 Hello everyone, and thank you for joining us at the 

’s Oncology Stakeholders Summit. This is the Spring 2016 Peer Exchange Video Program. This program, which focuses on value-based care in oncology, will include a roundtable discussion, as well as a series of individual interviews featuring a distinguished group of healthcare experts with varied backgrounds in managed care, community oncology, and policy. My name is Dr Bruce Feinberg, and I am vice president of clinical affairs and the chief medical officer at Cardinal Health Specialty Solutions.

I am joined today by Dr Alan Balch, chief executive officer for the National Patient Advocate Foundation in Hampton, Virginia; Mr James Gilroy, senior director of market access and national accounts at Lilly Oncology; Dr Ira Klein, senior director of health care quality strategy in the Strategic Customer Group of Janssen Pharmaceuticals; Dr Michael Kolodziej, national medical director for oncology strategy at Aetna; and Mr Ted Okon, executive director of the Community Oncology Alliance. Thank you, again, for joining us.

Value-based care, by definition, incorporates cost into clinical decision making. Robust debate continues as to what constitutes cost, who’s responsible for managing cost, and how cost should be communicated. Today’s discussion will illustrate the complexities and hurrying to assessing costs as our healthcare system migrates to value-based care. We’ll be covering a few important topics: evolution of value-based care, what should be incorporated in value-based care, and how should value be calculated.

Let’s start this off. I think I’m going to start with Ira because Ira has sat on both sides of the fence now that he’s working for a pharmaceutical company and lived for many years in a payer world. When you think about value, what’s the definition that resonates with you?

I would say that previously, I had always said that value is the outcomes generated over the cost incurred. And over time, what I’ve come to realize is that the outcomes generated is actually not a single answer. It’s value over a continuum—or, I should say, outcomes over a continuum.

The outcomes differ depending on who you are. If you’re the payer of services, you want to see that cost of a therapeutic be applied, and you also want to see the total cost of care be affected by the therapeutic. If you’re a patient, you want to be sure that you’re getting what you want for a disease. A lot of this will focus on oncology. What do patients want? They want cure. If cure’s not possible, they want amelioration of disease, and they always want to have minimal side effects, ease of use, and some kind of assurance that they’ll be able to participate in, if not the same lifestyle as before, something close to that previous lifestyle. So, I’ve kind of evolved over time to thinking about outcomes as a continuum.

All right. So I’m concerned, from the patient perspective, that although I think it’s really important in terms of what Ira brought out, for somebody who is living in the world of the patient, I’m not sure that’s the complete picture of what patients are looking for and if they’re really able to understand the process well enough that they can assess value in a meaningful way.

 Yeah. I think, first of all, it’s important to keep in mind that the system, as it’s currently constructed, was not inherently designed for the patient to be an active consumer and decision maker in the process. Therefore, value through that consumer and patient lens isn’t really ingrained into the current framework.

I think this is an exciting opportunity from a patient perspective. As we talk about shifting from volume to value, the increasing role of consumer-driven healthcare designs, and the shift in responsibility for payment shifts to patients, as well as the personalized medicine paradigms that are coming to fruition, there is an exciting opportunity for patients to be much more involved in this process of what is [considered] value. I think the rub, from a patient perspective, is that we think of value at the individual level, and it really varies from person to person.

Stakeholders Define Value in Healthcare

 I would challenge you that it may be somewhat inherent in our Western culture that from the patient perspective, volume is value. They want more, they want it to be new. There are things that they want—that’s part of our cultural heritage of “wanting it now,” “wanting more of it,” and “wanting the newest that’s available.” That almost drives the volume argument from a patient perspective.

 I don’t know that patients, at this point, have been given enough choice and been given the information to differentiate between “more” or “different” options, or choosing between them in a way that really captures my value framework.

So, I think the opportunity that’s before us is to figure out how, in a shared decision-making environment, patients have access, not to information but to knowledge. And that they can express their values in helping to make that treatment selection that really reflects what they want out of care at the individual level. From our perspective, that’s how you get at value. If the end goal of what we’re trying to get to is a system that delivers value, the ultimate consumer in the system is the patient. Having that is sort of the central star with which we’re trying to align—value to the patient&mdash;which again gets you into this world of patient centeredness.

At least from the patient perspective, if we’re going to redesign and realign incentives—as well as not just the payment incentives, but the delivery platforms&mdash;how do you do that in such a way that it really allows and empowers patients to express their values and make decisions in the healthcare environment that reflect what they’re trying to get out of their care? I would suggest to you that the answer varies from patient to patient. If given that choice and given a system that allows them to do that, I would guess that oftentimes, patients would make different decisions than what you might think that they would make.

 We’ve been sort of focused on the numerator here; not to get mathematical, but in terms of the quality or outcomes component to this. The cost component is equally as challenging because a lot of times we gravitate right to, literally, the value associated with the drug. And the fact of the matter is [that] there’s a value associated with their overall care, which includes their hospital care, if that’s involved, and their radiology as well. So this is very complex.

And the one thing I would challenge, and I think it’s going to come up in our discussion today when talking about all these calculators and all this other stuff, is that it can’t just be about the drug. Because we, Milliman, commissioned a study that was released recently that shows that your drug piece, which is very important and something that has to be controlled, is only, if you look at the Medicare side, it’s 18%. If you look at the commercial side, on average, it’s 21%. It’s only a piece, about one-fifth, of all the cost that you include when you talk about treating cancer.

Can Patients Distinguish Volume From Value in Healthcare?

 I think an argument could be made that the patient is the recipient of care, but they’re not the consumer of care. In fact, from a medical oncologist perspective from someone who has practiced medical oncology for 25 years, my referring doctors were consumers. That’s how I stayed in business and had referrals. My payers were consumers because they were paying for care as an extension of an employer, and the employer was really paying for the care.

So how did we get to this point? Is it really a patient-focused evolution? Or is there something different that’s happening?

 I think a big part of it is that the cost of care has risen so quickly, and we have become extremely uncomfortable with such a high percentage of the GDP [gross domestic product] being devoted to healthcare. We’re just uncomfortable with that, and we should be uncomfortable with that. I think, though, that the discussion around each stakeholder having a different value construct–some stakeholders being consumers, some stakeholders not being consumers–I don’t think that’s particularly constructive.

First of all, I’m not a patient, but I also took care of patients for a very long time. And, although I do believe there may be individual differences, it’s not hard for me to understand, from a more global context, what is important to patients. I talk to enough of them to have a pretty good idea. And there are nuances.

I’ve worked for a payer long enough, now, to understand that there are certain global things that payers are interested in. And certainly, I was a physician, so I understand what physicians are interested in. I also understand what innovators are interested in and why pharmaceutical companies are stakeholders in this space too. I actually think it’s a lot more beneficial to take a step back and say, “Okay, we believe each of these [stakeholders] has a slightly nuanced value construct, but there’s actually a lot more in common than there is in conflict,” rather than saying, “I have primacy.” That’s just not constructive.

