Appl Health Econ Health Policy DOI 10.1007/s40258-014-0130-9

CURRENT OPINION

Health Technology Assessment of Cancer Drugs in Canada, the United Kingdom and Australia: Should the United States Take Notice? George Dranitsaris • George Papadopoulos

 Springer International Publishing Switzerland 2014

Abstract Cancer remains a global problem, with 7.5 million deaths annually, making it responsible for approximately 13 % of deaths from all causes. Cancer also becomes more prevalent as the population ages, making it a major health policy challenge for many countries around the world. However, the encouraging news is that the number of cancer-related deaths has stabilized in many countries. At least part of this success may be attributed to improved diagnosis, early intervention strategies and the development of a newer class of anticancer agents, collectively called ‘‘targeted therapies’’, that are more specific in inhibiting key pathways in tumour genesis. However, these newer drugs are associated with a higher cost. As a result, expenditures for agents and cancer in general have been rising rapidly, far beyond the rate of inflation. Some view this as threatening the very health care systems themselves, which are integral to the modern social contract. Different countries have adopted unique mechanisms to facilitate patient access to these newer agents, with the intent of ensuring value for money and sustainability. In this review, cancer care policies and mechanisms for patient access to new drugs will be discussed and compared between select countries. Given its position as a country that allows free pharmaceutical pricing and multipayer health insurance, the USA will be the reference country and will be compared with the UK, Canada and Australia, three countries with socialized health care systems and active health technology assessment programmes. This article is part of the Topical Collection on The influence of Health Economists on Health Policy. G. Dranitsaris (&) Augmentium Pharma Consulting, 283 Danforth Ave, Suite 448, Toronto M4K 1N2, Canada e-mail: [email protected] G. Papadopoulos Emerald Corporate Group Pty Ltd, McMahons Point, Australia

Key Points for Decision Makers The public health care systems of the UK, Canada and Australia have rigorous health technology assessment (HTA) programmes that consider clinical safety and efficacy, price and overall value before a recommendation for reimbursement is made for a new cancer drug. In contrast, the public health care system of the USA does not conduct an HTA before reimbursement decisions are made, nor does it consider price or overall product value. The product is simply reimbursed following regulatory approval by the Food and Drug Administration. The US health care system is currently undergoing a rapid transition through the Affordable Care Act (ACA), which will have an impact on cancer drug access and affordability. The ACA may introduce some aspects of HTA currently used in these other countries in order to reduce costs and improve efficiency. Therefore, the USA should take notice of the established HTA processes of the UK, Canada and Australia that are used to assess the value of new cancer drugs.

1 Introduction Cancer is a major health care concern. Globally, there are approximately 7.5 million cancer deaths annually, which is approximately 13 % of deaths from all causes [1]. Cancer also has a major socioeconomic impact. The worldwide cost of premature death and disability due to cancer

G. Dranitsaris, G. Papadopoulos

(including direct and indirect costs) was estimated to exceed US$895 billion annually [2]. The populations of many countries, especially in the developed world are also aging. This is of concern to health care authorities because it has been estimated that 60 % of all new cancers occur in people over the age of 65 years [3]. In addition, cancer is now considered to be a chronic condition because some patients with advanced-stage disease can live for 5–10 years after the initial diagnosis [4]. From the perspective of cancer centres, these factors are causing sharp increases in the number of patients seeking treatment. As a result, health care systems around the world are being strained as they attempt to meet the needs of patients. Pharmaceuticals represent an important component in cancer care and have been a major contributor to improved survival rates in disease sites such as breast, lung, prostate and colorectal cancer [5–8]. However, the cost of pharmaceuticals, especially in oncology, is increasing more rapidly than any other component of health care [9]. As an illustration, the current annual costs in the USA of nilotinib, dasatinib and ponatinib, drugs that are very effective in patients with chronic myeloid leukaemia, range from US$115,000 to US$138,000 per patient. Compare this with the first-generation drug imatinib, which cost US$30,000 per year when approved in 2001, but whose cost has risen to US$92,000 per year [10]. Rising cancer drug costs have now become a global concern as health care systems struggle to offer modern treatments within a limited health care budget. Some view this as threatening the health care systems that are integral to the modern social contract itself [11]. Health care authorities seek to satisfy several key mandates, which include containing health care costs, capitalizing on immediate or near-term savings to health care budgets and identifying measures that are easy to implement both practically and politically. The main components of health care costs consist of expenditures for hospitals, physician services and pharmaceuticals. Of these, curtailing spending on drugs is the easiest and perhaps most politically acceptable target for cost-containment initiatives. Reduction in drug spending is certainly easier to implement than reducing nursing staff, eliminating hospital beds or reducing fees for physician services. There are several approaches that payers from developed countries around the world use to reduce, or at least contain, the rising cost of drugs. These include (i) simply not approving new drug products for reimbursement; (ii) employing government-mandated price reductions; (iii) allowing new drugs to be used on a limited basis through usage criteria or guidelines, or by shifting the cost of new drugs to other payers (e.g. insurance companies), introducing user fees (e.g. patient co-pay), establishing mechanisms that discourage use (e.g. bureaucratic barriers), and

