The high costs of anticancer therapies in the USA: challenges, opportunities, and progress

Abstract

The USA spent $99 billion on orally- and clinician-administered anticancer therapies (excluding supportive care) in 2023 and spending is projected to increase to $180 billion by 2028. Increasing spending on anticancer therapies is largely due to high launch prices of novel therapeutics and price increases of existing products, even in the absence of new evidence of clinical benefit or changes in use. Consequently, high prices have decreased Americans’ access to and affordability of necessary anticancer therapies and thus, increased their risk of cost-related nonadherence, cancer recurrence, and mortality. To address the rising prices and concerns regarding Americans’ spending on anticancer therapies, over the past decade state and federal governments have enacted legislation that caps out-of-pocket spending, expands subsidies, and requires drug price negotiations. Herein, we summarize the US policies aimed to lower the costs of anticancer therapies, discuss the implications of such reforms, and propose additional solutions needed to decrease costs and increase value.

The increasing costs of anticancer therapies have been a major concern of patients, clinicians, and policymakers in the USA. Rising costs are largely the result of high launch prices and subsequent price increases.¹ In 2023, launch prices exceeded $100,000 per year for 95% of new anticancer therapies.^1,2 Furthermore, pharmaceutical manufacturers typically increase prices of marketed drugs, even when unsupported by new evidence of clinical benefit or changes in use.^3–5 For example, the price of lenalidomide, an orally-administered therapy indicated to treat multiple myeloma and myelodysplastic syndromes, increased from $215 per pill in 2005 to $763 per pill in 2020,^6,7 while the monthly price of pralatrexate, a clinician-administered therapy indicated to treat peripheral T-cell lymphoma, rose from $31,684 in 2011 to $45,409 in 2017.⁸

Why are prices in the USA so high? The reason is simple – pharmaceutical manufacturers are permitted to set the prices of anticancer therapies as high as the market will bear.⁹ In the context of rare and complex illnesses with few treatment options, as is the case for many types of cancer, this price appears to be nearly unlimited. In contrast, most other advanced industrialized nations use some form of value assessment (e.g., comparative clinical effectiveness or comparative cost-effectiveness) for determining a fair, negotiated price for treatments that are on the national formulary, including anticancer therapies.¹⁰

Due to disparate pricing approaches, prescription drug prices in the USA are, on average, two to three times higher than other high-income countries.¹¹ Specifically, prices in the USA are 2.4 times higher than the average prices of nine nations – Austria, Australia, Belgium, Canada, Germany, Japan, Sweden, Switzerland, and the United Kingdom.^11,12 In turn, per capita spending on prescription drugs is more than double in the USA compared to industrialized countries across Europe and Asia (Figure 1).⁹ Spending on orally- and clinician-administered anticancer therapy (excluding supportive care) is significantly high in the USA, comprising 45% of global spending each year from 2018 to 2022.¹³ In 2019, the USA spent $65 billion on anticancer therapies,¹³ which translates to median treatment costs of approximately $15,000 per person relative to approximately $6,900 per person in other high-income countries.¹⁴

Figure 1.

2021 Per Capita Pharmaceutical Spending

Source: Authors’ review and analysis of OECD data.

^a Prescription and over-the-counter medication expenditures are in US dollars and include wholesale and retail margins and value-added tax where applicable.

The current drug pricing system has been called unsustainable for commercial and government payers, who ultimately pass high treatment costs to American taxpayers and patients.^15–17 Many patients with cancer experience extreme financial burden, which adversely impacts medication use and clinical outcomes.¹⁷ Evidence suggests that 2% to 35% of patients with cancer have medical debt or borrowed money to pay for care.¹⁷ Moreover, many patients forego or discontinue necessary care due to high out-of-pocket expenses.^17–20 For example, 50% of older adults did not fill prescriptions for anticancer therapy when their out-of-pocket costs exceeded $2,000,¹⁸ whereas 30% of commercially-insured patients with the highest copayments were nonadherent to their orally-administered treatment.²⁰ Consequently, financial burden and cost-related nonadherence contribute to poor prognosis, high risk of cancer recurrence, and low rates of overall survival.^17,20–24

Given the impact of financial burden resulting from anticancer therapies and other high-cost medications, efforts have been made at the state- and federal-level to address out-of-pocket spending and therapy costs, more broadly. These efforts include state specialty drug spending caps and state oral oncology parity laws aimed at commercially-insured individuals and federal reforms to the Medicare medical and prescription drug benefits that covers adults aged 65 and older and those with permanent disabilities and other qualifying health conditions.

Progress on Lowering Anticancer Therapy Costs and Prices at the State-Level

State governments have primarily focused policy efforts on curbing patient out-of-pocket spending, through the implementation of out-of-pocket caps on high-cost medications and enactment of oral oncology parity laws (Figure 2). However, a growing number of states have adopted price transparency laws to understand the contributors to, and mitigate the impact of, high drug prices. Below, we summarize these state efforts and discuss the impact of their implementation.

Figure 2.

