Trends in cancer drug revenue retained by providers under buy-and-bill reimbursement, 2010-2024.

Abstract

11032 Background: Cancer care providers, including physician offices and hospitals, retain “markup” fees on clinician-administered drugs (such as chemotherapies and immunotherapies) which are proportional to drug price. Under this system, commonly known as “buy and bill,” multiple external factors may impact provider revenue: increasing cancer drug prices, increasing care delivery in hospitals (where markups are higher) rather than offices, the 340B Drug Pricing Program, and payer “bagging” strategies to avoid paying markups to providers. Study goals were to estimate changes in provider revenue retained on clinician-administered cancer drugs from 2010-2024 and to quantify the contribution of four factors: 1) cancer drug sales, 2) site of care (office vs. hospital), 3) 340B participation, and 4) payer “bagging” strategies. Methods: We included all clinician-administered cancer drugs with available US sales data, including biosimilars and cancer-specific supportive care drugs (e.g., growth factors). We obtained cancer drug sales from manufacturer SEC filings (aggregated in SSR Health data), inflated to 2024 USD. We estimated the proportion of cancer drug sales administered within each of nine payer-care settings (three major payers: Medicare, Medicaid, commercial, and three major sites of care: physician office, 340B-participating hospital outpatient, and non-340B hospital outpatient), using Surveillance, Epidemiology, and End Results (SEER), the National Health Interview Survey (NHIS), and CMS and commercial claims. To estimate markup revenue, we applied setting-specific markup rates (from statute for Medicare/Medicaid, from peer-reviewed literature for commercial) to the drug sales in each setting. Plausible estimates of “bagging” prevalence were obtained from the literature. Results: Cancer drug sales increased from $27.3 billion (B) in 2010 to $64.9B in 2024, a 138% increase. Provider markup revenue on cancer drugs increased from $8.7B in 2010 to $35.7B in 2024, a 309% increase. Of the 2010-2024 increase, increasing drug sales accounted for 73.3%, shifting site-of-care to hospitals for 24.2%, and 340B participation growth for 2.5%. During this period, drug revenue retained by physician offices increased by 30%, non-340B hospitals by 49%, and 340B-participating hospitals by 739%. Accounting for bagging reduced 2024 markup revenue from $35.7B to $28.4B. Conclusions: Provider revenue from cancer drug markups grew substantially during 2010-2024. The largest single factor was growing cancer drug sales, although shifts in site of care also contributed. Revenue retained by 340B-participating hospitals increased much more than offices or other hospitals. Growth in provider markups was reduced modestly by growth in payer bagging strategies. Policymakers should consider whether growing markups on clinician-administered drugs reflects an efficient use of healthcare spending.