employing risk-sharing agreements where payers receive rebates for patients who fail to benefit from therapy [12]; and (iv) only approving new drugs for reimbursement when there is compelling evidence that the agent offers sound health outcomes for the associated incremental cost. Economic evaluations and Health Technology Assessments (HTAs) are most commonly associated with the latter two approaches. Therefore, the current paper will review cancer drug policy in the USA and compare it with more socialized health care systems like those in Canada, the UK and Australia.

2 The Role of Economic Evaluations in Oncology In many countries around the world, pharmacoeconomic evaluations (PEs) have played an integral role in the formulary decision-making process for cancer drugs. The basic premise behind such evaluations is to compare the costs and consequences of alternative pharmaceutical interventions, and to determine which treatment offers the best value for limited resources. There are several methods available to evaluate economic efficiency, and these include cost-minimization, cost-benefit and cost-effectiveness analysis [13]. With respect to drugs to treat cancer, cost-utility analysis can be complex but is the preferred method because it considers cost, overall-survival and quality-of-life differences between two or more competing therapies. As these studies estimate health benefits [in terms of quality-adjusted life-years (QALYs)] and incremental costs for a wide range of health and medical interventions, they enable decision makers to identify optimal opportunities to invest a nation’s health care budget. What is evident over the past 20 years is an increase in the number of cancer-related economic evaluations appearing in the medical literature. To track the number of HTA reports, a database was created in 1998 through a collaborative effort between several HTA agencies. The database is maintained by the Swedish Council of Health Technology Assessment and contains publications and projects from international HTA organizations covering 58 agencies and 21 countries. From 2000 to 2004, approximately 3,933 HTA reports were published, with 2002 being a peak year [14]. For the year 1991, there were approximately 50 cancer-related PE publications contained within the Health Economic Database. For the year 2000, when some of the new targeted therapies began to emerge, there were 274 new cancer-related publications added to the database [14]. In addition, the Cost Effectiveness Analysis Registry (CEA Registry) is a comprehensive database containing detailed information on more than 8,650 standardized cost-

Health Technology Assessment of Cancer Drugs

effectiveness ratios and more than 11,800 utility weights published in the peer-reviewed literature [15]. It details studies published from 1976 through 2012 and is regularly updated. When the CEA Registry was updated for 2012, it became apparent that there was a notable spike in the number of cost-utility studies added that year. Approximately 45 % (538 vs. 372) more cost-utility analyses were published in PubMed in 2012 than in 2011 [16]. It is also interesting to note that a majority of the publications were from the perspective of the UK, Canada, the Netherlands, Sweden and Australia; countries where a full economic analysis is required before a reimbursement decision is made. HTA are also an integral part of the national drug review process in several countries. The second part of this paper will review cancer drug access in selected countries and the role of HTA.

3 Cancer Drug Access in Canada Canada is a country that consists of 12 provinces and two territories. What is unique about the Canadian health care system is that the provincial governments have the mandate from the national government to deliver health care in a model most suitable to their citizens. Therefore, Canada can be considered as a country that really has 12 independent provincial health care systems. With respect to cancer drugs, each provincial health care system is responsible for making their own final funding decisions. As a result, not all effective and approved cancer drugs are uniformly available to all patients across the country with the same diagnosis. Some citizens may be disadvantaged with respect to cancer drug access because of where they live. In order to promote equity and to ensure that all provinces have the same information and guidance for make funding decisions on cancer drugs, the federal government in Ottawa formed a national body to review the clinical and economic evidence associated with newly approved cancer agents and to make funding recommendations to the provinces. Following regulatory approval, the route for cancer drug access in Canada (except the province of Quebec) begins with the pan Canadian Oncology Drug Review (pCODR) process, which accepted the first submission in July 2011 [17]. To have their product added to a provincial cancer formulary, manufacturers are first required to make a submission to the pCODR. The pCODR provides submissions guidelines to manufacturers and also encourages a presubmission meeting [17, 18]. The submission should contain all clinical and safety data, a budget impact analysis and a PE analysis demonstrating that the product is cost effective at the listed price [18]. In situations where a new cancer drug provides an incremental benefit in terms