Policy Efforts to Lower Anticancer Therapy Costs and Prices at the State-Level

Source: Authors’ review and analysis of state laws, including studies on oncology parity laws^27,28,31 and specialty drug, out-of-pocket caps²⁵ and the National Academy for State Health Policy legislation trackers.

^a Figure presents oral oncology parity laws as of 2021, pricing transparency laws as of 2023, and specialty drug out-of-pocket caps as of 2019.

^b California’s out-of-pocket caps apply to all prescription medications.

Specialty Drug Out-of-Pocket Caps

A small number of states have enacted legislation aimed at lowering patients’ out-of-pocket costs on “specialty drugs.”²⁵ Specialty drugs treat rare or complex health conditions, such as cancer, multiple sclerosis, and hepatitis C, often at high costs to both patients and health plans.^25,26 Research has found that specialty drug out-of-pocket caps (e.g., patients pay no more than $150 per 30-day supply of medication) were associated with a 32% reduction in out-of-pocket spending among the highest spenders.²⁵ Despite potential savings for some patients, adoption of specialty drug caps has been limited, which may reflect concerns that reduced out-of-pocket spending could increase health plan spending.²⁵

Oral Oncology Parity Laws

Since 2007, most states and Washington, DC have adopted oral oncology parity laws, which typically require equivalent cost-sharing for orally- and clinician-administered anticancer therapies.^27–30 Studies have found that oral oncology parity laws modestly improved financial protections for many patients, but alone were insufficient to ensure that patients were protected from high out-of-pocket costs.^27–30 Following the adoption of parity laws, the probability of paying $0 per month for orally-administered anticancer therapy more than doubled;^27,28 however, the proportion of prescription fills costing more than $100 per month slightly increased from 8.4% to 11.1%.²⁷ Minimal reductions in out-of-pocket spending could have resulted from early adopters not implementing out-of-pocket limits.

As of 2017, eleven states have included out-of-pocket caps ($50 to $300) for a monthly supply of orally-administered anticancer therapy.³¹ Research has demonstrated that patients with the highest out-of-pocket spending saved $831 more per orally-administered anticancer medication fill in states with caps than those with traditional parity without caps.³¹ Moreover, out-of-pocket caps applied pre-deductible resulted in even greater savings per prescription fill than those applied post-deductible.³¹ For example, mean out-of-pocket spending declined $92 per orally-administered medication fill and the highest spenders saved $888 per prescription fill.³¹

Although parity could reduce out-of-pocket costs for the highest spenders with cancer, the narrow scope of these laws may have prevented adoption across all 50 states. State oral oncology parity laws only apply to a subset of commercial health plans – fully-insured plans – which means that individuals enrolled in self-funded plans do not benefit from reduced out-of-pocket costs.^27,28,31,32 To address the limitations of state laws, US Congress has repeatedly introduced (2009–2023) legislation that would expand parity to all commercial health plans.^31,32 It is unclear why federal bills have not progressed, but some researchers and clinicians argue that parity has not reached a high enough national priority to be addressed.³²

Price Transparency Laws

Pharmaceutical manufacturers have often argued that high drug prices are the result of investment in research and development (R&D).³³ The estimated cost of developing a new drug is not well-established and ranges from approximately $160 million to $2.6 billion.^33,34 To provide clarity on R&D expenditures and other factors that influence pricing (e.g., pharmaceutical manufacturer rebates paid to health insurers and pharmacy benefits managers), many states have enacted legislation that requires entities along the supply chain (e.g., pharmaceutical manufacturers, pharmacy benefit managers) to report information that contributes to high launch prices and/or price increases.^33,35 Data from early adopters has shown that the rate of drug price increases has decreased following the implementation of transparency laws.^35,36 For example, from 2016 to 2020, Vermont reported a 79% reduction in the number of medicines that reached the state’s per year price increase threshold.³⁵

State pricing transparency laws have resulted in additional policy efforts to lower drug prices, including the establishment of prescription drug affordability boards (PDABs). PDABs often review pricing data and/or reports required by transparency laws to set an upper payment limit or payment cap on drugs deemed unaffordable.^35,37,37 While the goal of PDABs is to reduce government spending and improve patient affordability,^35,37,38 the boards have been highly scrutinized by pharmaceutical manufacturers, payers, clinicians, and patient advocacy organizations, all of whom, contest that a payment cap will have unintended consequences on access.^39–42 Specifically, oncologists caution that upper payment limits set below the acquisition price could lead to rationing of drug supply and closing of community practices.⁴¹ Given the complexities of anticancer therapy storage, preparation, and administration,⁴¹ PDABs should consider the “cost drivers of the drug delivery system”⁴¹ when setting upper payment limits to ensure both the financial stability of community practices and necessary access for patients with cancer.