I think the fact of the matter is that a lot of my patients wanted to go on clinical trials, not because they were going to personally benefit, but because they were going to help society. And I think a lot of patients do think about how much things cost, both in terms of the implications for their bank account, and the likelihood that they’ll have bankruptcy, as well as just a sense of how much we are spending on treatments that might have marginal impact. So, I think that it’s come to a head now because we’ve developed this almost adversarial relationship among stakeholders. It’s not constructive.

 I think that’s very well said. From my perspective, I think it is the silo mentality that often persists because what you just described is actually very hard to do, right? So, Ted, when you talked about the denominator of drug cost–“let’s look at total direct cost,” “let’s look at indirect cost as well”–I think oftentimes, as a broader community, we gravitate toward what might be the easiest change to enact. The fact of the matter is the whole discussion around value and the whole discussion around the number of stakeholders that are involved in defining it is just not easy.

 I think we got here because, as a society, we are using more healthcare. We’re growing older, we’re not as healthy as we should be, but no one politically wants to touch that at all. So, what do we do?

We focus on, in essence, the demand side for healthcare services. And as you said, Mike, it’s growing disproportionately in terms of GDP. As a result, we have to say, “We have to look at value.” That’s the answer–we have to seek value. So, we throw things out from a policy standpoint, but it’s actually hitting only one side of the supply-demand equation. That’s troubling to me because I think no matter what we do, we’re never going to slow it down enough because we still have more and more demand for healthcare services.

 That said, the opportunity here is that although there have been some clumsy attempts at defining it, there is a desire to bring in a scientific method–some sort of objective way of measuring inputs. And, I will say, unfortunately, not all stakeholders have been equally represented in those clumsy attempts. Hopefully, that will get fixed.

The point is that we know there’s a problem. We know that the path we’re down is not going to lead to a solution. But, the idea that we can bring some sort of intellectual honesty and scientific rigor to assessing these novel therapies, these changes in care delivery, and a way of deciding–does this really make people feel better, live longer, be happier, enjoy more health? We’re there now. That’s a good thing. We have not been there before.

Arguing for the Patient as the Consumer of Healthcare

 There was a point in time where all of this driving was just to make an impact—just to help patients overcome suffering and live longer. We’re now at a point where we have cures. We have diseases which convert into chronic disease and we have therapies that can be administered with much less suffering. I think you get to a point where, as in a specific disease like testicular cancer, we can say, “Maybe we don’t need 6 cycles. Maybe we can actually give 4 or give 3.”

I think that, in a way, that value story may be a bit of an evolution. It was almost impossible to go down that road when all you’re doing is striving for some improvement in people who are suffering. Now, maybe, we’ve gotten to a point where there’s enough improvement that we can start to look at this.

Now we’re at a point where you look at the NCCN [National Comprehensive Cancer Network] Guidelines and see 16 different regimens listed for node positive HER-2-negative breast cancer. And you’ve got to ask yourself, “Can that much variance be a good thing?”

So, Ira, you’ve lived for years on that payer side, and now you’re on the pharmaceutical side. It’s a learning piece for you. Maybe you’re understanding a new perspective.

 Yes. When I think about value in the pharmaceutical industry, I think of, “Can we define what we’re talking about?” I work in the brand space. Innovative medicines come from preclinical; through phase 1, 2, and 3; to FDA approval. Then, post market surveillance after that. So, there’s value on the generic side, but I’m not an expert on that.

If you look at other disease states and populations—for example, if you look at cardiovascular disease, death rates have gone down by half, in the past 20 years, and the therapy is pennies per day. We tend to forget about that. But, working in the brand space, I think about parsing this between, “What about introducing a new drug in a therapeutic class where there are multiple other drugs?” and, “Are we doing a lot for society?” I think about parsing that versus trying to explore new mechanisms, or greatly improved mechanisms of managing disease to get to what you said before, which is cure or amelioration of disease and the ability to translate that disease into a chronic disease.

I now look at how brand companies can think about putting drugs into the innovative space. There are some issues there because we’re talking about a point where we want to investigate this. So, are we going to investigate this using the tools we’ve used in the past? The tools we’ve used in the past are the ones that have been handed to us by the FDA that look at safety and efficacy. So, the tools of overall survival, progression free survival, and time to progression—those things sometimes work, but in breakthrough drugs may not be so accurate. Then, there are some surrogate measures that just don’t work at all.

I think we have to get better at the tools. What are the rulers? I would argue that in breakthrough treatments, sometimes, we don’t have overall survival data because the drug is too good and it’s too far in the future. That’s a good problem to have, but it’s a tough problem as we wrestle with the overall problem of the cost of drugs and how that nests within the total cost of care. We just don’t have a lot of data. The other thing is that we don’t have a lot of great data exchange.

I do think that this new paradigm that Mike talked about will hopefully include people being transparent not just about some aspects of how they do their business, but also about data sharing. We’ve got data that is locked up in multiple vaults that I think is not benefiting society because we’re not sharing it. That is a way to reduce costs.

Understanding the Drug Developer's Perception of Value

 There’s all this effort to have patients put skin in the game, and they’re definitely putting skin in the game now, to the point where the patients that we serve are choosing between their medication and literally groceries, their car, and utilities. These are consumers who are making tragic trade-offs, based on their financial situations, to afford their care. They are the persons to whom the ultimate benefit of the service is supposed to accrue. All of the other stakeholders in the system, while they are consumers in a different way, they are benefiting in monetary ways that the patient is not.

I think it’s important for patients to have a financial stake in that arena. But, I also think it opens the door to a more prominent place at that stakeholder table when determining, “What is value?” How is that value going to be realized for the individual patient, especially low-income patients who are making trade-offs between their financial health, their personal health, and their physical health?

It really speaks to having everybody come together. This idea of sort of dividing, conquering, and pointing the finger at each other; or saying it’s one group’s cost over another group’s cost—I really think that is what we need to get away from. We need to bring everybody together around the notion of trying to bring benefit to that individual patient.

So back to the point about variance; I do think variance can be confusing for patients and difficult to manage. But oftentimes, variance can also be important if it speaks to variance in subpopulations and gets to, “What is unique?” There might be specific treatment options that really better realize my [patient’s] preferences. There may be a product that may not have as much likelihood of increased survival, but may have a lower side-effect profile. I may want to tradeoff between one of those other 2 variables.

Giving patients that opportunity in a shared decision-making environment, to sort of express, “What am I really focused on?” “Am I concerned about neuropathy?” “Am I concerned about getting to my daughter’s wedding?” “Am I concerned about not having nausea?” “What are my goals?” “What are the options available to me that really speak to what I want to try to get out of care?” It’s not that the patient needs to become a doctor to make those decisions. It needs to be a shared decision-making environment.

 I think you said something important about variance that I should have said when I was trying to answer Bruce’s question. The actual learnings are several standard deviations away on the bell curve, in both directions. So when I was talking about brand drugs that work their way into a therapeutic category that already has drugs, we don’t share data very well. If we did, would we find out if there is a benefit in that product for those people who actually do really well when not expected to, or those who do not do well at all?

If we were better at sharing the data, that would move us along the innovation cycle, much more quickly. For some areas, we’re just not there yet. By looking at the margins and sharing data, we can get deep insights. So, it’s really hard to create breakthrough after breakthrough. Sometimes, the breakthroughs are there on things that don’t look so great if you can look deeper.