of overall survival, a cost-utility analysis is the recommended method of economic evaluation [19]. In other cases where a new treatment has advantages in method of drug administration or safety, but comparable overall survival relative to the standard of care, a cost-consequence analysis would be acceptable to the pCODR [19]. The submission is reviewed, with input from various stakeholders, which include clinical and economic guidance panels, provincial advisory groups as well as patient advocacy representatives [17, 18]. A final recommendation to list or not list the product is then made to the provinces by the pCODR Expert Review Committee after careful deliberation. However, there is no official cost per QALY threshold for a positive recommendation. Furthermore, the provincial payers make the final decision on whether to fund the drug [17]. Even in the case of a positive recommendation, the manufactures must still contact the provincial payers and initiate discussions on a listing agreement [17]. An interesting observation is that risksharing agreements as previously described or national price negotiations are not part of the final recommendation to list or not list the product. Therefore, it seems that, for the time being, risk-sharing agreements and national negotiated prices are beyond the mandate of the pCODR.

4 Cancer Drug Access the UK The agency that provides HTA services for drugs and medical devices to the National Health Service (NHS) of the UK is the National Institute for Health and Care Excellence (NICE). Originally established in 1999, the services provided by NICE include the development of evidence-based guidelines, quality standards for patient care and drug effectiveness, guidance on public health and the evaluation of diagnostic and medical technologies [20]. However, NICE is most noted for its technology appraisals and recommendations on drugs for funding by the NHS. During a NICE review, a patient may receive a drug before the recommendation is rendered, provided that the local NHS clinical commissioning group agrees to fund it. However, once a recommendation is given by NICE, the health authorities of England and Wales generally follow the guidance to ensure equity across regions [20]. Decisions made by NICE are through independent committees, which include patient or public members (lay members), academics and researchers. If a negative decision is given, there is a mechanism for appeals that can be requested by key stakeholders. Notwithstanding, a main objective of NICE is to ensure, through a transparent process, that people have equal access to effective, evidence-based care, regardless of where they live. Scotland and Northern Ireland have separate HTA organizations.

G. Dranitsaris, G. Papadopoulos

In the event of a negative recommendation for NHS funding by NICE, patients can still get access to cancer drugs through the Cancer Drugs Fund [20]. Originally established in 2011 with a budget of £280 million per year for 5 years, decisions to add drugs to the list are made by four regional panels called Chemotherapy Clinical Reference Groups [20]. The application for funding to the Cancer Drugs Fund has to be made by the patient’s oncologist. Given the urgency of an untreated cancer, funding decisions are usually made within 10 days of application. NICE is also active in the development of risk-sharing agreements and in securing direct or indirect price reductions from manufacturers whose products were deemed not to be cost effective following an HTA appraisal. The risksharing agreements are called Patient Access Schemes (PASs) and are intended to provide the NHS with discounts from the list price [21, 22]. The majority of UK PASs are simple discounts. For instance, NICE was able to secure such price reductions from manufacturers for the anticancer drugs gefitinib, lenalidomide and sunitinib based on cost-effectiveness thresholds [12, 23, 24]. However, some PASs are linked to drug performance. To illustrate, a PAS was designed to ensure that the NHS only pays for bortezomib in multiple myeloma patients who respond to therapy. Through a retrospective review of bortezomib performance, payers are reimbursed in cases of nonresponding patients [21]. It waits to be seen if Medicare in the USA and the pCODR in Canada will become involved in risk-sharing agreements and direct price negotiations. In their funding recommendations to the NHS, NICE applies thresholds for supporting or rejecting a new product. In the UK, the value threshold for drugs is approximately £30,000 per QALY gained, but there have been exceptions for cancer drugs above this threshold [20, 25, 26]. Under certain circumstances (i.e. using the end-of-life criteria), the appraisal committee may make a positive funding recommendation even if the cost per QALY exceeds the value thresholds. For this advice to be applied, all the following criteria must be met: the treatment is indicated for patients with a short life expectancy, normally less than 24 months; there is sufficient evidence to indicate that the treatment offers an extension to life, normally at least an additional 3 months compared with current NHS treatments; and the treatment is indicated for small patient populations [27].