While state price transparency laws aid in the documentation of financial flows and targeting of policy interventions, they have been challenging to implement. Most states that have pursued transparency legislation have faced legal challenges from the pharmaceutical industry.⁴³ The industry has cited violations of “trade secrets” and patent holders’ rights as the rationale for not complying with pricing disclosure requirements.⁴³ In addition, the scope of existing laws, particularly the entities targeted for reporting, may undermine their impact on high drug prices. Among early adopters of transparency laws, most states targeted one or two entities, which is insufficient to understand transaction prices and profits along the entirety of the supply chain.⁴⁴ Congressional committees have been proactive at introducing federal price transparency legislation, aimed at pharmaceutical manufacturers, pharmacy benefit managers, and health plans, which could address the shortcomings of state laws.^35,45,46 Despite bipartisan interest, federal transparency legislation has failed to progress.

Addressing Increasing Anticancer Therapy Costs and Prices at the Federal-Level

The Inflation Reduction Act (IRA) of 2022 included substantial changes to medication prices and coverage policy for Medicare beneficiaries. Reforms include drug price negotiations, rebates for drug price increases, expansion of prescription drug subsidies, and a redesigned prescription drug benefit that caps out-of-pocket spending. We discuss each of the law’s provisions and the implications of their adoption in greater detail below.

Drug Price Negotiations

While prior state and federal efforts to address prescription drug costs have focused on patient spending, the IRA will tackle one of the root causes of escalating treatment costs – high prices. The Secretary of Health and Human Services (HHS) will now be required to negotiate prices with pharmaceutical manufacturers (traditionally done between plan sponsors and manufacturers) for some brand-name therapies that are covered by Medicare Part B or Part D.⁴⁷ Among drugs without generic or biosimilar competition (Table 1), those with the highest gross Part D and Part B spending will be selected for negotiations, with the number of selected drugs increasing from 10 Part D-covered medications in 2026 to 20 Part D- and Part B-covered drugs in 2029 and beyond.⁴⁷

Table 1.

Criteria for Selecting Products for Drug Price Negotiations

Criteria	Selected Drugs	Common Treated Conditions	Gross Medicare Part D Spendinga	2023 List Priceb	2026 Negotiated Price	Savings
Drugs excluded from negotiations:	Apixaban	Blood clots	$16,482,621,000	$521	$231	$290 (−56%)
Have generic or biosimilar available	Empagliflozin	Diabetes; heart failure	$7,057,707,000	$573	$197	$376 (−66%)
Less than 9 years (small molecule) or 13 years (biologics) from FDA approval or licensure date	Rivaroxaban	Blood clots	$6,031,393,000	$517	$197	$320 (−62%)
“Small biotech drugs” which account for 1% or less of Part D or Part B spending and 80% or more of spending under each part on that manufacturer’s drugs	Sitagliptin	Diabetes	$4,087,81,000	$527	$113	$414 (−79%)
Medicare less than $200 million in 2021 (increased by the CPI-U for subsequent years)	Dapagliflozin	Diabetes; heart failure; chronic kidney disease	$3,268,329,000	$556	$178.50	$377.50 (−68%)
Orphan designation as only FDA-approved indication	Sacubitril/valsartan	Heart failure	$2,884,877,000	$628	$295	$333 (−53%)
All plasma-derived products	Etanercept	Rheumatoid arthritis; psoriasis; psoriatic arthritis	$2,791,105,000	$7,106	$2,355	$4,751 (−67%)
	Ibrutinib	Blood cancers	$2,663,560,000	$14,934	$9,319	$5,615 (−38%)
	Ustekinumab	Psoriasis; psoriatic arthritis; Chron’s disease; ulcerative colitis	$2,638,929,000	$13,836	$4,695	$9,141 (−66%)
	Insulin aspart	Diabetes	$2,576,586,000	$495	$119	$376 (−76%)

Source: Kaiser Family Foundation,⁴⁷ The White House⁵³

Abbreviations: CPI-U, Consumer Price Index for All Urban Consumers; FDA, US Food and Drug Administration

^aMedicare Part D spending is from June 2022-May 2023.

^bMedicare plans already pay discounts on list prices due to rebates (which are confidential) negotiated between pharmaceutical manufacturers and pharmacy benefit managers/health plans.

The law establishes the “maximum fair price” or the upper limit for the negotiated price. The Secretary of HHS has recently completed negotiations for the first 10 Part D-covered medications (including one anticancer therapy, ibrutinib, indicated to treat chronic lymphocytic leukemia, small lymphocytic lymphoma, and Waldenstrom’s macroglobulinemia) and considered R&D, manufacturing, and distribution costs, federal support for R&D, market and sales data, patents and exclusivities, and evidence regarding alternative therapies (e.g., comparative effectiveness of selected drugs and therapeutic alternatives).^47–49 Negotiated Part D drugs will be required to be covered by all prescription drug plans (referred to as “fair price and fair access”), with prices taking effect in January 2026.⁴⁷ For Part B therapies, negotiated prices will be available in January 2028 (negotiations slated to begin in February 2026) and payments to health care providers will be 106% of the “maximum fair price.”⁴⁷

