Payer Insight: It’s NOT All About Drugs

Payers put drugs at center stage for cost control initiatives in oncology. This year’s report, however, illustrates that payers are also looking at other costs.

• Direct drug costs (orals and infusions/injectables combined) equate for ~half of Payers’ focus for controlling costs; nearly all Payers are also targeting other categories to some degree:
  • Medical oncologist or hematologist/oncologist professional services (not including drug costs; 0-35 points across respondents; avg. 14 points)
  • Infusions performed in hospital systems with high chargemaster reimbursement vs community infusion clinics or home infusion (0-60 points across respondents; avg. 16 points)
  • Emergency room/department use for managing drug side effects (0-60 points across respondents; avg. 14 points)
• PBMs prioritize controlling costs of orals significantly more than infusions/injectables:

“Drug cost is our primary concern. We don’t try to control provider services costs, but we do have site-of-care programs.” – national vertical payer

A real-world example illustrates the factors that drive Payers’ drug cost focus in oncology:
An infused oncology product currently on the market costs ~$190,000/year. It is reported that ~20% of patients starting this therapy visit the ER/ED over the first 12 months of using it. The average cost for an ER visit for a patient with private insurance in 2019 was $2,453 (Kaiser, 2022). Using this ballpark average, even if the first-year ER/ED visits prompted by the infused oncology product were somehow prevented entirely, the savings would be arguably irrelevant: only 0.3% of the drug cost alone (ie, not including office visit costs for infusion/etc).

For further insights on the oncology sector, check out our other latest articles at https://www.hmpmarketaccessinsights.com/insights. From the Enhancing Oncology Model and integrated delivery network pharmacy performance metrics to payer pathways, we are sure to cover a topic that meets your needs!