5 Cancer Drug Access in Australia Following regulatory approval by the Therapeutic Goods Administration (TGA) [28], a therapeutic good (i.e. a pharmaceutical) is entered in the Australian Register of

Therapeutic Goods (ARTG) and thus can be lawfully supplied in Australia [29]. Cancer medications may then be accessed by patients if listed on the national subsidized reimbursement schedule known as the Pharmaceutical Benefits Scheme (PBS). Alternative access pathways such as public hospital formularies, private health insurance schemes, clinical trials or out-of-pocket expenses are also possible but are not the focus of this paper. The PBS is part of the Australian government’s National Medicines Policy and is governed under the Australian National Health Act 1953 [30, 31]. The PBS provides a range of medicines for community-based patients, including patients with cancer. Cancer medications can thus be accessed by patients in the community via the PBS or through participating public hospitals. Submissions to list new medicines (including cancer medications) on the PBS must be evaluated first by the Pharmaceutical Benefits Advisory Committee (PBAC). The PBAC is a government statutory body. Since 1993, it has been mandatory for the evaluations considered by the PBAC to include clinical, economic and budget impact analyses. The PBAC produced its ‘‘PBAC Guidelines’’ (current iteration is version 4.4), which explain in detail how to prepare a submission to list a new medicine or medicinal product on the PBS. The guidelines provide detailed instructions on what information is required by the PBAC and the Economic Sub-Committee (ESC) to support the proposed new medicine, and the most appropriate form of clinical evidence and economic evaluation for specific submissions [32, 33]. The provision of cost-effectiveness or cost-utility analyses underpin the considerations by the PBAC for all drugs, including cancer medications. The ‘‘PBAC Guidelines’’ make a specific note that the incremental cost per QALY gained is the preferred outcome of submitted analyses. However, unlike in the UK, there is no formal incremental cost effectiveness ratio (ICER) threshold. After the PBAC has reviewed the submitted evidence, it issues a recommendation on whether the medicine should be added to the PBS and the Department of Health finalizes the pricing and reimbursement requirements. Only after these steps can the Minister of Health approve the medicine for addition to the PBS [33]. Similar to in the UK, the PBAC and the Department of Health in Australia actively encourage risk-sharing agreements and price negotiations, especially for new high-cost medicines with high cost per QALY ratios. The PBAC guidelines outline a specific section (Section F.2) for describing the proposed risk-sharing agreements to be considered during the valuation process [34]. A recent example of a cancer medication passing through the evaluation process and being listed on the PBS with a specific risk-sharing agreement is ipilimumab (Yervoy) for unresectable stage III or stage IV malignant melanoma. Whilst

Health Technology Assessment of Cancer Drugs

the exact details of the risk-sharing agreement between the manufacturer and the Department of Health are commercial-in-confidence, an understanding of the nature of the risk-sharing agreements may be found in the published outcomes of the PBAC recommendation [35]. The PBAC was concerned about the cost-effectiveness of ipilimumab if the claimed survival gain was not observed in practice, as the base-case ICER was in the range of AU$45,000–AU$75,000/QALY, but could be as high as AU$200,000 under certain scenarios explored in the sensitivity analyses. The PBAC recommended the risksharing arrangement involve three key aspects: • •

•

Appropriate use: development of the PBS restriction to align with the TGA-approved indications. Maintaining cost effectiveness: implementation of a mechanism to verify the anticipated overall-survival benefits of ipilimumab in the real-world clinical practice in Australia. The approach should be designed in such a way that it provides evidence of whether or not the survival benefit modelled in the submission and which was used in the calculation of cost effectiveness was realized in Australian clinical practice. The sponsor/manufacturer would be expected to rebate the cost of the difference in performance between the observed and the predicted benefits of ipilimumab. Managing financial risk: the negotiation of a suitable risk-sharing agreement with significant rebates in order to manage the risk of the financial expenditure in terms of number of patients and dose.