Pharmaceutical manufacturers that choose not to comply with drug price negotiations will either face an excise tax of 65% to 95% of a product’s sales or withdrawal of all products from both Medicare and Medicaid.^47,49 The excise tax, and negotiation program more broadly, have been the impetus for numerous legal challenges, in which the pharmaceutical industry argues price negotiations violate their constitutional rights.^50–52 While many cases are still awaiting decisions,^46,48 district courts in Delaware, New Jersey, and Texas have rejected the industry’s arguments against drug price negotiations.⁵² The pharmaceutical industry is continuing to fight the negotiation program through appeals,⁵² but “maximum fair prices” for the first 10 Part D-covered drugs were recently published on August 15, 2024 (Table 1).⁵³

In addition, pharmaceutical manufactures have contended that drug price negotiations will adversely impact future innovation.^54–56 Negotiations are expected to save Medicare $98.5 million over the next seven years,⁴⁷ yet declining pharmaceutical manufacturer revenues could result in 1 to 139 fewer new drugs entering the market during this same period.^47,55 Although estimates of “lost drugs” vary significantly and continue to be debated,^47,55 the more important question is if and how the composition of innovation will change. For example, the establishment of Medicare Part D spurred the development of products targeted to treat illnesses affecting older adults;^57,58 however, most of this “innovation” was concentrated on diseases that already had multiple existing treatments.⁵⁸ Monitoring the industry’s R&D investment should be a priority, but an aging population coupled with high returns on anticancer therapies suggests that substantial incentives will exist for future innovation.

The pharmaceutical industry has also argued that the criteria used to select drugs for negotiations impose a “penalty” for manufacturers of small-molecule drugs.^56,59,60 Since small-molecule drugs become eligible for negotiations after only 9 years on the market (versus 13 years for biologics),⁴⁷ pharmaceutical manufacturers stand to lose 50% of a product’s revenue which occurs between years 9 and 13 on the market.^56,61 Consequently, manufacturers have started to deprioritize the development or launch of small-molecule therapies, especially those that target conditions of older adults (e.g., cancer).^61,62 However, the actions of small-molecule manufacturers may be premature, as the negotiated price of ibrutinib suggests HHS pursued the minimum required discount (25% of the non-federal average manufacturer price)⁶³ and the introduction of federal legislation aimed at “equalizing” the negotiating criteria for small- and large-molecule drugs.^64,65 Together, these actions could ensure the profitability of and future investment in small-molecule drugs, especially anticancer therapies.

Rebates for Drug Price Increases Above Inflation

While new technologies often become more affordable over time due to improved efficiencies in manufacturing and competitive market pressures, brand-name medications, especially anticancer therapies, tend to have annual prices increases that exceed inflation.^4,66,67 For instance, from 2019 to 2020 the rate of inflation was 1%, yet the prices of lenalidomide (orally-administered therapy indicated to treat multiple myeloma and myelodysplastic syndromes) and pembrolizumab (clinician-administered therapy indicated to treat numerous solid tumors) rose 6.5% and 3.3%, respectively.⁶⁶ Medicare did not have the authority to limit these drug price increases; however, starting in 2023, pharmaceutical manufacturers must pay a rebate if prices of Part D- and Part B-covered drugs increase faster than the rate of inflation.⁴⁷

Inflation rebates are projected to save Medicare $56.3 billion over the next seven years,⁴⁷ and limit the growth of beneficiaries’ premiums and out-of-pocket costs.⁴⁷ For example, beneficiaries receiving enfortumab vedotin-ejfv, a clinician-administered therapy indicated to treat advanced bladder cancer, saved as much as $1,181 in Part B coinsurance from April 2023 through March 2024.⁶⁸ To slow price growth over time and avoid inflation penalties, the Congressional Budget Office expects pharmaceutical manufacturers to increase launch prices of orally- and clinician-administered drugs coming to the market in 2023 and beyond.^47,69 Prices for new drugs rose 35% from 2022 to 2023, although a rationale for such an increase is not entirely clear.⁷⁰ Given that Medicare plans are required to cover all anticancer therapies,^71,72 opportunities to address the prices of new orally- and clinician-administered therapies would be limited until the products have been on the market for at least 9 or 13 years and become eligible for price negotiations.⁴⁷

Low-income Subsidy Eligibility Expansion

The Medicare Part D low-income subsidy (LIS) program provides assistance with prescription drug premiums and cost-sharing for beneficiaries with limited incomes and assets.⁴⁷ Since its inception in 2006, the program has offered full subsidies to beneficiaries who were dually-eligible for Medicaid, participated in Shared Savings Programs, or had incomes <135% of the federal poverty level (FPL) and assets ≤$10,590 (in 2023); and partial subsidies to beneficiaries with incomes <150% of the FPL and assets between $10,590 and $16,660 (in 2023).^47,73 Full subsidy recipients were only responsible for modest copayments (e.g., $10.35 for a brand-name medication in 2023), while partial subsidy recipients paid an annual deductible ($104 in 2023) and 15% coinsurance up to a specified out-of-pocket threshold ($7,400 in 2023).⁷³

Research has demonstrated that receipt of full subsidies was associated with improved uptake of and short-term adherence to orally-administered anticancer therapies.^74–77 Conversely, studies have shown that partial subsidy recipients were the least likely to start orally-administered anticancer therapy compared to their full subsidy and non-subsidy counterparts.⁷⁴ Recognizing this, the IRA now extends the full subsidy benefit to individuals who were eligible for partial subsidies (income <150% of the FPL).⁴⁷ Modifications to the program became effective in 2024 and are expected to decrease annual out-of-pocket spending by an average of $300 for approximately 400,000 beneficiaries,⁴⁷ although the savings will likely be greater for patients taking high-priced anticancer therapies.