Yeah, I fully agree. I’d say the day we launch a product or bring a product to market, based on the regulatory system, is probably the day we know the least about how it’s going to benefit patients. It’s everything, thereafter, as we do some of the post-market surveillance and capture real-world evidence around the impact of that product or service that may ultimately bring information to a patient or a group of patients. It’s important to say, “Maybe that’s not the right day to ask the question on value.”

 Yes, but let’s be fair. That’s because of the way drugs are priced these days. That’s just reality, right? If you can’t, you can’t have both ways, right? You can’t say, “Oh, we don’t really know how good this is until we have it around for a while.” I don’t disagree with that, but pricing it at a premium makes it impossible to allow that real-world evidence to be accumulated because you’re placing yourself in a highly regulated and restricted universe. You can’t have both ways.

 I think that’s where it does become important for patients to know the reality of what is known and what is unknown, and what the costs and benefits of the options before them are. They may make different choices based on their own financial situation or their goal. Like I said before, I think it is important to give that information to patients in a way that they can understand and digest. It’s not monolithic how patients think about value. If given a range of options, and knowing what the trade-offs and what the financial risks are going to be for different choices, I think you’d be surprised how patients would like to have their role in this process—to know and to be honest about what the options are, what the uncertainties are, the risks, the benefits, and what it means for the patient and family, and make a choice.

They’re the ones that are going to live with it. They have this hope and we don’t want that hope to be a false promise. Patients should be given information in a way that allows them to create knowledge, but at a level that they’re comfortable with.

Some patients just want to be told, “What should I do? What is the best option from your point of view, with your expertise?” But others, and we’re seeing this increasingly, want information. They’re out there getting the information off the internet, and they’re coming to the doctor’s office with this mountain of stuff. They already have in their head what they think they want. It might not be the best choice or they might not know all the options but then, that’s the conversation, right? I think that’s part of the challenge—that conversation is not reimbursed very well.

That time it really takes to engage with the patient in that shared decision-making realm, and have that goal-concordant care conversation is one of many things that are important to patients, but that is not currently reimbursed to the extent that it matches the value to patients. This is just one little example of why if we started aligning what’s reimbursed with what actually matters and what’s valuable to patients, I think you’ll start to see services that should be offered that mean something to patients—that really aren’t valued in the system appropriately right now.

Eliminating Data Silos to Benefit the Patient

 It seems to me that both value and cost are very different things to each of the stakeholders. We have been a little bit focused, right now, on that patient perspective, but each of you have a perspective to share. And Mike, I want to start with you as a former practicing oncologist. How do you think the provider sees cost and value? I don’t think it’s going to be the same for each stakeholder.

 So for the oncologist, when they’re trying to weigh through the value decision, let’s just talk about cost, that’s relatively easy. I think the only thing to actually think about, by and large, is whether or not the patient can afford it. Whether or not the patient can accept this therapy given the economic burden it’ll place on them. I don’t think oncologists think about anything else when they make or have a shared decision-making discussion. I definitely don’t think they think about “ASP + 6” [average sales price plus 6%].

I will go formally on record as saying that oncologists never think about what the ASP is so that they can increase the plus 6 part of it. In therapeutics, that just doesn’t happen, right?

Outcomes—outcomes are harder for oncologists. There is not an oncologist who doesn’t like telling the patient that the tumor is smaller. That’s response rate. That’s not a very good outcome, right? It’s a weak outcome. Progression-free survival&mdash;oncologists like not having to change therapy. Changes in therapy or transitions in therapy are uncomfortable for the doctor and the patient.

 They are very stressful. Survival—I have a chance to cure you. Of course they think about how likely it is they’re going to cure the patient. They would love to be able to offer that to more patients.

Those are the outcomes that they think most about when making a treatment decision. They also think about the toxicities they wish to avoid. Everybody uses the example of the piano player and paclitaxel. Fine, that’s okay. That’s old hat, but there’s a lot of other ones. Hair loss is a big one. Fatigue is another big one. Does fatigue mean that I won’t be running the next marathon, or does it mean I won’t be able to get out of bed in the morning? Fatigue is a big one. So, I think toxicity.

 I would add neuropathy because it’s so insidious. You know, “You may be grade 2, but you have the rest of your life...”

 It always gets worse after you stop the drug, right? It never just stops like that. So, I think that when an oncologist is making a decision about outcome, they do think about response rates, progression-free survival, and survival. They think about therapeutic alternatives, especially from the perspective of toxicity. I think that is the value equation for an oncologist.

 Half of the oncologists are now working for an integrated delivery network, which is very different than it was 5 or 10 years ago. So, is it all oncologists, or is that the perspective of the private practice oncologist? Or if it is oncologists, how is the decision making different when that oncologist is a staff physician in a bigger organization that might have a different value and cost perspective?

 I can tell you that if you look at the United Study, which basically looked at taking away the so-called “incentive” and had a number of community oncology practices, the write-up on that appeared in one of the peer-reviewed journals said, “paradoxically,” when the so-called incentive was removed, drug spending went up 179%.

I think there’s a lot of reasons. We don’t have to talk about them now, but that’s kind of interesting. The other interesting thing is when you look at the government’s own watchdog that looks specifically at hospitals that are 340B hospitals that don’t have plus 6, but they have plus 100 on to the cost of the drug, the Government Accountability Office said, “They prescribe more or more expensive drugs.”

 I think it’s fair to say that, and I’ve looked at the claims trail for physicians who practice on both sides. I looked at the hospitalization rates, and the emergency room visit rates, and the length of stay. They’re not that different. If you’re an oncologist, you’re an oncologist.

Now, there may be institutional preferences. I’ll tell you what I mean by that. I remember very well when I was in practice that if you had a patient that was being taken care of in the hospital under a DRG [diagnosis-related group], the likelihood you could give that patient pegfilgrastim was zero. There’s no way the hospital pharmacy is going to eat that charge within the DRG. They won’t let you do it. They may have formulary differences, but the truth of the matter is that I don’t think the pattern of care is all that different unless it’s influenced at the formulary level.

 I agree with you for the most part, Mike. But there are now some heavy institutional pressures. What I mean is there are administrators who realize that, “Oh, my gosh, this drug has a huge margin associated with it.”

 And not that they’re pushing, but they are trying to push in that direction. I’ve got some great examples of where the administrator has come along, especially from newly-acquired practices that don’t yet have, for example, 340B pharmacy, and have said to give “this part of the drug” over here. “This” meaning the brand drug. And basically, the patient has to drive 10 miles to go to the hospital that is 340B. Then, step back and you can give the generics because they’re not worried about the margins being as high. So, I absolutely think beyond just the normal formulary and the P&T committee at the institution level, there are some differences.

But I totally agree with Mike. You don’t have oncologists routinely sitting around with a calculator in their head saying, “Oh, the ASP is this plus 6, so therefore, I should prescribe this.” They’re looking at it from the patient’s perspective, because here’s what’s happening. They’re sitting there with an increasing army of individuals who are trying to figure out how they can get copay assistance. They call the National Patient Advocate Foundation and say, “How can we get this drug?” “How can we get some help on this drug?”