Whilst neither the PBAC nor the Department of Health have explicitly stated that a threshold exists for the ICER that will indicate the government’s willingness to pay for a QALY gained, empirical research from various authors has suggested that it is in the range of AU$45,000–AU$75,000 [36–38]. Harris et al. [36] showed that the probability of receiving a positive recommendation from the PBAC would be less that 5 % if the ICER was greater than AU$75,000/QALY gained. O’Leary et al. [38] evaluated the success factors for achieving reimbursement for oncology drugs in Australia and concluded that the majority of oncology drugs considered by the PBAC are eventually recommended for listing on the PBS. However, most required multiple submissions and those products that received positive recommendations following the first submission had ICERs below AU$45,000 and a budget impact of less than AU$10 million per year. The oncology drugs that received positive recommendations for the subsequent submissions generally had data provided that further defined the place in treatment that improved the cost effectiveness, and reduced the financial risk to the government, and a price reduction was frequently cited as a contributing factor for gaining a positive

recommendation. The ICER was below AU$75,000/QALY or life year (LY) gained in the vast majority of oncology drugs listed. Unlike the UK, however, Australia does not have a specific fund for oncology medicines, nor a separate set of guidelines. The one exception often quoted is, however, the ‘‘Herceptin Program for Late-Stage Metastatic Breast Cancer’’ [39]. The PBAC had rejected the submissions for trastuzumab (Herceptin) on three separate occasions because it considered the treatment to be cost ineffective in the patient population evaluated in the pivotal trials. The Liberal government of the day, mostly because of community pressure, decided to set up a specially funded programme independent of the PBS, and ignore the recommendations of the PBAC and fund trastuzumab for patients with late-stage metastatic breast cancer. Such a funding programme, independent of the PBAC and PBS process, has not been repeated since the Herceptin programme was initiated in 2001 and is also unlikely to be in the near future because it undermines the entire HTA approach.

6 Comparison Between Countries For comparison, reimbursement decisions between the PBAC of Australia, NICE from the UK and the pCODR in Canada for some of the major cancer drug submissions made over the past 10 years are presented in Table 1. Of the 25 listed drug submissions, the number of positive recommendations (with or without criteria) from NICE in the UK was 46 % (11 of 24 that were submitted) compared with 74 % (17 of 23 that were submitted) in Australia and 83 % (19 of 23 that were submitted) in Canada (Table 1). Therefore, these data suggest that NICE in the UK is the most stringent HTA body in providing positive funding recommendations. The HTA process is time consuming and complex, but the programme can be fair and transparent, allowing input from all of the key stakeholders. Therefore, a country such as the USA that does not have a formal HTA programme for evaluating uncertainty and measuring value for limited health care dollars should consider at least some aspects of the processes that are currently being used in the UK, Canada and Australia.

7 Health Care in the USA and Cancer Drug Access The three major payers of health care services in the USA are private insurance companies, Medicare, which covers citizens over 65 years of age, and Medicaid, for people with low incomes. Private insurance for health care services and drugs is typically made available to

G. Dranitsaris, G. Papadopoulos Table 1 Comparative cancer drug reimbursement decisions between Canada, the UK and Australia Drug

Cancer

Positive recommendation: Canada

Positive recommendation: the UK

Positive recommendation: Australia

Trastuzumab

MBC

Yes

Yes

Yes

Trastuzumab

ABC

Yes

Yes

Yes

Bevacizumab

MBC

Not submitted

No

Not submitted

Nabpaclitaxel

MBC

Yes, with criteria

Not submitted

Yes

Lapatinib

MBC

No

No

Yes

Eribulin

MBC

Yes

No

No

Lenalidomide

MM

Yes, with criteria

Yes, with criteria

Yes

Bortezomib

MM

Yes

Yes, with criteria

Yes, with criteria

Imatinib

CML

Yes

Yes

Yes

Dasatinib

CML

Yes

No

Yes

Nilotinib

CML

Yes

Yes

Yes

Bevacizumab

mCRC

Yes

No

Yes

Cetuximab

mCRC

Yes, with criteria

No

Yes

Panitumumab

mCRC

Yes

No

No

Erlotinib

mNSCLC

Yes

Yes

Yes

Pemetrexed

mNSLC (2nd line)

Yes

No

Yes

Pemetrexed

mNSLC (1st line)

