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Dr West

Money Matters: The Business of Oncology

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The following is complete editorializing, my opinion and not meant to be the word from on high.

Recently, the most popular physician blogger on the internet, KevinMD, wrote a short piece on whether physicians should discuss the cost of medicines with their patients. This was specifically with regard to outpatient medications, and in oncology we have some of the most expensive outpatient medications around, ranging from nausea medicines like zofran to oral chemotherapy like Xeloda (capecitabine, used commonly in colon cancer and not among the more active drugs for lung cancer) to targeted therapy like the EGFR inhibitors Iresas (gefitinib) and Tarceva (erlotinib). Because, depending on insurance coverage, some patients would need to pay thousands of dollars each month for some of these medicines, I don’t think it’s feasible to really discuss the pros and cons of these medicines without talking about the cost to the patient.

But I think a much bigger issue is the overall cost of these cancer medicines and whether how much that should factor into our management standards, if at all. To take a step back, we can say that cost of cancer care should never factor in to decisions about the treatments to recommend, but that’s not really the way it’s been, and it’s certainly not a sustainable approach. As it stands now, some of our cancer medicines are wildly, and many people could say unjustifiably, expensive (pricing at basically whatever the market will bear, and with a presumption that for cancer treatment it’s hard to call anything extortionate) ; some lung or colon or breast cancer cancer regimens cost well over $10,000 per month for what still amounts to a palliative, not curative, therapy.

In countries around the world with single payer systems, there are explicit limits based on the costs of treatments, and it’s understood that the system can’t and won’t permit coverage of every treatment out there for everyone, forever. Though the US system has nearly unlimited medical options for some people, others have much more regulated treatment choices (most health maintenance organizations, the VA system), and still others miss out on care that most experts would consider to be extremely valuable and a clear standard of care.

While the treatment options for some people are not limited by either the evidence or their ability to pay directly for this care, there is a clear consensus about just about any health care economist or health care policy expert that this is not sustainable. The costs for proven and unproven treatments that run into the thousands or even tens of thousands of dollars per month are paid by taxes and rapidly escalating health care premiums. Individual families and businesses small and large are being crushed under the weight of constantly escalating costs for health care. With a rapidly growing elderly population as the baby boomer generation ages, combined with newer and more expensive health care interventions every year, the projections become horrifying.

In many health care systems, ranging from Canada to the UK to many HMOs and the VA system, the treatment options are limited and largely based on evidence-based medicine, and the physician often doesn’t have the ability to expand those options. While I and many other American oncologists are very happy to have the freedom to pursue treatment options based more on our own judgment, this system places physicians in a very difficult situation when they are forced to balance between the good of the patient, who may benefit from unlimited treatments at unlimited costs, and being a responsible citizen. Is the possibility that someone will get a few weeks of a survival benefit worth charging $25,000 to the insurance company and all of the struggling families that are paying premiums, or the government as it faces deficits that literally cannot be comprehended and will be passed on to future generations?

I realize that the audience here includes many people who would want virtually unlimited options for themselves or their loved ones, but much of the time, working in the current health care system feels like you’re out to an expensive dinner with a very large party and everyone just orders everything they see because the bill will be split among everyone at the end of the meal (god help us all when it does). But there is no question now that our health care system doesn’t get its money’s worth.

It should surprise nobody that oncology decisions, like most things in life, are being made based on economics all the time. The systems with the tightest budgets, whether the national health care systems or HMOs, need to contain costs, and the HMO profits come from money not spent on tests or treatments. While needing to follow the general standards of care, they have a major disincentive to offering unproven expensive tests or treatments. Physicians working in them need to follow the system’s policies, and they may receive added incentives for treating patients economically.

In private health care systems, physicians make money for doing procedures, including giving chemotherapy. Oncologists, or internal medicine doctors or pedicatricians for that matter, aren’t really paid for spending time answering questions for patients and family members. They may be under pressure to see several dozen patients in each day, for very limited amounts of time. One of the concepts being discussed in revising the US health care system would address the shortcoming that doctors really aren’t paid fairly for spending time with patients; they’re paid for administering procedures.

Various chemotherapy options may be comparably effective but differ greatly in cost, and in the money that an oncology practice can make. Some oncology practice managers (the ones who oversee the finances) may highlight for their oncologists the treatment regimen among many comparable and defensible choices that make the most profit for their practice.

It’s reasonable to presume that many oncologists, like just about anybody, will favor the treatment approach that makes the most money for them personally. In truth, however, I think many people would be surprised at how many oncologists recommend treatments that don’t maximize their financial reward. When oncologists recommend an oral therapy like tarceva as a first or second line treatment instead of an IV chemotherapy, they’re probably doing this against their own financial self-interest. (On the other hand, when I hear some oncologists dismiss tarceva for the vast majority of patients and recommend fourth line IV chemo instead, I am very suspicious of their motivations.)

When oncologists express skepticism about maintenance avastin or question the value of progression-free survival when there isn’t a significant improvement in overall survival, this is based on trying to spare patients marginally helpful treatments and reduce the rate of runaway health care costs; the oncologist could often make more money personally by just advocating more treatment at every visit. The same applies to fourth or fifth line treatments that have no established benefit.

