Trends in Oncology: A Focus on Medical Pharmacy Spend

It is no secret that oncology spend is high and continues to rise (by some estimates, cancer costs in the U.S. will reach $250 billion in the next five years!1). With the arrival of oncology biosimilars and the introduction of cell and gene therapies, it’s critical for payers to understand the trends and know what future-forward strategies can be deployed in the now to prepare for these market shifts.

The trends you need to know

The Magellan Rx Management Medical Pharmacy Trend Report is the industry’s premier resource for unlocking pharmacy trends and emerging strategies to mitigate rising specialty spend on the medical benefit. We’ve been tracking trends for a decade, and oncology remains the top spend category across all lines of business including commercial, Medicare, and Medicaid. For commercial plans, oncology has been the top spend category 10 years in a row, with oncology and oncology support spend increasing 54% since our 2010 report.2   

Commercial Oncology Spend-01

When you look at per member per month (PMPM) spend, oncology represents at least one-third of total medical drug spend across all lines of business and is approaching 50% of total spend in Medicare.

2018 % of Medical Drug Spend-01

Neulasta, Herceptin, Rituxan, Avastin, Opdivo, and Keytruda are all in the top 10 drugs by spend. Keytruda and Opdivo have experienced rapidly increasing utilization and spend, with Keytruda almost doubling in PMPM in Medicare. Medicare also has more than four times as many members utilizing oncology agents when compared with Commercial. In Commercial, the average cost per patient for these drugs is also increasing year over year.

Opdivo and Keytruda avg cost-01

Payer management strategies

The high cost of oncology therapy has urged healthcare stakeholders to explore cost-containment strategies while maintaining quality. According to our 2019 survey, payers were open to cost-saving strategies when appropriate.

  • 76% of payers surveyed are restricting specified regimens based on the patient’s performance status when aligned with National Comprehensive Cancer Network (NCCN) guidelines.
  • 69% are incentivizing lower-cost regimens when they carry the same level of compendia recommendation.
  • 54% of payers are limiting agents that are recently approved by the FDA under an accelerated approval pathway to patients who meet the study eligibility criteria used for FDA approval.
  • 35% are not covering NCCN 2A recommendations if evidence is lacking.

Looking ahead

Many opportunities for savings are anticipated with the biosimilars for Avastin, Herceptin, and Rituxan. At Magellan Rx, we have launched a solution to help our health plan customers maintain or expand member access to clinically-effective treatments, while having the added benefit of delivering significant drug spend savings. According to our latest research, presented at AMCP Nexus, biosimilars for oncology treatment show increased uptake and potentially sizable savings for health plans.

BIosimilars-for-Oncology-table-01

Source: Magellan Rx Management internal data

In addition, the gene therapy and biosimilar pipeline is robust in oncology with upwards of 700 drugs currently in clinical trials. In Medicare alone, the pipeline is projected to be worth $10.72.  Based on forecasting, growth in oncology is projected to soar 69% due to slight increases in utilization of current therapies—potentially with expanded indications—and, more dramatically, due to new pipeline approvals.2 To help health plan customers prepare for this shift, and continue to manage growing oncology spend, Magellan Rx has taken a comprehensive approach. We leverage our clinical expertise and experience to deliver innovative, cost-saving solutions such as dose optimization, drug wastage, biosimilar management, and site of service, along with genetic testing and patient-focused oncology care management programs.

For more on medical pharmacy trends, read the Medical Pharmacy Trend Report or watch our webcast.

  1. 30 May 2019. Global Oncology Trend Report 2019. https://www.iqvia.com/insights/the-iqvia-institute/reports/global-oncology-trends-2019. Accessed October 7, 2020.
  2. 2018 Magellan Rx Management Medical Pharmacy Trend ReportTM, ©2019.

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