No

Yes, with criteria

No

Bortezomib Rituximab

Mantel cell lym Lym

Yes Yes

Yes Yes

Yes Yes

Sunitinib

RCC

Yes

Yes

Yes

Sorafenib

RCC

No

No

No

Temsirolimus

RCC

No

No

No

Pazopanib

RCC

Yes, with criteria

Yes, with criteria

Yes, with criteria

Everolimus

RCC

Yes, with criteria

No

No

Bevacizumab

RCC

Not submitted

No

Not submitted

ABC adjuvant breast cancer, CML chronic myelogenous leukaemia, lym lymphoma, MBC metastatic breast cancer, mCRC metastatic colorectal cancer, MM multiple myeloma, mNSCLC metastatic non-squamous cell lung cancer, RCC renal cell carcinoma

members and their dependents via a person’s employer. However, there is often a deductible associated with private insurance plans as well as with Medicare. The deductible, which can reach 25 % with some plans, can become substantial when applied to the new high-cost cancer drugs. This can put a severe financial strain on some patients. In a national survey of cancer patients with insurance, approximately 25 % of respondents reported that they had consumed all or most of their personal savings to treat their disease. In addition, 33 % of households reported difficulties in paying their cancer costs [40]. Cancer was also reported to be the highest cost diagnosis when medical reasons were cited as the main cause for declaring personal bankruptcy [41]. In one interesting population-based study, patients diagnosed with cancer were approximately 2.7 times more likely to file for personal bankruptcy in the 5-year period following their diagnosis compared with a matched sample of people without a cancer diagnosis [42].

A cancer diagnosis and its associated treatments have a substantial socioeconomic impact on the US health care system and its enrollees. For the year 2010, the direct cost of cancer care in the USA was estimated to be US$124.5 billion, with breast, colorectal, and lung malignancies being responsible for the largest share, at US$16.5, US$14.1 and US$12.1 billion, respectively [43]. If the incidence of cancer and its costs follow these trajectories, the cost of care is projected to reach US$172.8 billion by 2020 [44]. These increases in cancer care and health care consumption in general have consumed a substantial portion of the US gross domestic product (GDP). For the year 2009, total health care spending was estimated to be US$2.5 trillion or 18 % of the US GDP. This is substantially higher than for other developed countries [45]. As a comparison, health care spending as a proportion of GDP is less than 10 % in Australia, the UK and Japan (Fig. 1). In the USA, cancer drugs have contributed to this increase in health care spending. Over the past several

Health Technology Assessment of Cancer Drugs Fig. 1 Heath care spending as a proportion of gross domestic product (data source: OECD Health Data, 2009). OECD Organisation for Economic Co-operation and Development

United States Germany France Canada Sweden United Kingdom Spain Japan Italy Finland Australia 0.0%

years, anticancer drugs and haematopoietic growth factors have accounted for 11 of the top 15 drug expenditures. In addition, biological drug therapies for cancer accounted for 15 % of all prescription drug costs [46]. There are several reasons for these observations, but a main one is that cancer drug prices in the USA are the highest in the world because a manufacturer can set the drug price at the time of launch. Unlike countries like France, the UK, Australia and Canada, the manufacturer does not have to negotiate the price of the product with any government body [47]. In addition, Medicare is not permitted to use HTA and PE evaluations demonstrating value for money in making reimbursement decisions. If a product receives an indication from the US Food and Drug Administration (FDA), Medicare is legally obligated to reimburse the drug [47]. The USA spends the most on health care, yet approximately 40 million of its citizens remain uninsured. These disturbing trends prompted US legislatures to approve the Affordable Care Act (ACA), which was signed into law by President Obama on 23 March 2010. The overall intent of the ACA was to ensure that Americans have access to affordable health insurance options. Other objectives of the ACA were to improve the quality of care, reduce costs and improve efficiency by increasing competition, creating incentives to streamline the delivery of health care, imposing penalties on hospitals with high readmission rates and implementing new patient protection measures [48]. The Congressional Budget Office projected that through these changes, the ACA will lower future budget deficits and health care spending [49]. Early evidence suggests that the ACA may be having an impact on reducing health care spending. According to the most recent projections, health care spending grew by only 1.3 % annually from 2010 to 2013 (Fig. 2). This is the lowest rate for any 3-year period since 1960. The reductions were particularly pronounced with a 2 % drop in the