That’s happening more and more. It’s really focused more on the patient because if the patient can’t pay, the patient doesn’t take the drug, and the physician, therefore, doesn’t realize any of the outcomes measures that Mike was talking about.

Value Equation: Do Patients and Oncologists Agree?

 We serve about 25,000 patients a year through our case management program. These patients present to us with a number of different problems. We perform an open-ended intake assessment—we call it the emergency room for affordability and access.

The number-one thing that patients ask for assistance with is [their] co-pay for doctors’ visits and hospital bills. The second thing is transportation. The third thing is co-pay assistance for pharmaceuticals. The fourth is utilities, and the fifth is rent—and there’s a reason for that; I alluded to it before. They’re making trade-offs between affording their insurance care, and their medical care, and their ability to afford their everyday care. Those things bundle at the top. There’s really not any statistical differences between those. That’s just the order of them&mdash;but they all fall within a range where that’s sort of the bundle of things that patients, at least the low-income patients that we’re helping, are presenting to us with.

And so, going back to your conversation about cost, I think in these patients in our surveys, about half the time they are trying to understand what the cost implications of their care are before they start care. Many of them are already seeking that cost—what is the cost burden going to be? I think the patients think about the same things as oncologists and healthcare providers [do]. You know, “What is my chance of survival?” Then, “What are my chances of being progression-free, controlling the tumor?” And they also think about the side effects. I think they’d love to have that conversation, which many of them will&mdash;but not everybody. “Tell me the options. What are the different trade-offs between them?”

I also think that patients, at least based on what we see, particularly low-income patients, are willing to make pretty significant trade-offs in their lives in order to pursue a treatment regimen that either their provider has told them is the best option for them or, even better, [for which] they understand what the risks and benefits are, and they know what the financial risk is, and they’re willing to take it. I think that’s what concerns me about some of this—making decisions beforehand about what a patient can or cannot afford and either limiting choices or directing them in certain ways based on some presuppositions. Rather than how to have that cost conversation, when to have it, and how to do it in a productive way with patients. It is important.

 I’m glad you said that and put it in perspective, and I’m going to keep coming back to this over and over again. Look, the drug piece is something that has to be solved. I have talked to the leadership, as Ira knows, at Janssen. I’ve talked to the leadership of Lilly, and I’ve said to all of the companies, “The drug price is an issue; it has to be addressed.” But we have to put in perspective that even though we come back to the drug piece all the time, there is a big other world out there.

Eighty percent of the pie chart is other costs associated with cancer care. Then, there’s the third dimension of where that care is delivered, because there are differences when it’s in community oncology, an independent practice, or when it’s at the hospital and a large health system site.

So, I’m glad you said Alan that patients are calling in not just saying, “How do I get my drug co-pay?” but, “How do I get my hospital co-pay?” “How do I get my co-pay associated with my physician’s visit, or radiology, or radiation, or any other aspect of it?” We’ve got to be clear about that, because I can tell you right now, and I say it with 2 representatives from drug companies here—it’s a problem.

Cost Implications of Oncology Care for the Patient

 Payers are caught in this limbo area of thinking about population health but being responsible at the patient level—which is your member, your crowd.

 So how do you balance the 2 when you start to think about value and cost?

 When I was on the payer side, we knew all of the rules regarding our various patient populations—commercial, who was fully insured; commercial, who was self-insured by [their] employer; and Medicare and Medicaid, and the rules of the government. We knew what was going on in those worlds and how we could try to pull levers to get more value for the care that we were providing, both in the population health base&mdash;for example, cardiovascular disease&mdash;and the high-cost, low-incidence diseases like cancer. In the commercial population, about 6 per 1000; Medicare maybe about 4 per 1000. And that leads to different strategies.

For population-based care, you can really implement value-based insurance design because the treatments are not expensive and you can remove some of those barriers without hurting anyone’s bottom line. And you can impact a lot of people who get it. It’s not a difficult equation to say, “I’ve had a heart attack. Now my ACE inhibitor and my beta-blocker are free.” Okay, more people are going to take ACE inhibitors and beta-blockers. I totally get that.

With the high-cost, low-incidence diseases is where we struggle. Because 5% of the population typically incurs 50% of the cost, the solutions have to be more personalized. At the same time, as Mike pointed out earlier, the decision maker is often not the patient. Then, as Alan said, it’s often the system. The reason being, the disease is so complicated that you often need to have the decision making made primarily by the provider or the provider group.

That leads you into the types of programs, like oncology medical homes, where you say that the patient’s really not going to be able to pick one of those 16 NCCN [National Comprehensive Cancer Network] regimens for a HER2—negative, node-positive, breast cancer. But, if I have a provider practice that signed a contract that says they’re going to use a narrowed portion of evidence-based medicine, then I kind of delegate that value to the practice. All I have to do is create an insurance design that creates a tiered network so that more patients will go there. And then I’ve tried to solve that by doing sort of a network model and delegating responsibility, and maybe some upwards and downwards risk to the provider group.

That’s how I’ve looked at it on the payer side. On the pharmaceutical side, it gets a little more complicated because “nobody pays retail.” So what’s being touted out there as cost is not actually the real cost. And when I think about the hierarchy of what I would want to eliminate to create more efficiency in the system, I’m not so sure I’d want to take a swing at the innovators first because there’s so much grit in the machine that there’s a lot of other things we can do to lower cost.

We didn’t talk about that political third rail. That’s a little less electric, but still is what we are doing with medical futility and care that’s given at the end of life. We haven’t really talked about why there are such low enrollments in clinical trials. And we haven’t talked about why people are hogging their data and locking it up in safes and not allowing innovation to move quicker. So I would rather take swings at those elements of the system that need to be fixed than something that involves a price that’s not actually the price.

How Do Payers Balance Personalized Care With Population Health?

 The academics that talk about this come from the institutions that are paying, in many cases, 50 cents on the dollar or less. Yet, it’s not the patient who’s getting the benefit of that. It’s the patient who’s calling in to Alan’s organization to basically say, “I can’t afford this drug. I’m making the trade-off between getting this drug or getting my next bunch of groceries.”

That’s a problem. It’s obviously not just 340B. We’ve expanded the Medicaid program—that’s great, more people are covered. But, the Medicaid discounts factor in, as well. It’s very elusive when you talk about the price of a drug being $100 or $100,000&mdash;whatever the case may be.

 It’s a really important discussion that goes back to the initial question that led us here—how do the different stakeholders define value? I think, as an innovative pharmaceutical company, we would define value as the innovation that we are bringing to the marketplace. When referring back to the initial equation of quality over cost, you know that innovation is not necessarily only breakthrough innovation, but in some cases, incremental innovation, is just as important. This goes back to the point I made earlier around understanding the value of that particular innovation over time.

When it comes to the price that someone actually pays for a drug, I think that when we consider this as a pharmaceutical company, we think of how many hands are ultimately touching that product across the value chain before it ultimately makes its way to a patient. I’ve heard anywhere from 10 to 30, right? So there’s a number of other actors within the particular space where there’s opportunity for margin. There’s opportunity for added value, as well. I think we need to figure out how to “right size” what we pay for those various services along the value chain.

