The pace of annual global spending on oncology medicines which is approaching the $100 billion threshold has moderated over the past five years, even as a surge in innovative and targeted therapies has brought new therapeutic options to the growing number of patients being treated for cancer and as survival rates for most tumour types continue to increase, according to a study  – Innovation in Cancer Care and Implications for Health Systems – of the IMS Institute for Healthcare Informatics.

The study is the most comprehensive review of current trends affecting the market for oncology medicines, the state of innovation in therapeutics, measures of the value of treating cancer, and pricing dynamics. The report also assesses the potential for biosimilars to reshape the oncology market, and analyzes the changes playing out in the delivery of oncology medicines in the US.

Growth in global spending on cancer drugs, including those used for supportive care, increased at a compound annual growth rate of 5.4 per cent during the past five years, reaching $91 billion in 2013, compared with 14.2 per cent from 2003 to 2008. The recent lower growth rate reflects fewer breakthrough therapies for very large patient populations, as well as patent expiries, reductions in the use of supportive care medicines, and stronger payer management. While oncology spending remains concentrated among the U.S. and five largest European countries which together account for 65 per cent of the total market the rising prevalence of cancer and greater patient access to treatments in pharmerging nations has propelled oncology to the fifth-largest therapy area in those markets.

Targeted therapies have dramatically increased their share of global oncology sales, from 11 per cent a decade ago to 46 per cent last year. Payers have intensified their scrutiny of the value of these medicines relative to their incremental benefits over existing treatments. At the same time, the average cost per month for a branded oncology drug in the US is now approximately $10,000, up from an average of $5,000 a decade ago. Concentrated or single-payer health systems, and those utilising health technology assessments to evaluate the value of treatments, tend to pay less than US prices for medicines. The pricing discount mechanisms used in major European markets typically drive net prices down by approximately 20-40 per cent compared with US list prices.

“As the cancer patient population mix shifts from mature and developed markets to low- and middle-income countries, oncology is bringing higher levels of uncertainty to health systems across the globe both in terms of the nature and rate of innovative treatments, and levels of reimbursement for patient care,” said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics. “While an estimated 30 percent of cancers are preventable and early diagnosis and treatment can reduce or delay mortality significantly, the reality is that countries struggle to bring together the right combination of preventive measures and clinical interventions, including vaccines, diagnostics and therapeutics.”

Global market growth for oncology spending has moderated. The global market for oncology drugs, including those used in supportive care, reached $91 billion in 2013 as measured at ex-manufacturer prices and not reflecting off-invoice discounts and rebates. This compares with $71 billion in 2008 and $37 billion a decade ago. Global growth has been less than 10 per cent each year since 2008, and the US market for oncology drugs has grown at a 3.5 per cent CAGR over the past five years, reaching $37 billion last year. Biologic products now represent less than half of the oncology market, a slight decline over the past ten years as new drug launches have been concentrated in small molecules, including kinase inhibitors.

Innovation in cancer therapies is becoming more targeted. New drug development has yielded significant innovation across cancer types and therapeutic approaches, including preventive vaccines. Pharmaceutical company investments remain high and cancer therapies account for more than 30 per cent of all preclinical and phase I clinical development products, with 22 new molecular entities being launched and reaching patients in the past two years alone.

These new medicines have increased the complexity of treating cancer, leading to more combination therapies and additional lines of therapy. Clusters of innovation based on similar underlying science and multiple development pathways have transformed patient care in areas such as advanced melanoma, as well as sub-populations of cancers with higher prevalence. Although sales for certain recently launched oncology drugs have rivaled those of earlier blockbusters, many new drugs are targeted to small patient populations and face strong competition, resulting in comparatively modest sales levels. While much of the pipeline is focused on lung and breast cancer, tumour types with lower prevalence such as ovarian, leukaemia, stomach and liver cancers also are being actively pursued.

Pricing and the value of treatments face more payer scrutiny. The high number of new targeted therapies launched and available for cancer patients also has escalated payer scrutiny of their value relative to incremental benefits over existing treatments. Judging the additional value of these treatments for individual patients is fraught with challenges due to the high level of variability in patient response, the frequent changes in protocol, and underlying issues of equity and patient care. Newly launched treatments typically bring between two and six months of incremental overall survival, although this can vary by patient. The American Society of Clinical Oncology recently issued recommended targets for meaningful clinical trial outcomes, a useful step to guide those investing in innovation as well as those paying for patient care. In the E.U., there is a trend toward lower list prices at the time of launch compared to US list pricing, and European markets have other discount mechanisms that may be employed across national, regional and local levels.

Impact of biosimilars and non-original biologics is growing. The introduction of regulatory pathways for biosimilars and increased production capacity around the world are driving a new competitive dynamic in the $40+ billion biologics portion of the oncology market. However, the potential role of biosimilars in developed countries will be limited by the expected flow of patent-protected innovative products that will displace older, off-patent products subject to biosimilar competition. These agents already play a role in the supportive care segment of the oncology market in Europe, and are expected to do the same in the U.S. in the near term. In low- and middle-income countries, non-original biologics those based on an original molecule not introduced by its manufacturer in a particular market are expected to play a significant role in oncology and already capture 60 per cent or more of certain recombinant and synthesized biologics. On a global basis, biosimilars are expected to generate $6-12 billion in oncology sales by 2020, increasing the level of competition but accounting for less than 5 per cent of the total biologics market at that time.

Unique dynamics in US contribute to changes in oncology care. In the US market, which contributes 41 per cent of total oncology drug sales, changes in the structure of healthcare delivery are impacting cancer treatment site of care, reimbursement and patient out-of-pocket costs. Physician practices are becoming larger, and healthcare organizations that care for underserved populations and are covered by the 340B Drug Discount Programme have expanded their oncology presence, as have Accountable Care Organisations. This is resulting in a shift in patient care from physician offices to hospital outpatient facilities. Since hospitals incur higher costs and overhead for the delivery of care, their reimbursement levels for the administration of drugs are higher than those for physician offices. For typical targeted therapies that are infused or injected by an oncologist, reimbursed costs for hospitals are at least double those for physician offices and have brought sharply higher costs to payers over the past two years. These higher costs are also associated with higher patient out-of-pocket costs depending on insurance plans and benefit designs, and can trigger reduced levels of therapeutic persistence by patients and higher overall cost of care.