Use of Cancer Drugs in Medicare

About 1.6 million Americans are diagnosed with cancer every year and around 60% of those persons are Medicare beneficiaries.  Overall around 8 million Medicare beneficiaries have cancer.  Drugs are a common treatment for cancer, and many of the drugs are biologics that are or are derived from organic molecules.  These drugs have special manufacturing, testing and distribution needs that make them very expensive.  Since Medicare pays for around 50% of all cancer care, it is paying for a lot of these drugs.  Two new AHRQ Reports describe use of biologics for cancer by Medicare beneficiaries.   (AHRQ Rpt. 1) (AHRQ Rpt. 2)

The number of beneficiaries using a cancer biologic went from 262,000 in 2006 to 360,000 in 2009.  Overall spending on these drugs has increased even faster.  The primary categories include monoclonal antibodies, kinase inhibitors, biologic response modifiers, immunosuppressives and immunomodulators.  Much of the use of biologics, estimates are as high as 75%, is for off-label uses.   Primary cancers treated include leukemias, lymphomas, lung cancer, breast cancer and prostate cancer.

The whole model for pharmaceuticals is changing dramatically.  Gone are the days of many oral blockbuster drugs.  Those are being replaced by specialty pharmaceuticals like biologics, which often address smaller patient populations but have much higher per dose prices, most of which cannot be justified by the extra effort involved in manufacturing, development and distribution.  Medicare, like private payers, is going to have to find a way to control spending on biologics, a task which is complicated by many of them being covered by Part B and others by Part D.  A good first step for Medicare would be to put all drugs in Part D or at least have them all managed by one vendor, so there could be a consistent approach to ensuring appropriate use and negotiating the best prices.