, some of the statistics we were just talking about—67% of that drug is ultimately paid within the commercial marketplace, and an average of around 19% of that price is actually paid within the government space, when you consider all of these additional components once the product ultimately makes it to the patient.

So we need to “right size” some of that. No doubt, there are some bad actors on the pharmaceutical side as well. There’s been some, as of late, that have gotten quite a bit of press, but, I do ultimately believe that for the most part, innovative pharmaceutical companies are looking to price medications based on that value that they ultimately bring to the marketplace.

 I think everybody has a responsibility, because this is about value that’s delivered. I’ve said it publicly—community oncology is part of the problem. Community oncology has to be part of the solution, and I think that’s inherent in the Oncology Medical Home and some of the things that we’ve tried to do.

Ira, Mike, and Alan have been involved in terms of defining quality and value. We have a responsibility. I think that the drug companies have a responsibility in terms of, literally, value. I know there are impediments that stand in the way. ASP [average sales price] is an impediment. Best price on the Medicare side is an impediment. They have to come down, but drug companies have a responsibility. I think the same holds true on the payer side of it as well. I think it definitely holds true on the large health system side, and even the mid-hospital side, that has, for example, 340B discounts. We’re all in this together. It’s not just about the drug, it’s about the total pie that incorporates all of the component costs of cancer care. We all should be thinking about being measured on value (everyone involved). I also think the patients have a responsibility. We all should be measured in terms of value.

Rightsizing Drug Distribution to Improve Value

 We focused a lot on cost, and we’ve introduced some of the complexities of cost—basic economic modeling, fixed costs, variable costs, global costs, and opportunity costs.

We haven’t really gotten into the value side. The problem when trying to take that cost, and then assign value, is going to be with the evidence that’s behind the value proposition—the evidence that’s supporting quality and efficacy.

Then, we get into levels of evidence, quality of evidence, real-world evidence, and clinical trial issues. How do we start to approach assigning that value story in order to be able to have the equation that Ira opened us up with to explain how we get to value?

 We’re dealing in sort of the world that we know. Let’s put this in an innovation context: there’s been a lot of innovation on the drug discovery side and on the clinical discovery side. We’re trying to innovate, now, on the reimbursement side with the shift from volume to value. But, we’re not really innovating as far as trying to come up with a new way of doing it. We’re sort of using what we know—old tools around efficacy, safety, and evidence&mdash;and we’re applying those when we really should be innovating in the reimbursement environment.

So, what can we bring to the table that is new and different? Just like precision medicine and what’s happening on the research and discovery side, we need the same kind of innovative spirit on the healthcare delivery side. Where I’m going with this is if you look at other sectors of the market—look at refrigerators, look at cars, look at all sorts of other places where consumers are very active and gather a lot of information before they make choices&mdash;those industries (sectors) know so much about their consumer and value. They’ve studied it, and they know it to a “T”. They try to deliver products that the group of individuals or the people they’re trying to sell to will value in some way.

If we’re really going to define value in a way that means something to the patients who are supposed to benefit from that value, the moonshot we need to have is to really understand what patients perceive as value.

 But I would argue it’s an erroneous argument to go after a product comparison. Think more of a utility, where it’s a product and a service. Maybe that might be a better model to start to consider?

 Yes, the analogy certainly has its limitations. I’m not suggesting it’s the same. You’re not buying a car the same way you’re selecting a treatment for oncology, but there are some parallels in terms of people seeking and understanding information about trade-offs and how it affects their financial situation and the utility of the service that they’re engaging in. I think some of that can be applied in the healthcare space.

 But if we take that metaphor a little bit further, what you’re saying is, we have 

. Anybody who suggests that we’re going to have 

 for oncology in America is smoking something, because we’re basically talking about the adoption of health technology assessment, which has been ridiculously radioactive forever. Why is it radioactive? Because health technology assessment means you say no sometimes. We’re not comfortable with that.

What we have, now, are these efforts by ASCO [American Society of Clinical Oncology], and NCCN [National Comprehensive Cancer Network], and ICER [Institute for Clinical and Economic Review]. All of these entities are trying to develop a methodology, not unlike 

 when I’m buying a car, which takes into account reliability, service, cost, safety, and all that other stuff. They’re doing it. They’re using different inputs, but they’re doing it. They don’t have all of the right inputs, and I’m sure we’re going to get into that. It’s a work in progress, and they have used the tools that are currently available to them to try to build a model so that we can have an honest discussion about health technology assessment.

Evaluating the Quality of Evidence Used for Developing Value Frameworks

 Isn’t it really an issue of system fragmentation? It’s a system design or a system fragmentation that won’t allow us to get to the point that you would like to see us get to.

 I’d love to know what Alan’s constituency wants me to know about how we should have this shared decision-making discussion. But, in fact, if a patient comes in to see me, I can’t tell them what a toxicity profile would be for a patient who’s like that person. I can only tell them what a toxicity profile looks like for people in the clinical trial, or some population which may or may not be representative of that patient.

So, all of the value constructs that I mentioned lack some sort of patient-reported outcome—patient experience. I can’t tell the woman who’s sitting in front of me, “Your response rate is going to be 14.3% because that was the response rate in the clinical trial.” Of course that’s irrelevant for this specific patient for any number of reasons, including the high likelihood that she was not well-represented in the clinical trial, upon which all value frameworks are based.

 I think there lies the challenge of some of what we’re trying to do. The information we have, on which we base some of these value decisions now, are not reflective in many ways of the individual sitting in front of you. That is the problem we should try to be solving, and I think what we can do right now is have that conversation [with the patient]. You probably do this, and many oncologists do, but it’s not systematized or scalable in a way that makes sense and that can be repeated and reimbursed.

Talk about what you are concerned about when it comes to safety. Have that conversation [about safety] to help understand what’s important to that patient. What do we mean when we say progression-free survival? What do we mean when we say the tumor shrinks? Give them [the patient] that context for what we know about efficacy and safety, and have that conversation about what’s important.

Say to them, “We know from clinical trial data that you’re likely to have this side effect. I don’t know if it’s going to be the same for you, but this is what the best option for you looks like,” or “Here are 3 options based on what you said are some of the trade-offs,” and, somewhere in there, bring up the cost conversation.

Not every patient is going to want that kind of engagement or conversation, but I think we’re going to have to have it as long as we continue down this path of shifting the cost onto the consumer and, particularly, the patient. The patients, we said, are making serious trade-offs in their lives around their medical care versus their ability [to afford] the day-to-day cost of living.

 Going back to some of your comments, Dr. Kolodziej, is that the enhancement of that patient discussion, from what I understand, is actually the goal of the NCCN’s [National Comprehensive Cancer Network] Evidence Blocks, which is to talk about a specific value scoring tool.

So set aside the robustness, or lack thereof of the inputs to the Evidence Blocks themselves, and think about what the intent is. There’s a big difference between that and ICER [Institute for Clinical and Economic Review], and what ICER is looking to try and accomplish. ICER’s customer, in my opinion, is 

 I totally agree. I think ASCO’s [American Society of Clinical Oncology’s] Value Framework and the NCCN Evidence Blocks are built toward a shared decision-making perspective. The drug advocates in ICER are [worried] about how much your drugs should cost at the time of release, given quality-adjusted life years or whatever metric you wish to use. It’s very different.

