An examination of oncology drug purchasing compared to average sales price

Abstract

20500 Background: Drug costs make up approximately 70–85% of expenses for community oncology practices. This study examines the buying power effectiveness of community oncology practices relative to Average Sales Price (ASP) and ASP+6% reimbursement. Methods: During the 2nd & 3rd qtrs of 2007, data was independently collected from 20 oncology practices ranging in size from 1–18 physicians on 12 key oncology products and compared to CMS published ASP data for the 2nd qtr 2007. Results: The average of pricing data submitted for 11/12 practices and the median pricing data submitted for 12/12 practices were higher than ASP. The minimum price for 5/12 practices was higher than ASP and the maximum price for 8/12 was higher than ASP+6%. The average product difference in price between practices was $84.41. The 20 practices reported multiple different prices for individual products ranging from 14 up to 19 unique prices for a given product. Conclusions: Effective systems and methods are not being used to negotiate pricing at many community oncology practices. Few practices in our data negotiated prices below ASP and many practices pay prices above ASP+6% reimbursement for key products. This economic strain combined with inadequate reimbursement limits patient access to care when practices are forced to turn away patients or go out of business. A wide variance of pricing occurs in community oncology. This variation is a signal of a highly fragmented market in need of unity to gain buying power and visibility to pricing. Practice Pricing Analysis (Cost/Billing Unit) Drug Name/Billing Unit Darbepoetin Alfa/Epoetin Alfa 1 mcg/1,000 u Pegfilgrastim/Bevacizumab 6 mg/10 mg Cetuximab/Docetaxel 10 mg/20 mg Gemcitabine/Irinotecan 200 mg/20 mg Oxaliplatin/Paclitaxel 0.5 mg/30 mg Rituximab/Trastuzumab 100 mg/10 mg JCODE J0881/J0885 J2505/J9035 J9055/J9170 J9201/J9206 J9263/J9265 J9310/J9355 MIN PRICE $2.66/$8.58 $1797.76/$44.21 $46.02/$281.21 $119.85/$119.02 $8.68/$11.30 $469.10/$54.69 ASP $2.97/$8.92 $2040.88/$54.27 $46.99/$289.45 $118.08/$118.87 $8.47/$11.88 $468.13/$54.60 AVG PRICE $3.64/$9.70 $2360.71/$54.63 $47.55/$297.89 $124.51/$127.05 $9.41/$12.63 $488.01/$56.66 MEDIAN $3.82/$8.99 $2465.34/$55.00 $47.52/$296.45 $125.15/$120.84 $8.92/$12.18 $485.60/$56.52 ASP+6% $3.14/$9.45 $2163.33/$57.53 $49.81/$306.81 $125.16/$126.00 $8.97/$12.59 $496.22/$57.87 MAX PRICE $4.12/$12.27 $2546.00/$57.47 $49.84/$341.35 $127.69/$240.51 $18.09/$18.46 $502.72/$58.26 MAX-MIN DIFFERENCE $1.46/$3.69 $748.24/$13.26 $3.82/$60.14 $7.84/$121.49 $9.41/$7.16 $33.62/$3.57 UNIQUE PRICES 16/18-14/17 19/20-16/19 15/19-18/19 19/20-18/20 17/20-15/19 18/20-19/20 Due to formatting limitations, products should be viewed from top to bottom, not making comparisons. No significant financial relationships to disclose.