While LIS expansion could aid low-income beneficiaries, questions remain regarding the impact of subsidies on health equity. Many Black and Hispanic beneficiaries who qualify for subsidies are often unaware of the LIS program and enrollment process.^78,79 The Centers for Medicare & Medicaid Services (CMS) should focus on developing educational resources, which are culturally- and linguistically-sensitive,⁷⁸ to raise awareness of and ensure all qualifying beneficiaries benefit from reduced cost-sharing. The expansion of subsidies is a critical step in addressing inequities in anticancer therapy use; however, reduced out-of-pocket costs alone may be insufficient to narrow racial and ethnic inequities.⁸⁰ Evidence suggests that Black beneficiaries were less likely than White beneficiaries to start orally-administered anticancer therapy, regardless of subsidy status.⁸⁰ Therefore, clinicians and policymakers should address known barriers to access (e.g., implicit bias, social determinants of health) to improve health equity.⁸⁰

Medicare Part D Prescription Drug Benefit Redesign

Historically, the standard Medicare Part D prescription drug benefit has been comprised of four phases – a deductible, the initial coverage phase, the coverage gap phase, and catastrophic coverage – in which, the responsibility for prescription drug costs varied across beneficiaries, health plan sponsors, pharmaceutical manufacturers, and Medicare (Figure 3).^47,81 Depending on the coverage phase, beneficiaries’ costs would shift from flat-fee copayments to coinsurance (e.g., 25% of a medication’s price),^47,81 which often resulted in inconsistent and substantial cost-sharing with each prescription fill. Moreover, the standard benefit did not include an out-of-pocket spending limit, meaning beneficiaries needing high-priced medications, such as anticancer therapies, could spend tens of thousands of dollars for a single prescription fill.^26,80

Figure 3.

Medicare Part D Prescription Benefit Redesign

Source: Kaiser Family Foundation^47,81

The IRA completely redesigns the Medicare Part D benefit in 2024 and 2025 (Figure 3). Specifically, beneficiaries’ 5% coinsurance requirement in catastrophic coverage was eliminated in 2024, which essentially capped out-of-pocket spending at approximately $3,300.^47,81 An out-of-pocket spending limit of $2,000 will be introduced in 2025, and beneficiaries will have the option of “smoothing” their out-of-pocket costs, rather than face high upfront expenses.^47,81 Additionally, Part D redesign includes modifications to health plan sponsors’ and pharmaceutical manufacturers’ liability to address long-standing concerns regarding incentives to use high-priced drugs.^26,47,81 After beneficiaries reach the $2,000 out-of-pocket limit, health plan sponsors share of costs will be 60% for brand-name and generic medications and manufacturers will provide a 20% discount on brand-name drugs.^47,81

Medicare Part D redesign is expected to reduce out-of-pockets costs for beneficiaries with relatively high spending, including those prescribed high-priced anticancer therapies.^47,81,82 For example, an estimated 1.4 million Part D beneficiaries could save an average of 40% of their annual out-of-pocket costs with the implementation of the out-of-pocket spending limit.⁴⁷ Despite these potential savings, capping out-of-pocket spending could result in increased premiums.⁴⁷ However, the IRA limits base premium increases to no more than 6% from the prior year, which, coupled with increased utilization management strategies (e.g., prior authorization, step therapy), could mitigate premium hikes from 2024 to 2030.⁴⁷ Nevertheless, CMS will need to monitor premiums to ensure they remain affordable and do not negatively impact access to necessary prescription drugs.

The option to “smooth” out-of-pocket payments (referred to as Medicare Prescription Drug Payment Plan) aims to address concerns that, even with a $2,000 out-of-pocket spending limit, beneficiaries with high upfront costs may be unable to afford their medication.^82,83 Most beneficiaries filling prescriptions for anticancer therapies would benefit from enrolling in the payment plan; however, those filling prescriptions earlier in the year would have much lower out-of-pocket costs (e.g., $167) than their counterparts filling at the end of the year (e.g., $500-$2,000).^82,82 CMS is continuing to develop guidance for the implementation of the payment plan to ensure they target the Medicare Part beneficiaries likely to benefit and streamline the enrollment process.^82,83

Remaining Barriers to Anticancer Therapy Affordability and Future Directions

Despite state and federal progress, there remain several important barriers to improving affordability of anticancer therapy for patients and for society, more broadly. These include high and growing launch prices for new drugs, challenges with biosimilar and generic price competition, and a disconnect between drug prices and drug value, especially in settings where clinical outcomes are uncertain. These issues are particularly challenging in the context of anticancer therapies.

