Insight ONCOLOGY. Drug Class. Background, new developments, key strategies INTRODUCTION. Incidence of cancer types per year

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1 Drug Class Insight ONCOLOGY Background, new developments, key strategies INTRODUCTION Over 1.6 million Americans will be diagnosed in Total annual costs for cancer: $216 billion, including $87 billion in direct medical costs. 1 Eleven of 12 cancer drugs approved in 2012 cost more than $100,000 per year. 1, 2 Normal body cells grow, divide, and die in an orderly fashion to allow us to clear away worn-out cells or repair injuries. Cancer is the general name for a group of more than 100 diseases which start when mutations damage cellular DNA. These mutations allow damaged cells to grow in an unrestricted way that can form tumors and spread. 4 In most cases, cancer cells form a solid tumor mass. Other cancers, like leukemia, rarely form tumors. Instead, these cancer cells involve the blood and blood-forming organs and circulate through other tissues where they grow. 4 Cancers are complex and they have different mechanisms that make them grow. This is why cancer patients need treatments that are highly targeted for their kind of cancer. 4 Incidence of cancer types per year Melanoma 76,690 Non-Hodgkin Lymphoma 69,740 Kidney 59,938 Leukemia 48,610 Prostate 238,590 Breast 234,580 Lung 228,190 Colon and Rectal 142,820 Source: National Cancer Institute: Common cancer types for Bladder 72,570 Thyroid 60,220 Pancreatic 45,220 Endometrial 49,560 Page 1

2 HOW COMMON IS CANCER? As of January 1, million Americans have or have had cancer 5 New cancer cases expected to be diagnosed in 2014: 1,665,540 5 Lifetime risk of cancer in US: 5 Cancer Incidence: % Men Women: 1 in 3 Men: 1 in 2 The slightly lower overall incidence reflects the success of antismoking campaigns. Additionally, while cancer incidence is up among children, their mortality rate is down, thanks to increasingly successful treatments. 5 No Change +8% Women Children under 19 ADVANCES IN TREATMENT True cancer cures began with the introduction of anesthesia-enabled surgery. However, surgery was only effective for tumors small and localized enough to be completely removed. 6 Few early cancer patients had any hope of long-term survival. The 20th century revolution in cell biology and genetics unlocked many new treatments. 6 Now, we have a new generation of chemotherapy drugs that target specific genetic pathways. These drugs, manufactured using biologic rather than chemical methods, are usually referred to as specialty medications, are typically genetically engineered variants of naturally occurring biological substances. 7 Specialty drugs play a key role in treating complex conditions like cancer and are an increasing concern for employers because of their extremely high cost. 7 Cancer drugs are now the largest single treatment class by spending in the US. 8 Better odds With improved treatments (especially for skin cancers) and diagnosis we have seen sharp jumps in five-year 9, 10 relative survival rates for cancer (when adjusted for normal life expectancy). 25% 5 year survival: % 5 year survival: % 5 year survival: Page 2

3 THE HIGH COST OF CANCER The cost of cancer is growing rapidly for both the medical and pharmacy components. Adjusted annual direct medical spending on cancer in the United States has doubled in under 20 years, while spending on cancer drugs is rising twice as fast as 9, 10 for health-care costs overall. For example, in the 1970 s the standard treatment for breast cancer was an infusion comprising three different drugs. It cost about $ By 2010 the average cost per-dose of cancer medications was more than $10,000 per month and today it is common to see cancer 12, 13, 14 treatments costing over $100,000 per year. Rapid Rise 15 Median Monthly Price between : +1330% Monthly Price of Treatment $15,000 $10,000 $5,000 $ Year of FDA Approval Source: Memorial Sloan-Kettering Cancer Center; Cancer Spending by Category: $86.6 billion % Pharmacy 12.0% Outpatient Medical Drug 52.3% Outpatient Medical 20.3% Inpatient Source: IMS Institute for Healthcare Informatics: May Outpatient medical drug includes drugs injected or infused in a facility, office or home health setting. 4-Year Trend in Mix of Cancer Spending by Benefit Type; Total cancer expenditures 77.0% 77.0% Medical benefit Pharmacy benefit 72.6% 73.2% 4-Year Trend in Mix of Cancer Spending by Benefit Type; Drug only cancer expenditures Medical benefit Pharmacy benefit 59.2% 62.3% 59.3% 60.7% 23.0% 23.0% 27.4% 26.8% 40.8% 37.7% 40.7% 39.3% Source: 2013 Genentech Oncology Trend Report Source: 2013 Genentech Oncology Trend Report Page 3

