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Deloitte's Life Sciences & Health Care Blog

Innovation to help curb rising oncology costs

Many pioneering health plans and providers today are looking to value-based payment models to mitigate the rising cost of oncology care. When researching oncology payment models, we found that several emerging payment models such as patient-centered medical homes (PCMH), bundled payments, and specialty ACOs among others, are taking hold and starting to show success. Providers can save by reducing variations in care through adherence to evidence-based pathways, increasing access to lower-cost care settings, and proactive care planning. But, how does innovation fit into these models? Will increased innovation help or hinder cost controls and care quality?

New treatments, such as immunotherapy can be costly, well over $100,000 a year per treatment. But as discussed in our report on the top 10 innovations in health care, these therapies also have the potential to fundamentally change how cancer is treated. These drugs harness the patient’s immune system to target cancer cells and avoid the toxicity that is associated with traditional chemotherapy. Reducing negative effects can also reduce the cost of managing patients with chemotherapy – which may include expensive ER visits and hospitalizations.

Additionally, more efficient use of targeted therapies can help improve care quality. For example, one provider told us that requiring physicians in his practice use a new biomarker test to identify which patients would benefit from a targeted therapy led to an increased survival rate in that patient group.

Biopharma companies are also investing in other innovations that could potentially increase appropriate treatment use and help advance value-based goals. In the near-term, these innovations could increase cost – requiring physician practices to make investments in new technology or patients to undergo additional diagnostic tests. But in the long-term these technologies and data sets could be combined into dynamic decision-support tools that take into account multiple patient variables and the financial trade-offs of treatment choices, helping to optimize prescribing and eventually drive costs down. These innovations include:

Real-world evidence (RWE): Many biopharma companies are leveraging RWE to help providers identify which patients are benefitting from which treatments, based on the outcomes of patients in the real world. Several are partnering with technology companies that are building platforms to collect and analyze this data. This better understanding of patient populations is likely to increase the appetite of providers to take on financial risk for oncology care when there are tools to generate the evidence to support more efficient oncology care delivery. As we’ve seen in our research, greater emphasis on value-based payment models in oncology could help to reduce inefficiencies in care and reduce costs.

Next generation sequencing: Next generation sequencing is helping many biopharma companies better identify which patients can benefit from which treatments, through genomics and better understanding of the mechanism of disease. Understanding a patient’s likelihood of response based on the specific characteristics of their disease could expedite the time to get them the right treatment in the real-world. This could cut the costs associated with trying different regimens, before ultimately getting to the optimal treatment plan for that particular patient.

Artificial intelligence (AI): Many leading oncology treatment centers are already working on AI solutions that can be used to improve accuracy and timeliness of patient diagnoses. Additionally, several biopharma companies are investing in AI partnerships to accelerate drug and diagnostic discovery, identify patients for clinical trials, and advance our understanding of cancer types. AI, when combined with RWE, could help providers identify patients who are at high risk for experiencing negative side effects, and that should be closely managed. This type of predictive analytics could lead to earlier intervention, and avoided costs.

Taken in combination, these developments will likely advance what is and should continue to be a strategic imperative for stakeholders: reaching value-based care goals and making drug treatments accessible to patients who would benefit from them.


Author bio

Ralph is a principal in Deloitte Consulting LLP’s Life Sciences consulting practice and biopharma sector leader. With over 18 years of experience, his work includes developing and executing strategic and operational initiatives broadly across the Life Sciences value chain. Ralph has led the development and assessment of innovative collaborations for discovery and early development, global operating development and design, and executed large scale R&D business model transformations.