5.0%

10.0%

15.0%

20.0%

cost of prescription drugs over the 3-year period [50]. Other promising trends that are consistent with the introduction of the ACA are reductions in 30-day hospital readmission rates of Medicare patients (Fig. 3). Under the ACA, there is now a financial disincentive to readmit patients who could be managed as outpatients to hospital. Another component of the ACA is the creation of new payment models that enhance accountability. These programmes seek to create incentives to encourage the delivery of efficient and high-quality care to patients. Under these programmes, health care providers seek to be designated as an Accountable Care Organization (ACO). To achieve an ACO designation, several quality benchmarks must be achieved. Once an ACO designation has been received, an organization would be eligible to share in the cost savings that are achieved in the provision of efficient health care to patients [50]. Such an approach appears to be superior to the previous fee-for-service model where providers had perverse financial incentives to offer more services to maximize reimbursement. Currently, there are approximately 240 health care organizations covering 4 million Medicare patients that have adopted the ACO model [50]. A recent analysis by the Centers for Medicare and Medicaid Services (CMS) revealed that annual health care costs for ACO organizations grew by 0.3 % in 2012 compared with 0.8 % by organizations not aligned with ACO [51]. A final economic benefit that may be derived from the ACO is ‘‘spill-over effects’’ from Medicare to the private system. Part of the ACO consists of reduced fees for certain health care services that are deemed to be excessive. In one study, Clemons and Gottlieb [52] determined that reduction in prices reimbursed by Medicare allowed private payers to lower the amount they pay to comparable levels. Similar findings were also reported when payments were made to hospitals for services [53]. Therefore, it would appear that

G. Dranitsaris, G. Papadopoulos Fig. 2 Real per capita growth in US health care expenditures. CEA Council of Economic Advisors

Fig. 3 Monthly Medicare 30-day, all-condition hospital readmission rate

Medicare’s payment structure serves as a starting point for price negotiations between providers and private payers. As a result, lower prices paid by Medicare would translate in cost savings across the entire US health care system. From an individual cancer patient’s perspective, the ACA should reduce their financial burden. One important difference between the US health care system and those of socialized health care systems such as Canada, Australia and the UK is the role of private insurance. There is little private health care coverage in Canada. In Australia and the UK, both public and private health care insurance co-exist. Private insurance often has lifetime dollar limits or patients with pre-existing illnesses may have difficulty obtaining coverage. Cancer patients receiving treatment within the private

system in Australia and the UK always have the option of seeking treatment within the public system. Before the ACA was made into law, cancer patients in the USA who had private insurance only and did not qualify for Medicare faced annual and lifetime dollar limits to be paid by insurance companies. However, under the ACA, lifetime and annual limits have been removed, and it is illegal to deny insurance coverage to people with pre-existing medical conditions or people who are cancer survivors. Therefore, increased access to private insurance should reduce the financial hardships faced by cancer patients in the USA. Prior to the signing of the ACA, the cost of cancer care in the USA was estimated to be US$124.5 billion in 2010, which approached 1 % of the entire US GDP [43]. With

Health Technology Assessment of Cancer Drugs

growth rates prior to 2010 being between 2 and 4 %, this was clearly unsustainable. Therefore, aggressive measures to contain growth and improve quality and efficiency were needed. The ACA should help contain the cost of treating patients with cancer through some of the mechanisms described above. The ACA is currently in its fourth year, but not all of the US states have fully adopted it and not all eligible citizens are enrolled. In addition, it is unclear if all of the expected benefits in terms of improved efficiency and costs savings will be realized. Health policy analysts and health economist eagerly await the collection of more data in order to evaluate the long-term impact of the ACA. However, with an aging population and the associated age prevalence of cancer, failure to have acted in some structured way would have jeopardized the long-term sustainability of the US health care system.

8 Global Cancer Drug Pricing: Avoiding ‘‘The Tragedy of the Commons’’ Notwithstanding the application (or not) of HTA and cost effectiveness in making reimbursement decisions for cancer drugs, all countries around the world have limited public drug budgets that are allocated to cancer drugs. In relation to this, a parable can be taken from old England. The commons was an area of public land where farmers could bring their sheep for grazing. So the commons was a public good, which benefited all. However, at some point, individual farmers noticed that the commons was being depleted because of overgrazing. Following this observation, individual farmers made a rational economic decision to increase the number of sheep they would bring to the commons (before it would become depleted) for their own personal gain. However, when all farmers made the same rational decision, the commons was eventually destroyed to the detriment of all. This paradigm was first described by Lloyd [54] in 1833 and has been described as an economic theory by Hardin [55, 56]. The theory states that individuals acting rationally and independently according to one’s self-interest behave contrary to the whole group’s long-term best interest by depleting some common resource [55]. Hence, it is in the best interest of the group to cooperate and sustainably manage the fragile resource. The ‘‘Tragedy of the Commons’’ concept has been applied to national parks, fish stocks as well as air and water quality. It was stated earlier in this paper that cancer drug prices have been rising at rates well above the rate of inflation [9, 10]. This is of concern to all the major stakeholders because it could impact the quality of cancer care and bring undue financial hardship to the patient [41, 42, 56]. In addition, it may compromise innovation and new drug discovery because it could force governments to implement