 Let’s not forget the fact that there have been a lot of good strides made already in oncology, especially on the community side. Look at the oncology medical home—a number of individuals have been involved with that. Literally, you’re talking about measuring quality and value. You’re talking about the fact that we have 9 practices in this country which were accredited as an Oncology Medical Home. That required them to do things like be open or available 24/7, so that a patient doesn’t go to the hospital for hydration on a weekend; [instead], the patient goes into the clinic. It has required them to rethink. I’m not saying that it’s perfect now, but there have been a lot of strides.

 A lot of work has been done—even looking at things like the patient experience. Certainly, Alan has his tool, which is different from the COA [Community Oncology Alliance] tool, which has been administered now over 70,000 times and has forced oncologists to think about the things they normally don’t think about&mdash;like “How long am I keeping the patient waiting?” and “What does the patient think about me?”

That can lead to the back end, as well as when you talk about the treatment. So I think we should not ignore the fact that there’s a lot that’s been done already.

Data Fragmentation: A Barrier to Value Constructs

 As James pointed out, if there are 10 to 30 middlemen between my company and the patient who gets the drug, isn’t that a crazy supply chain? So, if we want to do what Mike said, which is, get to the point where we’re all in agreement that we need to have some shared responsibility to fix this issue, I would prefer that our federal overseers and masters help us.

Some of the rules tie us up—even some of the anti-kickback rules that may need safe-harbor relief. There are a lot of innovative things that can be done that get grit out of the machine, and allow us to get much more efficiency in the same way that automakers have gained efficiency. We need to actually get better data flow instead of fragmentation.

On the consumer side, Experian and LexisNexis know exactly how much you, Alan, can spend on a refrigerator. But, they don’t know how much Mike and Bruce’s patients can spend. So I would just put a plea in for some of those other things that we’re very good at doing in this country, and that people, in the rest of the western world, envy us for—be innovative in reducing some of the costs that are not about just the price of a pill.

This value conversation does open the door to rethinking about what it is we’re trying to achieve with healthcare. That’s exciting for patients, in particular, because it gives us a chance, hopefully, to be at the table to say, “All right, well, hey, as long as we’re paying a lot now and we’re the ones that are supposed to derive the benefit from the care, let’s talk about what we value.”

And to your point, Mike, we don’t have that information in a real world way that really allows us to be as adaptive and as nimble with that patient. So that’s the problem that we need to fix—how do we actually deliver data in a post-market world?

The challenge is that these products are so expensive out of the gate. It’s expensive to throw it out there in the marketplace and see what happens to it. So my gentle criticism of all the stakeholders is, while we’re talking about value, we’re not really trying to figure out how to create a new system that really understands and delivers value to the patient and determine the gaps that we need to fill to be able to do that. Instead, we’re creating tools based on the old way of doing things and the old notion of providers and payers.

Everybody could get together and decide what value is for the patient, and have the patient there at the table to talk about it. Then, the aggregate of those decisions should reflect net social value. From an insurance perspective, as a patient, I’m not having money taken out of my paycheck, and I’m not putting any money out of coinsurance and copayment in order to give it to the insurance company to try to generate some sort of net social value. Nor am I giving it to the drug companies to do that either. It’s my plan. It’s my coverage. I’m doing it because it’s supposed to provide coverage for me to be able to get treatment for what I need in order to get better and to protect me financially. In the head of a patient, that’s a different value proposition for insurance, and I’m not thinking of insurance as a way to increase net social value. I’m thinking of it as a way to make sure that it’s my plan—I’m going to have coverage. What we’re finding now is that most people don’t have coverage. They’re underinsured.

So, we need to rethink that. If we’re really going to put patients in the position of not being able to afford their care at that basis, then we’ve got to give them more information about how to make smart choices, and tell them the true risks, benefits, and costs to the choices that they’re going to have to make.

Filling the Data Gaps, Improving Patient Understanding

 I’ve heard from practicing physicians, and Ted, you can probably weigh in on frequency, that it is so common today to have a financial counselor in the practice; and that they were already doing that function, but it didn’t really advance the cause at all. If the doctor was already determining a net health benefit by some mechanism, and the financial counselor was then meeting with them to understand their personal financial situation, the framework—as applaudable as it is for what it tried to do&mdash;it doesn’t really advance our position.

 That’s right, and I think from a very practical level, that’s so true. Even in this day and age, small practices that are surviving basically have to have a financial counselor, or at least someone inherently that does that.

I was speaking with a practice administrator recently for a practice with 4 physicians, and it was really instructive. The practice administrator said, “Can you hold on for a second? I have to answer a question.” She took the phone, and she was, in essence, the financial counselor because they don’t have a dedicated person.

Obviously, in some big practices, they have teams of financial counselors. I think that’s an excellent point. Again, I look at it from a practical level. From a practical level, they’re already doing a lot of that. They have to because if not, the patient can’t get the medication or the patient is making the trade-off between groceries and medication.

 So let’s separate out the cost issues and the financial counselor role, and whether or not a physician is actually calculating a net health benefit. I think that’s a fallacy.

I talk to oncologists a lot, and sometimes they don’t like what I say. I would challenge them to tell me how they treated their last 10 metastatic lung cancer patients and what their partner did with the last 10. And the answer is, they don’t know. So tell me how they’re going to improve on that? They don’t even know what they’re doing at the beginning.

ASCO understands that what they have is an imperfect tool. But they are trying to develop a process by which they improve the inputs to get a better product. The separation of cost, because of the benefit design, looks at a Medicare patient differently than a commercially insured patient, and differently from a Medicaid patient. They put the cost in separate and they put the net health benefit in based on toxicity and efficacy. And they also realize that efficacy may be really important [to the patient], but maybe it’s not quite as important if they understand that they have a terminal illness.

 Maybe efficacy goes a little bit lower than progression-free survival.

 It still doesn’t address all the other costs—it’s only cost on the treatment side. From a patient perspective, if you want to have a cost conversation, if you’re not covering all those bases&mdash;from hospital costs, to transportation costs, to radiology (once you get past, sort of, the top 5 things in case management)&mdash;there’s a tie for first place among specialists and primary care visits to doctors, other medical providers, radiologists, anesthesiologists, etc; and then laboratory and prescriptions all sort of tie for fourth. Then, right below that is surgery and radiology.

So, if you’re not at least capturing the 5 or 6 things that patients identify as their primary sources of financial distress, especially for low-income patients, you’re not really having a comprehensive conversation about cost that’s going to mean something to the patient and help them with their financial situation.

Can Oncologists Perceive the Value of a Treatment?

We’re talking about Abacus, ICER (Institute for Clinical and Economic Review), NCCN (National Comprehensive Cancer Network), and ASCO (American Society of Clinical Oncology). What is that? Drug, drug, drug, and drug. I know it’s really popular in the press to slam the [drug] companies and to focus on the drug price. The drug price is an issue. Of all the components of care, it is the most rapidly growing.