4 COST DRIVERS The cost for cancer care will continue to grow faster than the rest of the medical sector over the next few decades at least. 17 The most important cost driver is the increased number of people living with cancer. 18 Driven primarily by an aging Baby Boom cohort, we can expect at least a 30% increase in new cancer cases by 2030, plus an increase in the total number of people who have ever had cancer by 45% by % increase in cancer prevalence by % increase in cancer care spending by 2020 Simple demographics, plus only a modest increase in the cost of care, will yield total cancer spending 18, 19 at least 66 percent higher by Medication costs High prices for new oncology medications are also a very important part of increasing cancer costs. 9 Cancer drugs account for approximately 25 percent of total spending on oncology care, with drug costs rising between 15 and 20 percent per year. 20 The illustration below shows the impact of new drug prices as patients begin therapy on newer, more-expensive therapies as first-line therapies instead of older, less costly oncology medications. 18 Cost change, standard 8 week regimen for metastic colorectal cancer 20 48,000% $ per 8 week regimen $63 $12K Original regimen cost pre-1998 $21K $30K Each change to a newer drug pushes costs up : 5 new drugs join standard regimen Page 4

5 NEW DRUGS IN DEVELOPMENT With nearly 1,000 new drugs in the research pipeline (meaning in clinical trials, not just in the laboratory), oncology is the most crowded area of drug research 21 New drugs are leveraging our understanding of cell behavior to disrupt the ability of cancer cells to grow or reproduce and on the promising field of nanotechnology 23, 24 to carry anti-cancer medicine directly to cancer cells. Cancer immunotherapy One of the most exciting areas is focused on using the body s own immune system to fight cancerous cells. In fact, in December of 2013, Science magazine selected cancer immunotherapy as its Breakthrough of the Year. 25 In doing so, they cited not only several successful clinical trials but noted also that immunotherapy represents a very basic shift in how we will fight cancer going forward. High tech; high cost Immunotherapy appears to hold great promise for highly effective new cancer treatments. 26 However, employer plans may need to brace for a significant financial hit: these drugs will be very expensive. Experts are predicting that within 10 years cancer immunotherapy drugs will be used to treat up to 60 percent of all cancers at a cost of $35 billion per year. 28 For comparison, that amount would be over $10 billion more that the cost of all oncology drug spending in Immunotherapy News Early excitement 88% remission In a 2014 study, patients with acute lymphoblastic leukemia got genetically modified versions of their own immune cells. 88% achieved complete remission. Most patients relapse following conventional treatments, which disqualifies them for a bone marrow transplant the only curative option. After immunotherapy, 44 percent of patients successfully received a bone marrow transplant. Memorial Sloan Kettering Cancer Center: Cell Therapy Shows Remarkable Ability to Eradicate Cancer in Clinical Study. February 19, Visualizing a breakthrough This illustration shows how the immune system s own T-cells, or killer cells are removed from the patient and genetically engineered to help T-cells recognize cancer cells and destroy them. Inactive T-cell Activated T-cell Activated T-cell Tumor cell Inactive T-cells are removed and exposed to bioengineered antigens (green). The antigens activate the T-cell to recognize cancer cells and attack them. In addition to attacking cancer cells immediately, some activated T-cells will continue to produce an anticancer immune response to keep cancer from coming back. Page 5