High Launch Prices

The IRA aims to lower prescription drug prices of products nearing the end of market exclusivity through negotiation;⁴⁷ however, the law does not address high launch prices of newly approved products or indications. For anticancer therapies that have broad, mandatory coverage in Medicare and new limits on beneficiaries’ out-of-pocket spending, it is reasonable to assume that launch prices will increase (even significantly) in future years. Research has shown that launch prices have increased 20% each from 2008 to 2021,¹ which demonstrates the lack of effective negotiation of new therapies. If launch prices continue this trajectory, policymakers will likely need to extend the price negotiation program to protect Medicare beneficiaries and taxpayers from excessively high spending on new drugs, including anticancer therapies.

Limited Generic and Biosimilar Competition

Following the enactment of the Hatch-Waxman Act in 1984, efforts to lower drug prices have focused on the market entry of generics or low-cost alternatives. Consequently, pharmaceutical manufacturers have adopted numerous strategies (e.g., reverse payments) to delay competition.^84–86 Research suggests that public payers have spent in excess of $109 million annually for 31 products with delayed generic entry.⁸⁶ Given that patent practices and litigation are the most common cause of delayed entry,⁸⁶ the Federal Trade Commission (FTC) is challenging over 300 improper listings of or “junk” patents for 20 brand-name medications.^87–89 The FTC contends that these “sham” listings impede timely generic competition and thus, drive up costs for patients, health plans, and taxpayers.⁸⁷ While the FTC is focusing on drugs indicated to treat diabetes, asthma, and chronic obstructive pulmonary disease,⁹⁰ US lawmakers have called on federal agencies to scrutinize patent requests of anticancer therapy manufacturers.⁹¹

Brand-name pharmaceutical manufacturers also file multiple, often overlapping patents on a single product (“thickets”), extending market exclusivity and revenues far beyond the 20-year patent term.^92–95 For example, lenalidomide (orally-administered therapy indicated to treat multiple myeloma and myelodysplastic syndromes) has been granted 117 patents which have limited unrestricted generic entry until 2026 and resulted in over one-third of US sales in the period following primary patent expiration in November 2019.⁹³ Additionally, patent thickets are costly to litigate as generic and biosimilar manufacturers must contest a “dense web” of patents when challenging existing protections of brand-name drugs.⁹⁴ Specifically, the mean number of patents asserted against 30 biosimilars in the USA was 16.2 versus 1.8 and 1.3 in Canada and the United Kingdom, respectively.⁹⁴ To address the costly delays in generic and biosimilar market entry, the US Senate unanimously passed bipartisan legislation – Affordable Prescriptions for Patients Act – which will limit the number of patents a pharmaceutical manufacturer can assert on a brand-name therapy.^95,96

Since the adoption of biosimilars was initially low in the USA,^97–99 the Food and Drug Administration (FDA) developed the Biosimilars Action Plan to enhance the efficiencies of product development and approval, improve the understanding of biosimilars and interchangeability, and deter anti-competitive practices.¹⁰⁰ In turn, uptake of biosimilars has steadily increased, especially in oncology.¹⁰¹ As of the first quarter of 2023, the market share of biosimilars for trastuzumab (clinician-administered therapy indicated to treat breast, stomach, and esophageal cancer) and bevacizumab (clinician-administered therapy indicated to treat glioblastoma, ovarian, cervical, renal, colorectal, non-small cell lung, and hepatocellular cancer) reached 83% and 85%, respectively.¹⁰¹Efforts continue to ensure the sufficient market share of biosimilars. Specifically, the IRA temporarily increases payments to health care providers (from October 2022, lasting five years) to incentivize the use of biosimilars covered by Medicare Part B,⁴⁷ while the FDA has issued draft guidance that would relax switching study requirements for interchangeability desgination.¹⁰²

Finally, as an increasing number of anticancer therapies face generic and biosimilar competition, it will be important to monitor both health plan and patient costs. Although evidence is limited, studies have demonstrated that Medicare Part D prescription drug plan sponsors overpay for some generic anticancer therapies relative to the acquisition cost.^103,104 For example, imatinib (orally-administered therapy indicated to treat various leukemias and gastrointestinal stromal tumors) had an acquisition cost of $4.20 per tablet but was reimbursed at a mean of $126.05 per tablet.¹⁰³ Additionally, data from transparent cash-pay generic retailers (e.g., Mark Cuban’s Cost Plus Drugs) and investigations into the practices of pharmacy benefit managers are shedding light on plan overpayments.^105,106 According to a recent Federal Trade Commission report, a single fill of generic imatinib ranged from $97 at a non-preferred pharmacy to $19,200 for mail order (which is preferred by the prescription drug plan).¹⁰⁶ It is unclear who profits specifically from these arrangements (e.g., pharmacy benefit managers, pharmacies), but it is likely to be increasing spending by beneficiaries and taxpayers.