arbitrary price controls [12]. Government-mandated price drops have already occurred in some European countries [57, 58]. In addition, developing countries could also issue a compulsory licence, which would enable local production of the patented drug. This is possible under the ‘‘Trade Related Intellectual Property Rights’’ agreement of the World Trade Organization and has already occurred with some HIV drugs [59]. The Indian government did this for imatinib (Gleevec), and it was recently upheld by the Indian Supreme Court [60]. Such events do not support innovation and the discovery of new drugs to fight cancer. Global cancer drug budgets should also be seen as a ‘‘commons’’. Therefore, to avoid the ‘‘Tragedy of the Commons’’ as it relates to cancer drug budgets, pharmaceutical companies developing innovative agents and physicians prescribing them should see the drug budget as a finite fragile resource, which has to be managed and sustained to maximize the well-being of all. This could include the adoption of risk-sharing agreements, value-based pricing as is currently being proposed in the UK, price negotiations based on HTA reviews, and the use of societal-value thresholds based on per-capita GDP in combination with PE modelling to establish an affordable price [61–63]. Such options should be considered by all of the key stakeholders in all countries around the world in order to preserve the common good in cancer care known as the drug budget.

9 Discussion The number of new cancer patients will continue to rise because of the factors described earlier. However, more encouragingly, the number of cancer-related deaths has stabilized, and even decreased for some cancers, over the same 5-year period. At least part of this reduction in cancer-related mortality has been attributed to the development of new anticancer drugs. To continue with this success, patient access to new agents needs to be maintained and the correct incentives need to be put in place to encourage pharmaceutical innovation. A growing challenge to cancer drug access is the cost of the newer agents. The respective ministries of health around the world are mandated to ensure the sustainability of their health care systems. As part of this mandate, mechanisms have been created to improve the quality of care and efficiency and to reimburse only those agents with evidence showing they provide a clinically meaningful benefit at a reasonable cost. In this paper, we have reviewed the mechanisms of drug assessment and patient access in three socialized health care systems and compared them to those in the USA. The UK, Canada and Australia all use some form of HTA for making funding recommendations on cancer drugs for public health care

G. Dranitsaris, G. Papadopoulos

reimbursement. In all three countries, the QALY plays an important role in the final funding decision. Risk-sharing schemes and price negotiations with the national HTA body are integral parts of the mechanisms used in the UK and Australia. However, the pCODR in Canada does not engage in these processes, as they are delegated to the respective provincial ministries of health. The USA is unique among developed countries because HTA, risk sharing and price negotiations do not have a role in drug-funding decisions by Medicare. Upon approval by the FDA, Medicare and most private payers automatically begin reimbursing the drug. However, with the ACA, this may change because reduce costs and improve efficiency are important components of the ACA. Therefore, HTA and assessments for cost effectiveness may have a greater role to play within the reformed US health care system. It is unlikely that an HTA programme like in the UK or Australia will be implemented in the USA, because of political and historical reasons. In addition, there is not a single monopsony buyer for the majority of the health care services as in the previous countries mentioned. Medicare or closed health care systems such as Kaiser Permanente may be able to adopt HTA-type measures as these medical systems need to oversee global health care budgets and will eventually need to make value-for-money decisions in the delivery of their health care products and services. Notwithstanding, any HTA programme must be custom made to fit into the unique structure of the US health care system. Ultimately, the adoption of some form of HTA into US health care policy should be encouraged because it will contribute to better decision making and long-term sustainability. The ACA may lay the foundations for the adoption of some form of HTA by the US health care system that would be acceptable to all of the key stakeholders. Therefore, there is room for optimism. Acknowledgments external funding.

This review paper was not supported by any

Conflict of interest statement None of the authors have any conflicts of interest to declare. This review was an unfunded paper. Author contributions George Dranitsaris: conceptualization, literature review, development of major headings, writing and editing of manuscript. George Papadopoulos: literature review, writing and editing of manuscript.

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