6 A COMPREHENSIVE APPROACH TO MANAGING ONCOLOGY COSTS Synchronized Specialty Pharmacy Optimizes Results The combined size and expertise of Rx and UnitedHealthcare extends across all benefits. We leverage multiple strategies that lower total health care costs while helping members make the best use of their benefits. Total Cost Control Drug cost and choice Right benefit (medical or pharmacy) Appropriate use Total Care Coordination One care team Physician coordination Adherence support TOTAL COST CONTROL Every specialty class every drug requires a unique, thoughtful management approach. Of course we offer all of the standard PBM tools, like utilization management, tiering and clinical programs, but that s just to start. Here are just a few examples of some our innovative cost control strategies within the oncology class. Smarter drug reimbursement incentives Under the medical benefit, our chemotherapy fee schedule pays physicians more to use less expensive but clinically similar treatment options. New oncology reimbursement pilot Sample costs; course of treatment for breast cancer: Medication Employer Cost* Provider Revenue Generic (carboplatin) Brand (Herceptin) $1,049 $967 $2,513 $452 * For illustration only. Not a guarantee. Final employer cost may be affected by other factors, e.g., employee contributions. The existing payment model is flawed because it pays oncologists more when they use more expensive drugs. We have been piloting a new model that pays oncologists up-front for an entire cancer treatment program, including drugs and clinical care. Separating cancer payment from drug selection can help reduce oncology care costs and improve the quality of care by basing payment on the overall treatment of the patient. Regimen Guideline-Based Coverage There are thousands of different treatment paths oncologists can choose from when treating a patient. We follow the National Comprehensive Cancer Network (NCCN) guidelines for several types of cancer and only provide coverage when providers follow these widely accepted and proven pathways. This ensures the member gets the best care possible at the lowest cost. 1 in 4 cancer patients have treatment plans that do not conform to evidence-based cancer care Inappropriate deviations from the standards of care for cancer cost more than $25,000 per patient Source: Poster presented at 2013 ASCO Annual Meeting in Chicago, IL. The Cost per Patient of Deviations from Evidence-based Standards of Oncology Care. eviti, Inc. Page 6

7 TOTAL CARE COORDINATION We use the power of synchronization to surround oncology patients with the power of ONE. ONE streamlined member experience comes from ONE common platform supporting ONE care team to deliver lower cost and better health. ONE Experience ONE System ONE Team Streamlined touch points for a better experience 1 to 1 consultations Reducing costs by promoting lower cost medications, mail service, and care management programs Making the most interactions by engaging on health and savings opportunities 360 total health view of each member (Medical, Rx, lab, wellness) Real-time data vs. monthly feeds 64% of health and savings opportunities driven by pharmacy data Up to 30 days faster engagement on health and savings opportunities Pharmacists, nurses, case managers and member services share information and expertise. Depression screening and referrals Driving Value with Pharmacist Medication Consults All of our members have access to pharmacists who are embedded on the care team. They can conduct medication consults with consumers identified as at risk. Pharmacists use integrated tools to view each patient s medical history and automatically calculate their personal pharmacy risk score along multiple factors. They can also receive automated alerts for potential cost savings by switching to lower-cost alternatives. Medication-related opportunities by category 22 Medication Non-Adherence 11% Medication Gaps 6% Cost Savings 49% Drug Safety Concerns 34% Drug Safety Concerns: i.e. Drug-OTC and drug disease interactions Cost Savings: i.e. Lower cost alternatives, mail utilization, generics Medication Gaps: i.e. Missing med., inappropriate dose, ineffective drug ONE System for earlier interventions Systems that rely on monthly claims data feeds to identify patients who need cancer support programs are usually too late to be useful, since members aren t flagged until 3-4 months after the initial cancer claim. Page 7

8 MANAGING ORAL ONCOLOGY MEDICATIONS A recent study published by UnitedHealthcare and Rx highlight specifically examined whether cancer patients who used specialty pharmacy services experienced improved oncology medication use and reduced overall health care costs compared with members who used retail services. 4 year study demonstrates superior outcomes for Specialty Pharmacy Program vs. Retail Pharmacies $13,091 Savings per Rx Specialty Pharmacy Program member 1st year program implemented $84,105 $97,196 Retail Patients Specialty Patients Pharmacy Benefit Savings Medical Benefit Savings Increased oral oncology Rx use (from ($2,891) increased adherence) Decreased non-oral oncology Rx use $542 Published in Am J Benefits. 2012; 4(4): Pharm Specialty program outcomes based on UnitedHealthcare commercial membership 2007 to Savings based on members in the Designated Specialty Pharmacy program vs. those not in the program. Individual plan results may vary. Office Visits $850 ER Visits ($41) Outpatient Hospital $11,852 Inpatient Hospital $2,533 Other Medical $247 MANAGING INJECTABLE ONCOLOGY Medical Benefit: Oncology Medical Spend 41% Oncology 59% Other Oncology is our top category for medical spending, so we have a comprehensive range of strategies retain: Physician fee schedules Nationwide specialty pharmacy National contracts with infusion providers Medical benefit management capabilities including: - Utilization management, - Prospective prior-authorization - Claim edits for dosing, utilization, billing units Site of service steerage Results Our injectable oncology strategies save an average of $110,000 annually for a 10,000 life group. * * Medical cost reduction based upon UnitedHealthcare Legacy Fully Insured Utilization Page 8