But, it’s so refreshing to hear from someone who’s getting the calls every day about what’s happening and stating that it’s a larger picture than just the drug. If you look at it at the end of the day, it’s not just about an Abacus tool, or an ASCO tool, or an NCCN or ICER tool. It’s about what’s really important to patients—yes, the drug is important, but it’s these other costs, as well.

 I fully agree with that. What I’ll say about the Evidence Blocks is that NCCN, as an organization, has really built an amazing brand on evidence. That’s what that organization has done over time.

The domains around the Evidence Blocks—the efficacy, the safety, the quality of evidence, the consistency of evidence&mdash;a lot of that they’ve done already, and they’ve been able to sort of provide guidance to the practicing community around what guidelines should look like relative to those things. I think the Evidence Blocks is the addition of that fifth component, which is affordability.

This is really done with a very myopic focus on drug cost. I think that while I stated the brand’s been built around evidence, I think the evidence and the methodology behind how you get to affordability in these Evidence Blocks is still relatively misunderstood—at least to me and a number of my colleagues&mdash;as to what they say and then, ultimately, the process for getting there and how many boxes ultimately wind up getting shaded in.

For the most part, if you compare that to [the] acquisition cost of the drug relative across the blocks that they’ve released, I think you see relative consistency—but there are outliers. And, again, I think it’s somewhat a narrow way to try and prescribe that fifth block and say, “This is what it represents affordability-wise to any one specific patient.”

What I really like is the intent for that discussion. It is not a calculator that ultimately spits out one number and says, “You should look at this particular patient” or “You’re not going to be able to afford this product.” There's a number of things that that conversation ultimately can drive to. If there’s a low ranking on affordability, meaning that the product is particularly expensive, let’s talk about co-pay assistance. Let’s talk about patient assistance programs and the generous programs that a number of companies provide. Let’s enhance that conversation, making sure that it’s happening. Not all the way to Dr. Kolodziej’s point around calculation of net health benefit, but a step in that direction.

The NCCN Evidence Blocks

 You could argue that the reason the patient has been punished as the recipient of care is the rising co-pays and the rising deductibles; and you could argue that the reason for that is because much of this is just so complicated, and so difficult to manage, and so lost in regulatory issues, that there’s low-hanging fruit. The low-hanging fruit happens to be the one element in the cost profile that has had the most egregious increase over time—over the last decade. That comes back to drugs.

You can see why drugs have been picked, and they’re in the center of the target. So we now have these 4 different tools (more to come), and I thought it would be good to finally bring them out in the open and talk about them. I would probably go in the order in which they were released: DrugAbacus came out first, ASCO Value Framework second, NCCN Evidence Blocks came out third, and now ICER. Who wants to give a first stab at just giving that quick 1-minute capsule summary? We’ll start with DrugAbacus. Let’s explain what those little dials are, right?

 The little dials are looking at the components of, basically, value. It goes to, literally, the cost of the drug. Now, I really don’t know what the cost of the drug is to Memorial Sloan Kettering.

 But the dials are valuing efficacy and toxicity?

 Exactly. The one [component] that Dr. Bach left off was the site of service. He left off moving that dial because that dial is dramatically different in terms of where the site of service is. But I don’t know, and I haven’t spoken to an oncologist that has ever looked at this and said, number 1, they can really figure it out, and number 2, that it’s useful. I think the same is true for a patient. So I agree with Mike, that I think it was more meant to basically help Dr. Bach on his soapbox. There’s a problem with drug prices, and therefore, companies need to do something different. You can compare different drugs. I really don’t know, other than that, how useful the DrugAbacus is.

 I don’t think it’s got to do with the soapbox. I think what it’s got to do with is heading toward indication-specific pricing or determining (based on whatever objective criteria is included in the tool) other therapeutic options for that disease or class. What price is justified by the best-available evidence? That’s all it is in my mind. It is not designed for doctors to use, and it’s certainly not designed for patients to access—it’s designed for a dialogue, I think, between perhaps payers, or Medicare, or some other third party with the innovators.

 What’s the value there, especially when you have one individual at one institution that’s sort of determining what some of those are?

 That’s why the dials make a difference. You can personalize relative significance.

 Right—to a degree. There are parameters.

 The concept of the dials is that you’re going to assign a value to each of the components.

 Efficacy is the most important thing to me. Crank it up.

 Right. Crank up efficacy. Toxicity may be a little bit lower. Innovation is one of the dials—how innovative is this? How unique of a population is it that’s being treated with a rare disease? Does that elevate the need or the unmet need and therefore have greater value? So, I think there were some merits in the concept, but I agree with you in terms of asking who uses that tool. Where does that tool have value in the healthcare economy? It’s unclear.

Using the DrugAbacus Value Calculator

 Ira, how do you feel about ASCO’s Value Framework?

 Well, I think it’s like what Mike said—it’s really more about shared decision making. It also contains some of the elements that Peter’s tool [Dr. Peter Bach, DrugAbacus] contains, but contains them in ways that really don’t actually move you to a specific price. It just moves you to a place.

 Right. You get a value story, and then there’s a price. You have to kind of look both ways and decide if it feels good.

 However, one thing I liked about it is that it’s the only tool that was released with a peer-reviewed manuscript that goes into the detail of the methodology. There’s no guesswork about the process that was used and how it came about. But it’s so unwieldy.

 That’s the thing—it’s just so big, I don’t know how applicable it’s going to be.

 It’s not practical. If you look at oncologists that are out there looking at it, and I don’t mean to demonize it because I think it’s a step in a right direction, but I think it’s just not practical.

 No. Bruce, you were in oncology practice for many years. Mike, you were in oncology practice for many years. I was in academics as a hospitalist in the 90s, when we didn’t have personal digital assistants where we could look up stuff and yet technology was exploding.

When I read the ASCO Value Proposition, I felt it put me back to where I was in the late 90s, where I’d have a very complex hospitalized patient with multiple morbidities and I was at a point where I had to talk to them and the family about what would we do. Most of the time, the response was, “Doc, what do you think?” That’s what I think about this.

 To be fair though, I do applaud the fact that ASCO put out the publication and said it is not ready for clinical application. They lay it out, very delineated, all of the limitations. They were very honest about where they were, what they were trying to do, and the limitations of it.

That said, it does have limitations. Automatically, you’re just comparing drugs that were head-to-head in randomized controlled trials. From a patient perspective, I want to compare treatment to treatment, not necessarily head-to-head. So, it’s limited from that perspective. I do think they were trying to decide how this could evolve in such a way that it could have practical applications. I do appreciate what they did with the cost part of it—they didn’t try to incorporate that into the net health benefit score that they derived. It was sort of blank, and they were asking questions about how to deal with this.

 It’s a good thing because it’s not really the cost, and they said that.

 From a patient perspective, if it’s meant to be a tool for use for patients, it has a blank for drug acquisition costs, which means nothing to patients. It has a blank for the cost to the patient. That is a very personal discussion, because although you think the drug price is something or because you think, as a provider, it’s affordable, generally speaking, [you need to consider] what the cost is to patient and what their ability is to pay for it—this is going to depend on a lot of things and only some of which is their insurance design. It depends on how much money they have in the bank and how far they are willing to go. What risks and trade-offs are they willing to make in their own financial life and their own personal life to be able to afford an option if they think that’s the best one for them?