Paying for Unknown or Limited Clinical Benefit

The FDA accelerated approval pathway plays an important role in expediting access to potentially life-extending and life-saving medications.¹⁰⁷ Under the pathway, the FDA can approve a drug based on surrogate endpoints (e.g., progression free survival) that are reasonably likely to predict clinical benefit (e.g., overall survival).^107,108 The pathway is predominantly used in oncology, with anticancer therapies accounting for approximately 85% of accelerated approvals in the past decade (Table 2).¹⁰⁹ Although manufacturers must complete postmarketing studies to confirm drugs’ clinical benefit, delays in study completion coupled with products’ high costs and questionable therapeutic value have increased scrutiny of the accelerated approval pathway.^107,108

Table 2.

Medicare Part B Covered Anticancer Therapies Granted Accelerated Approval, 2009-2020

Brand Name	Generic Name	Accelerated Approval Date	Cancer Indication	Status	Conversion-Withdrawal Date
Avastin	Bevacizumab	5/5/2009	Glioblastoma	Converted	12/5/2017
Folotyn	Pralatrexate	9/24/2009	T-cell lymphoma	Not yet converted
Kesimpta	Ofatumumab	10/26/2009	Chronic lymphocytic leukemia	Converted	4/17/2014
Istodax	Romidepsin	6/16/2011	T-cell lymphoma	Withdrawn	7/30/2021
Marqibo	vincristine sulfate	8/9/2012	Acute lymphoblastic leukemia	Withdrawn	5/2/2022
Perjeta	Pertuzumab	9/30/2013	Breast cancer	Converted	12/20/2017
Beleodaq	Belinostat	7/3/2014	T-cell lymphoma	Not yet converted
Keytruda	Pembrolizumab	9/2/2014	Melanoma	Converted	12/18/2015
Blincyto	Blinatumomab	12/3/2014	Acute lymphoblastic leukemia	Converted	7/11/2017
Opdivo	Nivolumab	12/22/2014	Melanoma	Converted	3/7/2019
Opdivo	Nivolumab	9/30/2015	Melanoma	Converted	3/7/2019
Keytruda	Pembrolizumab	10/2/2015	Non-small cell lung cancer	Converted	10/24/2016
Darzalex	Daratumumab	11/16/2015	Multiple myeloma	Converted	11/21/2016
Opdivo	Nivolumab	1/23/2016	Melanoma	Converted	3/7/2019
Opdivo	Nivolumab	5/17/2016	Hodgkin lymphoma	Not yet converted
Tecentriq	Atezolizumab	5/18/2016	Urothelial carcinoma	Withdrawn	4/13/2021
Keytruda	Pembrolizumab	8/5/2016	Head and neck cancer	Converted	6/10/2019
Lartruvo	Olaratumab	10/19/2016	Soft tissue carcinoma	Withdrawn	2/25/2020
Opdivo	Nivolumab	2/2/2017	Urothelial carcinoma	Converted	8/19/2021
Keytruda	Pembrolizumab	3/14/2017	Hodgkin lymphoma	Converted	10/14/2020
Bavencio	Avelumab	3/23/2017	Merkel cell carcinoma	Converted	9/6/2023
Tecentriq	Atezolizumab	4/17/2017	Urothelial carcinoma	Withdrawn	12/2/2022
Opdivo	Nivolumab	4/25/2017	Hodgkin lymphoma	Not yet converted
Imfinzi	Durvalumab	5/1/2017	Urothelial carcinoma	Withdrawn	2/19/2021
Bavencio	Avelumab	5/9/2017	Urothelial carcinoma	Converted	6/30/2020
Keytruda	Pembrolizumab	5/10/2017	Non-small cell lung cancer	Converted	8/20/2018
Keytruda	Pembrolizumab	5/18/2017	Urothelial carcinoma	Converted	8/31/2021
Keytruda	Pembrolizumab	5/23/2017	Solid tumors	Converted	3/28/2023
Opdivo	Nivolumab	7/31/2017	Colorectal cancer	Not yet converted
Keytruda	Pembrolizumab	9/22/2017	Gastric adenocarcinoma	Withdrawn	2/4/2022
Opdivo	Nivolumab	9/22/2017	Hepatocellular carcinoma	Withdrawn	7/23/2021
Blincyto	Blinatumomab	3/29/2018	Acute lymphoblastic leukemia	Converted	6/20/2023
Keytruda	Pembrolizumab	6/12/2018	Cervical cancer	Converted	10/13/2021
Keytruda	Pembrolizumab	6/13/2018	B-cell lymphoma	Converted	10/14/2020
Yervoy	Ipilimumab	7/10/2018	Colorectal Cancer	Not yet converted
Opdivo	Nivolumab	7/10/2018	Colorectal Cancer	Not yet converted
Opdivo	Nivolumab	8/16/2018	Small cell lung cancer	Withdrawn	12/29/2020
Keytruda	Pembrolizumab	11/9/2018	Hepatocellular carcinoma	Converted	1/25/2024
Keytruda	Pembrolizumab	12/19/2018	Merkel cell carcinoma	Converted	10/12/2023
Tecentriq	Atezolizumab	3/8/2019	Breast cancer	Withdrawn	10/6/2021
Polivy	polatuzumab vedotin-piiq	6/10/2019	B-cell lymphoma	Converted	4/19/2023
Keytruda	Pembrolizumab	6/17/2019	Small cell lung cancer	Withdrawn	3/30/2021
Keytruda	Pembrolizumab	9/17/2019	Endometrial carcinoma	Converted	7/21/2021
Padcev	enfortumab vedotin-ejfv	12/18/2019	Urothelial carcinoma	Converted	7/9/2021
Enhertu	fam-trastuzumab deruxtecan-nxki	12/20/2019	Breast cancer	Converted	5/4/2022
Opdivo	Nivolumab	3/10/2020	Hepatocellular carcinoma	Not yet converted
Yervoy	Ipilimumab	3/10/2020	Hepatocellular carcinoma	Not yet converted
Trodelvy	Sacituzumab govitecan-hziy	4/22/2020	Breast cancer	Converted	4/7/2021
Zepzelca	Lurbinectedin	6/15/2020	Small cell lung cancer	Not yet converted
Keytruda	Pembrolizumab	6/16/2020	Solid tumors	Not yet converted
Monjuvi	tafasitamab-cxix	7/31/2020	B-cell lymphoma	Not yet converted
Blenrep	belantamab mafodotin-blmf	8/5/2020	Multiple myeloma	Withdrawn	2/6/2023
Keytruda	Pembrolizumab	11/13/2020	Breast cancer	Converted	7/26/2021
Danyelza	Naxitamab	11/25/2020	Neuroblastoma	Not yet converted

