24 percent for drugs and 22 percent for physicians and 54 percent for hospitals and that doesn't leave anything for nursing homes or equipment or anything else. Right so that's not my statistic that's united that's the head of united oncology statistic and that's his reporting i'm assuming that hospice care and nursing home care is in the hospitalization rate and i don't know about the rest because it's again it's not my statistic. There's a policy questions and via questions in controlling the cost of cancer care but there's also public attitudes and culture and it seems to me most of us especially those who are not physicians and not knowledgeable we equate excellent care with really intensive and expensive care and that there's a cultural dimension to to cancer care that has to somehow be addressed and i just wonder if you could comment on how we might have a different kind of public conversation about how we should take care of our loved ones with cancer that's a more humane and disciplined approach than then the families are often pushing for when when they're in places like like ucmc with the cancer diagnosis. Yeah thank you um i mean honestly i think our culture is the heart of the issue here um in many ways that in it's it's our it's patients cultural orientation to intensive care um and really a lack of understanding or appreciation for the importance and value of palliative care at the end of life which i think um my colleague tom smith has done a very beautiful job of articulating um in a variety of different cancers and in a variety of different control trials where he shows benefit and also cost savings um there's also our own institutional cultural biases which are to treat intensively and to do the new thing and to think that we should always be on the cutting edge all the time um you know we have an experimentalist mindset um and that has provided great advance but it also um it i think many of these changes signal for good or for bad um kind of a less value placed on experimentation on innovation at the expense of public payers for your sustainable efforts um i guess a little more of a kind of a raw economics question i mean you mentioned then in the recent budget deal the 28 percent reduction um has not been removed and if you assume that that continues for provider payments yes or an h okay for provider payments 28 so if you i guess the first question is have you contemplated that if that is maintained and is extended into the market are you expecting any type of potential reduction in some of these launch prices over time or if you haven't contemplated it yeah thank you um this is actually what i spend a lot of my time thinking about right now um let me unpack that there are 28 percent price reduction um in two ways um the first is that's a reimbursement price that's the level that medicare pays for the application of a drug that is not the acquisition price that a doctor or a hospital pays for those drugs okay and so basically what we're seeing is that revenue is declining from reimbursement but um if i was a provider facing that level of reimbursement change that would potentially induce some unanticipated behavior on my part which is to go out and look for much lower acquisition cost discounts for these drugs in the market to maintain my revenue we are seeing that in the market we've been seeing that since 2006 at least and probably really ramped up in 2007 2008 um with consolidation between certain types of out patient practices and certain types of hospitals that get very deep discounts on these drugs um on the order of 70 to 90 percent and so now i think more than 50 percent of oncology practices have some sort of merger and affiliation with one of these types of institutions um so think of it as providers have responded and they're moving and they are altering their the way in which they actually get these discounts will that actually have the desired effect on prices no um and that's because manufacturers knowing that they have to increase the amount of money um in the discounted price have every incentive to raise their list price and therefore be made hold one way or another so it is it's perverse um and it's the wild world of you know of u.s pricing policy thank you very much for being here one of the iom recommendations that was listed on your slide was team based care can you comment on any innovations in that area that are that you see as particularly relevant right now um so so honestly um that dimension of quality improvement is not really what i have focused my research on um i can tell you that there is some innovation at our institution related to team based care in the inpatient center david melzer has a has a cmmi grant where he's looking at um continuous um care at the locus of one provider one set of providers which includes patients with cancer but again treated in the inpatient setting i don't know how it's being applied in the outpatient setting it's an important question now you got the world's expert here last chance you talked about price control pharmaceuticals at least the initial price what deal with the pharmaceutical companies cut on the aca arrangement that might encourage or prevent such price control um i think that okay so um i think manufacturers know that they're already on the hook for um funding some part of the closure of the donut hole in medicare and this is forever this is not about cancer this is about for everything and so manufacturers already are anticipating that they will be the large underwriters if not the sole underwriters of the donut hole being closed for all part d drugs um which include cancer but cancer is actually a big spender but it's not the only spender in that market um and really the question is will manufacture what will manufacturers do knowing that they are already on the hook for this for funding financing this they already want give lots of patient assistance program program support that is apparently very generous and they're facing very significant discounts and rebates for acquisition prices already which are kind of in this unintended consequence of the existing system you know what are the i mean so i think that they have some political pressure to temper these prices but also if they can show value and i mean either there's a personalized therapy for cancer or they save money from inpatient costs or other types of costs i think that these prices are going to continue is the question back yeah quick question i was here recently for a new milani's presentation on medical innovation and i'm a nurse by background with the recognition that you know value and willful neglect on patient side or provider side might make the distinction of why you have different outcomes the provider doesn't give the drug that they should have or the patient doesn't continue the practice that they should have irrespective of the other complexities so that from a background standpoint the question that i wanted to ask is have you been working with anoop and his innovation value space when because when i look at this to me they match in so many different ways so i want to thank you so anoop is a good colleague of mine and we sit on opposite sides of the political debate around many things and so i am a little bit aware of the of anoop's work in this area and actually many of his papers are actually seminal in it for my work um but um i would say that um i am very focused on providing on getting reforms that actually provide patients with true value here and i'm i'm less worried about insurers and manufacturers they'll find their own way you mean tax tax exports in a way that we already do not um yeah it's a good question um okay so um the vast majority of drugs and cancer that we consume probably half of them are made in the u.s and the rest of them are made off-seas uh overseas and if they're not made over if they're not the final finish is made overseas they're actually the ingredients are made overseas so it's a little exports may not be the way here or taxing exports may not be the way but i think your question raises some an important another important point which is that we pay high prices here and in some sense we subsidize the rest of the oacd countries right but the subsidy um the the prices that we pay go for continued investment in innovation moving forward um i think there remains a willingness to invest in that types of innovation and a willingness of the u.s population to pay some prices for these continued things whether what we do in terms of direct price controls or indirect pricing controls will really matter both for what we get and what other countries get um but you shouldn't jump to conclusions that um just because we don't centrally price negotiate doesn't mean that we actually don't get pretty good deals on some of these drugs in fact again dick and i were just in europe and i learned that to signa which is a recently recently approved branded tki um which i think is i think the monthly cost is somewhere around 8800 per month um in in germany it's 9800 a month and in italy it's 7800 a month so actually germans are paying more um than we are for that drug um so um yes we subsidize that is true but um there is some modification of price for these branded drugs across the board um that isn't shared in other countries again they ration on the supply already on this last point richard epstein is often worried about parallel imports you sell a drug in another country for a lower price in your own country and the drug comes back to your market yeah right so in europe european countries are really worried about parallel imports and in fact there's this whole sequence of that who actually negotiates for these drugs because they want to make sure that they kind of get the best deal but it's not so much the best deal manufacturers where that it's not so much the best deal there'll be this parallel importing um i don't i mean the only way that i've heard this come up is why can't we just import can't really expensive cancer drugs from canada um and my view is yes you can but drug companies will actually raise prices in canada um if they recognize that the u.s market is consuming um and then i don't know it gets really complicated so i don't know thanks very much rena thank you