Integration of pharmacies with physician practices has little impact on cancer drug expenditures
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Integration of pharmacies with physician practices, where on-site pharmacies open at physician practice locations, is a growing trend in cancer treatment. However, little is known about how this integration affects drug utilization or expenditures, along with other aspects of the patient experience.
A study published today in JAMA Network Open compared the outcomes of patients treated by oncologists whose practices integrated with pharmacies, to those of oncologists that did not integrate. Researchers found a slight increase in utilization of oral oncology drugs, but no significant change in expenditures on the drugs.
In addition, there were no discernible benefits for patients as measured by out-of-pocket expenditures, medication adherence, and the amount of time before treatment of cancer started.
The study’s lead author Genevieve Kanter, a senior fellow at the USC Schaeffer Center for Health Policy & Economics and associate professor at the USC Sol Price School of Public Policy, said the results were surprising, given the negative effects observed from other types of integration in health care. The growth of physician-pharmacy integration over the last 15 years had raised concerns about potentially increased drug utilization and spending and a shift towards more profitable and expensive oral cancer therapies.
On the other hand, the potential benefits of integration were also not observed in this study. Earlier, small-scale studies have suggested that pharmacy integration can reduce waste and help patients stay more adherent to their therapies by enabling closer patient monitoring.
For example, physicians with an on-site pharmacy could, in theory, prescribe drugs covering fewer days because patients would not need to wait as long for a new drug if an adverse event arises and there is a need to switch therapies.
But the current study’s authors say that with integration, they actually observed an increase in days’ supply of drugs instead of a decrease. Since reimbursements increase with each additional pill, oncologists may have been responding more to the additional revenues from increasing days’ supply instead of the increased flexibility permitted by on-site pharmacies. In addition, there was no change in patients’ adherence to medications.
“Overall, we find that integration of oncology practices with pharmacies has not resulted in changes in expenditures, which is a good signal for regulators, but it also has not resulted in significant benefits for patients, which is disappointing,” said Kanter. “Although there do not appear to be regulatory restraints required at the moment, our findings of different impacts on patients with different types of cancer, and emerging gaps for some patient outcomes, underscore the importance of continued study of pharmacy integration.”
Study examined outcomes for a range of cancer patients
Researchers conducted an observational study of oncologists and commercially insured patients treated by these oncologists between 2011-2019. Oncologists were tracked longitudinally through the study period, and patients were followed for 6 months after their initial diagnosis.
Study participants were patients aged 18-64 who had been diagnosed with advanced stage breast cancer, colorectal cancer, kidney cancer, lung cancer, melanoma, or prostate cancer.
The study focused on community oncologists who owned their own practice and were not part of a hospital or academic or medical teaching institution. Researchers noted this group experienced the most rapid increases in integration during the study period and likely derived the greatest financial benefit from pharmacy integration because of their direct ownership stakes in on-site pharmacies.
The authors found no changes in either oral drug spending or intravenous (IV) drug spending when they looked at all the cancers combined. However, when they examined the subsample of patients with breast cancer – the biggest group of cancer patients in the study sample – they found substitution between oral and IV drugs. Researchers found a 69% increase in oral drug expenditures, and concurrently a 34% decline in IV drug expenditures. But on net, there was no statistically significant change in total oral and IV drug expenditures.
“As we see most clearly with the breast cancer patients in our study, cancer treatment is shifting from intravenous drugs to oral drugs, and there are a ton of new oral drugs in the drug development pipeline,” said Kanter. “Meanwhile, physicians who used to be paid for administering IV drugs are now seeing their practices losing some revenues, as oral drugs are dispensed at the pharmacy.”
In 2012, 4.2% of community oncologists in the sample worked in practices with on-site pharmacies. By 2019, the final year studied, that percentage had increased to 27.6% of oncologists in pharmacy-integrated practices. Researchers say the underlying incentive to open integrated on-site pharmacies is to retain some of that drug revenue they used to get through physician-administered drugs.
Future research should focus on hospital-based oncology practices
“Proponents of medically integrated pharmacies in oncology practices believe the benefits include improved safety and quality, decreased time to fill prescriptions, and decreased waste. Others are concerned that these pharmacies may increase inappropriate use of expensive oral cancer therapies,” said David Debono, Carelon’s national medical director for oncology and a co-author of the paper. “Our study didn’t find evidence for either of these positions, but it was not designed to identify very specific details of care quality and safety. Further studies will be necessary.”
Study authors say future research should look at how hospital-based oncology practices, which have also rapidly increased their on-site dispensing, have adapted to pharmacy integration.
Researchers noted that hospital-based practices tend to be larger and may face a different set of financial incentives than community practices, and that the impact of integration may be different for Medicare-insured patients and vulnerable racial/ethnic and economic populations.
About the study
In addition to Kanter and Debono, the study’s authors include Pelin Ozluk, Winnie Chi, Michael J. Fisch, and Andrea DeVries of Carelon, Inc.; Ravi B. Parikh and Justin E. Bekelman of Perelman School of Medicine at the University of Pennsylvania; Mireille Jacobson of the Schaeffer Center and the USC Leonard Davis School of Gerontology.
The study was funded by the National Institute of Health Care Management Foundation.