MEDICAL RISK RADAR

Cancer immunotherapy – An important development and its impact on business

At an average annual cost per patient of more than US$ 100,000 – in some cases even topping US$ 1,000,000 – cancer treatment is a major contributor to exploding cancer costs, a trend that is ongoing: The costs of cancer therapy accounts for 5–7% of overall healthcare spending and are expected to increase by 40% over the period of 2010 to 2020.1

As an effective treatment with multiple advantages over conventional methods, immunotherapy has brought new hope to cancer patients. Immunotherapy drugs do not target cancer cells directly, but rather train the immune system and spare patients many of the negative side effects of chemotherapy or radia-tion. Immunotherapy drugs currently accounts for 50%2 of the cancer drug market and is expected to increase its share as new drugs of this type become available.

Experts predict that in many types of cancer immunotherapy will render con-ventional chemotherapy obsolete. Due to slow approval and/or recognition of immunotherapy drugs in some countries, not all markets will be exposed to immunotherapy claims immediately but exposure in the near future is inevitable.

Understanding immunotherapy

The incidence of cancer continues to rise, a trend generally attributed to the ageing population. At present, one in 215 people in the community (one in 30 for individuals aged 65 years or older) develop the disease in some form. The proportion of cancer patients considered treatable is also growing, for example among the elderly with comorbidities.

Immunotherapy represents a major breakthrough in cancer treatment, for the first time offering a potential “cure”. It is playing an ever-increasing role, widen-ing the scope of the cancers that can be treated. Experts believe that within ten years it will be possible to treat 60% of cancers with immunotherapy. Rising healthcare costs for cancer patients will be the inevitable outcome.

Given the novelty of cancer immunotherapy, studies with sound figures to demonstrate the current impact on costs are not yet available. However, to gain an initial overview the Munich Health Business Analytics team has examined the immunotherapy costs in one of our claims data sets. This analysis indicates that spending on cancer immunotherapy began in 2010 and by 2012 already accounted for 15% of cancer treatment costs.

Immunotherapy drugs “teach” or involve the immune system to kill cancer cells selectively, sparing normal cells. It has been a recognised cancer treatment especially since 2010 and is expected to replace conventional chemotherapy for many types of cancer in the near future.

Incidence and costs of cancer continues to rise.

Immunotherapy is a qualitatively new approach.

Use of immunotherapy is increasing rapidly.

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These findings indicate that the cost of cancer treatment is an increasing challenge for health insurers due to the growing incidence of cancer and use of immunotherapy drugs, as the most expensive cancer drug category.

According to another analysis of the same claims data set, the number of cancer patients treated with immunotherapy increased from 3% in 2009 to 28% in 2012.

These findings demonstrate that we are already being exposed to the costs of immunotherapy, which continue to rise.

The breakthrough is leading to rising treatment costs.

Immunotherapy Cancer other expenses

2009 2010 2011 2012

15%

2008 2009 2010 2011 2012

30%

20%

10%

0%

% of cancer patients received immunotherapy

0%3%

17% 16%

28%

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Implications for your business

In terms of claims management, it is important to determine whether a given immunotherapy drug complies with coverage policies, e.g. whether it is approved or still experimental. Claims guidelines and compliance processes should be created to avoid unnecessary payments.

Negotiations with provider networks can also be used to ensure better rates for immunotherapy drugs.

As better long-term prognoses for patients may transform cancer into a chronic disease, it may be useful to consider establishing disease management programmes to cope with future costs.

With copays even proving unaffordable at present in an increasing number of cancer patients, development of products to cover copays, limit excess, etc., could offer a new business opportunity. As the increase in cancer cases and high treatment costs can be expected to drive demand for cancer products, insurers will have the opportunity to develop and market new solutions and improve existing products such as critical illness cover.

Current underwriting guidelines propose that applicants with a history of cancer be rejected. To remain competitive, however, health insurers will soon need to rethink their underwriting practices by quantifying the higher cure rates and insurability of applicants.

The increasing incidence of cancer and higher drug costs should be reflected in pricing and coverage adjustments as well as in new products.

Claims management

Provider networks

Disease management

New products

Medical underwriting

Actuarial calculations

As an emerging treatment method, cancer immunotherapy has a profound effect on health business. Besides its promising effects in terms of cancer treatment, which will significantly improve health outcomes, it also has sub-stantial financial implications. Therefore, it is essential to have a good under-standing of its efficiency/approval status when determining eligibility in claims management, its impact on healthcare costs for actuarial pricing, the long-term impact on UW and new business opportunities to be considered in product development.

Munich Health Medical Function has analysed this complex situation from various business perspectives and has summarised the core information in a compact factsheet for your reference.

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NOT IF, BUT HOW

Contact

Dr. Özer BebekSenior Medical ConsultantMunich HealthTel.: +49 89 38 91-97 80obebek@munichhealth.com

Dr. Nihat Erol CanizciSenior Medical ConsultantMunich HealthTel.: +49 89 38 91-82 66ncanizci@munichhealth.com

Literature

© 2016Münchener Rückversicherungs-GesellschaftKöniginstrasse 107, 80802 München, Germany

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Münchener Rückversicherungs-Gesellschaft (Munich Reinsurance Company) is a reinsurance company organised under the laws of Germany. In some countries, including in the United States, Munich Reinsurance Company holds the status of an unauthorised reinsurer. Policies are underwritten by Munich Reinsurance Company or its affiliated insurance and reinsurance subsidiaries. Certain coverages are not available in all juris-dictions. Any description in this document is for general information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product.

1 American Society of Clinical Oncology, Jan 2014. [Online]. Available: http://www.asco.org/advocacy/ asco-action-brief-value-cancer-care.

2 Research and Markets, 2015. [Online]. Available: http://www.researchand markets.com/research/cvf974/global_and_usa.