The Value of Specialty Oncology Drugs

Abstract

Objective. To estimate patients' elasticity of demand, willingness to pay, and consumer surplus for five high-cost specialty medications treating metastatic disease or hematologic malignancies. Data Source/Study Setting. Claims data from 71 private health plans from 1997 to 2005. Study Design. This is a revealed preference analysis of the demand for specialty drugs among cancer patients. We exploit differences in plan generosity to examine how utilization of specialty oncology drugs varies with patient out-of-pocket costs. Data Collection/Extraction Methods. We extracted key variables from administrative health insurance claims records. Principal Findings. A 25 percent reduction in out-of-pocket costs leads to a 5 percent increase in the probability that a patient initiates specialty cancer drug therapy. Among patients who initiate, a 25 percent reduction in out-of-pocket costs reduces the number of treatments (claims) by 1-3 percent, depending on the drug. On average, the value of these drugs to patients who use them is about four times the total cost paid by the patient and his or her insurer, although this ratio may be lower for oral specialty therapies. Conclusions. The decision to initiate therapy with specialty oncology drugs is responsive to price, but not highly so. Among patients who initiate therapy, the amount of treatment is equally responsive. The drugs we examine are highly valued by patients in excess of their total costs, although oral agents warrant further scrutiny as copayments increase.

Identifying stakeholder opinion regarding access to “high-cost medicines”: A systematic review of the literature

“…There is evidence to suggest that demand for medicines to treat life-threatening illness is very high regardless of cost [26,29].Survival gain, or gain in quality of life seems to justify even higher cost; at least from the patient perspective. Inequalities regarding willingness-to-pay are related to the financial status of the patient.…”

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“…Reducing out-of-pocket costs by one-quarter leads to a 5% increase in the probability of use of particular medicines. However, medicine's marginal benefit to cancer patients is about four times larger than the total cost of the medicine [34]. In Australia many patients experience an increasing financial burden associated with medicines.…”

Obstacles to Affordable Cancer Treatments

“…However, such strategies remain challenging to implement due to public pressure and concerns about health care rationing. Moreover, there is evidence that many patients with metastatic cancers value high-cost specialty medications and continued treatment, even when those therapies offer limited benefits [35,36]. This situation can create tension between patients, who often want continued treatment for incurable diseases, and payers, who must determine which therapies to cover and how generously to reimburse these products.…”