I think we’re moving toward a time when things are going to be different for US health care, where the system no longer operates as if there are unlimited resources. Many patients and family members may resent this, but I don’t foresee that a move toward making decisions based on the real value of treatments will limit the treatments that actually confer a meaningful benefit. This may limit the ability of people to receive an unproven drug like Sutent for lung cancer, at least without paying for it themselves, but I think it’s hard to justify why people struggling to pay their mortgage and also provide health insurance for their families should have their insurance premiums go up further to cover this for someone who has already received multiple lines of therapy, including everything that provides an established benefit.

By showing no ability or even interest in regulating ourselves, I think it makes cancer care a very easy target for being regulated by others.

4 Responses to Money Matters: The Business of Oncology

  • recce101 says:

    “When oncologists…question the value of progression-free survival when there isn’t a significant improvement in overall survival, this is based on trying to spare patients marginally helpful treatments and reduce the rate of runaway health care costs…The same applies to fourth or fifth line treatments that have no established benefit…I think we’re moving toward a time when things are going to be different for US health care, where the system no longer operates as if there are unlimited resources.”

    Agreed. I would probably be more content with a single-payer system than most people I know, but that comes more from my worldview than from any dissatisfaction with my current health coverage, which is very generous. Basically, I want no part in bankrupting the system even if I’m not around to see it happen. I say that knowing full well that at some point I’ll need to put my money (or more accurately, Medicare/Tricare’s money) where my mouth is.


  • Catharine says:

    Dr. West –

    Thank you for a thoughtful and thought-provoking post. I don’t have any great ideas or answers, but at least my HMO puts the “real” cost of my medications on the receipt for each, thus making me aware of what I would pay if not for my coverage. It’s sobering to see the actual cost of zofran or tarceva, and it helps me understand why my oncologist might begin with the less expensive drug (e.g., compazine) and move to the more expensive drug (e.g., zofran) only when the cheaper drug doesn’t work. Then again, I spent many years paying into a health care plan and not using it at all except for prevention/check-ups and a few minor illnesses.

    Maybe we should be asking more often WHY a particular treatment costs so much? Where does that money go? Is someone making what amounts to an obscene profit from certain treatments? And shouldn’t that be acceptable in a free market system where a company or entrepreneur charges what the market can bear? (My guess is NO, since it’s usually not a one-to-one exchange between the provider and the customer; e.g., the taxpayer or employer foots most of the bill.)

    Then again, we need to remember that cancer patients are also taxpayers, producers for society, payers of mortgages, and providers for families. Many have spent years genuinely trying to stay healthy and productive, only to wind up with the disease anyway – and some continue to work, provide, and pay mortgages even through their treatments — and maybe even BECAUSE of the treatments. We have to be careful not to (even unconsciously) consider the patient as some sort of parasite or unproductive drain on resources.

    We should also ask why more emphasis isn’t placed on funding broader coverage for prevention and early detection and diagnosis, which would lead to savings in the long run.


  • Dr Pennell
    Dr Pennell says:

    Great topic, and covered with style and flair, as always.

    Catherine, you make execellent points. In fact, companies DO charge what the market will bear in the hopes (successful hopes in many cases) of making massive profits. Of course, their argument is that is costs up to $1 billion in research and development to bring a new drug to FDA approval, so don’t they deserve to make that money back? Not to mention subsidizing all of the many drugs that fail to be approved but still have to be paid for.

    I do favor a comprehensive review of cancer drug costs on a policy level, and this will need to be a part of any comprehensive health care reform, especially if we go to a single-payer system (not holding my breath). If and when our country decides that it cannot afford marginally effective treatments (which are actually often highly effective treatments for a minority of patients), then I will support that decision. A better way might be to mandate that drugs only be used where they are proven effective, which is not always how they are used!

    But I do have problems with doctors who feel they have to take PERSONAL responsibility and make judgements about societal costs when making treatment decisions for individual patients. It is my job to be my patient’s advocate and their health and well-being is my primary responsibility. I could not deny my patient a drug I truly felt might help them if I knew it would be covered by insurance and it was available. If they could be getting it from my colleague down the hall but I have decided to deny it to them, I don’t feel I have done them a service. Supportive drugs like Emend and Zofran, for instance, I would rather use up front where appropriate rather then wait to hear that the patient saw their wedding cake from 20 years ago come up after cisplatin! I fight with insurance companies more or less constantly to get approval for Tarceva for patients, or to get lovenox rather than using coumadin, because it is my clinical judgement that these drugs will benefit the patient and that should be my only concern.

  • Incurable optimist says:

    One problem that seems to be bothering our National Health Service here in the UK is the appearance of ‘open-ended’ drugs such as Tarceva, priced at levels similar to standard chemo, even thouygh meant to be used for far longer.

    At least the medical authorities have a chance of estimating and controlling future costs when they are dealing with treatments which are capped at six cycles or whatever – but when the term ‘maintenance’ enters the debate, it’s a different ballgame.

    Perhaps we will see stronger pressure for price reductions on such maintenance regimes.

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