Best Practices

The Cost of Oncology Drugs: A Pharmacy Perspective, Part I

Even in the VA, the high cost of oncology medications are forcing health care providers to confront the economic impact of cancer care.



Health care costs are the fastest growing financial segment of the U.S. economy. The Centers for Medicare and Medicaid Services (CMS) estimates health care spending in the U.S. will increase from $3.0 trillion in 2014 to $5.4 trillion by 2024.1 About 19.3% of the U.S. gross domestic product is consumed by health care, which is twice that of any other country in the world. It is often stated that the increasing cost of health care is the most significant financial threat to the U.S. economy. The cost of medications, including those for treating cancer, is the leading cause of increased health care spending.2

The cost of cancer care is the most rapidly increasing component of U.S. health care spending and will increase from $125 billion in 2010 to an estimated $158 billion in 2020, a 27% increase.3 Most experts agree that the current escalation of costs is unsustainable and, if left unchecked, will have a devastating effect on the quality of health care and an increasing negative financial impact on individuals, businesses, and government. However, that discussion is outside the scope of this article.

The affordability of health care has become a major concern for most Americans. During the recent U.S. financial crisis, most of the focus was on the bursting of the housing bubble, plummeting real estate prices, the loss of jobs, and the failure of large financial institutions. However, medical bills were still the leading cause of personal bankruptcies during this period. In 2007, 62% of personal bankruptcies in the U.S. were due to medical costs, and 78% of those bankruptcies involved patients who had health insurance at the beginning of their illness.4

The cost of prescription medications is causing financial difficulties for many patients, especially elderly.

Americans who have multiple chronic medical conditions and live on fixed incomes. A recently released survey by the nonpartisan Kaiser Family Foundation found that the high cost of prescription medications, especially those to treat serious medical conditions such as cancer, is the top health concern of 77% of those Americans polled.5 In this environment, oncology providers face many challenges in their obligation to treat cancer patients in a cost-effective manner.

This article will appear in 2 parts. Part 1 will focus on the emerging discussion of the financial impact of high-cost drugs in the U.S. The drivers of increasing oncology drug costs will also be reviewed. Part 2 will focus on the challenges of high cost medications in the VA and the role the VA Pharmacy Benefits Management (PBM) Service has in evaluating new oncology agents. Clinical guidance tools designed to aid the clinician in the cost-effective use of these agents and results of a nationwide survey of VA oncology pharmacists regarding the use of cost-containment strategies will also be presented.


When discussing the value of targeted therapies, it is useful to define both targeted therapy and value. A targeted therapy is a type of treatment using drugs or other substances to identify and attack cancer cells with less harm to normal cells, according to the National Cancer Institute. 6 Some targeted therapies block the action of certain enzymes, proteins, or other molecules involved in the growth and spread of cancer cells (the molecular target). Other types of targeted therapies help the immune system kill cancer cells or deliver toxic substances directly to cancer cells and kill them.

Targeted therapy may have fewer adverse effects (AEs) than do other types of cancer treatment. Most targeted therapies are either small molecules or monoclonal antibodies. Although imatinib, released in 2001, is the drug that coined the phrase targeted therapy, many drugs released earlier, such as rituximab, can be considered targeted therapies due to their specific, or targeted, mechanism of action.


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