9 References 1. American Cancer Society. Cancer Facts & Figures National Cancer Institute. Cancer costs projected to reach at least $158 billion in Available at: CostCancer2020. Accessed 2/10/ Blood Journal. The Price of Drugs for Chronic Myeloid Leukemia (CML); A Reflection of the Unsustainable Prices of Cancer Drugs: From the Perspective of a Large Group of CML Experts. Available at: Accessed 02/10/ American Cancer Society: What Is Cancer? Available at: org/cancer/cancerbasics/what-is-cancer. Accessed 02/10/ National Cancer Institute. Questions and Answers: Annual Report to the Nation on the Status of Cancer, Available at: gov/newscenter/newsfromnci/2013/reportnationdec2013qanda. Accessed 03/11/ American Cancer Society: The History of Cancer. Available at: cancer.org/cancer/cancerbasics/thehistoryofcancer/the-history-of-cancercancer-treatment-chemo. Note insertions below HSC Research Brief No. 22: Limited Options to Manage Specialty Drug Spending. April Available at: Accessed IMS Institute for Healthcare Informatics Report: Medicine Use and Shifting Costs of Healthcare. April Available at: Reports/Secure/IIHI_US_Use_of_Meds_for_2013.pdf. Accessed Thomara Latimer Cancer Foundation: Cancer Facts. Available at: thomlatimercares.org/cancer_facts.htm. Accessed 02/10/ National Cancer Institute: SEER Stat Fact Sheets: 5-Year Relative and Period Survival by Race, Sex, Diagnosis Year and Age. Available at: gov/csr/1975_2010/browse_csr.php?sectionsel=2&pagesel=sect_02_table.08.html. Accessed 02/10/ Elkin EB, Bach PB. Cancer s next frontier: addressing high and increasing costs. JAMA. 2010;303: Nature. Immunotherapy s cancer remit widens. 28 May Available at: Accessed Health Affairs 2012 Apr; 31(4): Changing physician incentives for cancer care to reward better patient outcomes instead of use of more costly drugs. Available at: Mayo Clinical Proceedings October; 87(10): The High Cost of Cancer Drugs and What We Can Do About It. Available at: nlm.nih.gov/pmc/articles/pmc /. Accessed 02/10/ Memorial Sloan-Kettering Cancer Center; Monthly and Median Costs of Cancer Drugs at the Time of FDA Approval, Available at: Accessed 1/22/ SEER Stat Fact Sheets: Percent of New Cases by Age Group: All Cancer Sites. Available at: Pew Research: Baby Boomers Approach 65 Glumly. Available at: pewsocialtrends.org/2010/12/20/baby-boomers-approach-65-glumly/. Accessed National Academy of Sciences, Institute of Medicine: Delivering High-Quality Cancer Care: Charting a New Course for a System in Crisis. Available at: Accessed Oncology Journal. The Cost of Cancer Care: Part I. October 23, Available at: page/0/1. Accessed Bach PB. Limits on Medicare s ability to control rising spending on cancer drugs. N Engl J Med 2009; 360: February 5, Available at: Accessed March 3, UnitedHealthcare fully insured business, 1/1/2010 6/1/ PhRMA: 2012b Report. Medicines in Development: Cancer. 24. Plunkett Research. The State of the Biotechnology Industry Today. Available at: industry-trends 25. Science 20 December 2013: Vol. 342 no pp Available at: Accessed American Cancer Society: Immunotherapy. Available at: org/acs/groups/cid/documents/webcontent/ pdf.pdf. Accessed Flying Kite. Inventing the Future: Working towards the next cancer breakthrough. March 12, Available at: features/adaptimmune aspx. Accessed Cancer Immunotherapy Named Science Breakthrough of the Year. Available at: html. Accessed IMS Institute for Healthcare Informatics: Declining Medicine Use and Costs: For Better or Worse? May For more information about how you can mange oncology costs, please contact your Rx representative Circle, Eden Prairie, MN and the logo are registered trademarks of. All other brand or product names are trademarks or registered marks of their respective owner. Because we are continuously improving our products and services, reserves the right to change specifications without prior notice. is an equal opportunity employer. M33018-G 10/ All Rights Reserved. Page 9