The ASCO Value Framework as a Tool for Shared Decision Making

 To the point of acquisition costs and the cost of drugs, and why these entities have come out with these various tools, isn’t it true that in 2014, the rate of rise of drug costs was about 8% or 9%? And back in 2015, and all the years before that, it actually tracked with the overall medical cost rise—in the 3% to 4% range. The 2014 spike really had to do with more people being covered and a novel therapy set in hepatitis C.

We have these tools all coming out that Bruce is asking us to critique. It is kind of a knee-jerk [reaction] to a one-year aberration—it’s not a trend.

 If you look at the component cost of care—so, think about the pie chart and divvy that up in terms of drug, hospitalization, surgery, radiation, and radiology, and a lot of things&mdash;that actually is the largest growing component from 2004 to 2014, according to the Milliman study that was just released.

That component, both on the commercial side as well as the Medicare side, is the number one growing component. It’s grown over that period by over 300% to 400% on the commercial side. But, why it’s grown is because of the biologics. The biologics, which were a very small sliver, now incorporate a bigger piece of that.

The interesting thing is if you look at cancer costs on the commercial side or the Medicare side from 2004 to 2014, and you compare the rate of increase against sore throats and everything else, all patients, commercial and Medicare (according to that study), are essentially the same. Everybody thinks that cancer [cost] is growing by this huge amount. It doesn’t jive. The drug costs are growing and are as big of a component as is radiation; but hospitalizations, surgery, and some other things have actually decreased during that time period, or have grown at a lesser rate.

So that’s why, overall, when you say, “Oh, cancer care costs are doubling and tripling,” that may be [the case] on the drug side but, that specifically, [is the result] of new therapies. It doesn’t let you guys off the hook because there’s still a pricing issue; but, the fact of the matter is that, overall, the rise on both the Medicare and the commercial population is identical. This is sort of a landmark study that surprises people.

 Let’s not forget that the drug cost trend is mitigated by the introduction of generics into the marketplace.

 I’m totally going to blow that out of the water because I’m going to say one more thing about the Evidence Blocks. Directionally, it’s the right thing in terms of the usability of it, and is something that I think could facilitate (which is what it is designed to do) that conversation between the patient and provider.

It doesn’t get all the way there because of the input problem, and that’s not something NCCN (National Comprehensive Cancer Network) could charge themselves with solving. From an affordability perspective, it does try to capture other things besides the drug. The problem with it is it’s sort of asking a committee to hypothesize about how affordable it is from their perspective. It doesn’t have the same level of evidence and systematic approach that the other segments of the other Evidence Blocks have when it comes to consistency of evidence, quality of evidence, and safety and efficacy. But it’s a start.

From an affordability perspective, it’s looking at it more from that societal point of view—what is the cost to the system? And, again, from a patient perspective, just because you think it’s a 5, it may be very affordable to me. So I think that of all of those things, that’s the one that has the least utility right now from a patient perspective.

Evidence Blocks: Patient Versus Societal Costs

 What ICER is trying to do is more like the Abacus. It is meant to be focused at policy makers and thought leaders, and to have a conversation about value-based pricing—as opposed to [being] a decision-making tool.

I think it actually is trying to do it at 2 levels. You’ve got the care value component which is sort of [at the] individual [level]—that “at what price” to reach a certain benchmark of $100,000 per quality adjusted life year, or $150,000. I think the 2 benchmarks are: what does the price need to be in order to meet that threshold? And then, what is the health system value cost?

Making some assumptions about cost over a short period of time, from a health systems perspective, [I ask] what should the cost be? And that’s sort of the score framework.

It makes sense in some ways, because you’re really trying to capture a lot of input, and you try to be thoughtful and systematic and do a thorough cost—benefit analysis. And quality-adjusted life-years has been a standard, or a tried and true way, of measuring value over the years. I think the problem is if you understand, inherently, the limitations of cost–benefit analysis, then you know, inherently, why there’s flaws in trying to do it that way.

You can identify the upfront high-end costs. You can track those costs over time—you know what those are. Most of the benefits are very difficult to monetize and you wouldn’t even try. [For example], if you actually did a cost—benefit analysis, you probably, at the end of the day, depending on the discount rate you select, would determine that it wouldn’t make sense to have a child. But, because the benefits mean so much to you in ways that you can’t monetize, the cost–benefit analysis idea for something like that falls apart.

I think that’s part of the limitation of something like healthcare. You’re talking about people’s lives, and when we look at how much effort we will put into saving one life, we can clearly show that we value life at a rate much greater than $100,000 or $150,000 per quality-adjusted life-year at the individual level.

So, while I think you’ve got to start somewhere, and I like the idea of trying to gather a bunch of data and have a very academic and somewhat relatively transparent way of doing this—to say, “All right, we might not have everything we need, but at least we’re going to put something together that everybody can take a look at and shoot at and decide what we recommend for a policy for exclusion criteria if the price is going to be high.”&mdash;I just think, inherently, it has the CBA (cost—benefit analysis) approach, which has so many challenges in this space around trying to identify value at the social level and value at the individual level. From a patient perspective, I don’t know how you get past that.

Limitations of ICER's Value Assessment Framework Tool

 One of the potential biggest influences in this value-based care scenario will be the consolidation that’s taking place in the industry. There seem to be a lot of opinions on both sides—the consolidation will drive increased value, and there clearly is some early evidence that consolidation is decreasing value by increasing cost.

So, Ted, I know you waxed in on this poetically quite a bit—that the consolidation, at least in some aspects of the healthcare economy, is increasing cost. It’s not creating more value. So let’s start it off there and we’ll see if we can get a counter opinion.

Oncology Stakeholders Summit, Spring 2016

EP 1: Stakeholders Define Value in Healthcare

EP 2: Can Patients Distinguish Volume From Value in Healthcare?

EP 3: Arguing for the Patient as the Consumer of Healthcare

EP 4: Understanding the Drug Developer's Perception of Value

EP 5: Eliminating Data Silos to Benefit the Patient

EP 6: Value Equation: Do Patients and Oncologists Agree?

EP 7: Cost Implications of Oncology Care for the Patient

EP 8: How Do Payers Balance Personalized Care With Population Health?

EP 9: Rightsizing Drug Distribution to Improve Value

EP 10: Evaluating the Quality of Evidence Used for Developing Value Frameworks

EP 11: Data Fragmentation: A Barrier to Value Constructs

EP 12: Filling the Data Gaps, Improving Patient Understanding

EP 13: Can Oncologists Perceive the Value of a Treatment?

EP 14: The NCCN Evidence Blocks

EP 15: Using the DrugAbacus Value Calculator

EP 16: The ASCO Value Framework as a Tool for Shared Decision Making

EP 17: Evidence Blocks: Patient Versus Societal Costs

EP 18: Limitations of ICER's Value Assessment Framework Tool

EP 19: Impact of Consolidation on the Value of Care Delivery

EP 20: Is a Single-Payer System the Answer to Our Healthcare Woes?

EP 21: Need for Stakeholder Participation in Developing Payment Models

EP 22: Experts Share Final Thoughts on Delivering Better Value-Based Care in Oncology