Source: U.S. Food and Drug Administration

Public and commercial payers have spent billions on accelerated approval products each year, most of which is attributed to therapies that have not assessed clinical endpoints or have yet to confirm clinical benefit.^{108,110–113} In 2019, Medicaid spent $1.6 billion on products that were converted to traditional approval based on surrogate endpoints,¹⁰⁸ while employer-sponsored plans spent $1.9 billion on accelerated approval indications that had not yet confirmed clinical benefit.¹¹³ High health plan spending on products with unconfirmed clinical benefit is often driven by delays in postmarketing studies.^114,115 Approximately 30% of therapies did not have postmarketing studies initiated at the time of accelerated approval, which in turn, increased the time to conversion to traditional approval or withdrawal from the market.^107,114,115

Given that incomplete or delayed data from postmarketing studies could result in the ongoing use of therapies that subsequently fail to confirm clinical benefit,¹¹⁶ the Medicare Payment Advisory Commission recommended that the Medicare payment rate be capped for accelerated approval products that do not confirm clinical benefit in postmarketing studies or have postmarketing studies that are not completed within established deadlines.¹¹⁷ Questions remain regarding how to implement and operationalize the payment cap in Medicare Part B,¹¹⁷ yet critics argue that caps are unnecessary and will undermine access to therapy.^116,118

Specifically, the passage of the Consolidated Appropriations Act of 2023 has raised questions regarding the necessity of payment caps;¹¹⁶ however, the statute provided that the FDA “may require” postmarketing studies to be “underway prior to approval, or within a specified time period after” accelerated approval.¹¹⁵ Since the FDA is permitted – but not required – to use this authority,¹¹⁵ the payment cap would be necessary to incentive pharmaceutical manufacturers to complete postmarketing studies, especially those that have been delayed or are past-due.¹¹⁵ For example, postmarketing dosing studies for pralatrexate, a physician-administered therapy indicated to treat T-cell lymphoma, experienced delays and the required phase 3 postmarketing study is only expected to be completed by 2030 – 21 years after the product received accelerated approval.¹¹⁹

Critics of reform also suggest that manufacturers may choose to forego accelerated approval for traditional approval to avoid payment caps or that health care providers may not use accelerated approval products due to inadequate reimbursement, both of which, could delay product approvals and impede access to new drugs.¹²⁰ Alternatively, proponents argue that payment caps would incentivize the timely completion of postmarketing studies^116,117 and thus, enhance access to necessary and effective therapies. Essentially, payment caps would transform the treatment landscape and improve access to quality care, by rewarding the development of therapies that demonstrate strong evidence of clinical benefit and increase the use of anticancer therapies with high therapeutic value.

Conclusions

In the USA, anticancer therapies account for a majority of spending on cancer care and prescription drugs more broadly. While recent changes to pharmaceutical policy will likely lower drug prices and decrease patients’ spending, the cost of anticancer therapies is projected to increase over time. Additional reforms are needed to further address spending on anticancer therapies and to better align spending with a drug’s value. Without such alignment, it is possible that future spending will not improve clinical outcomes or quality of life and may even exacerbate inequities in access to and utilization of cancer care and health services more broadly.