Spending on cancer drugs could rise at least 10 percent a year through 2013, fueled by use of effective—and expensive—new therapies used over longer periods, according to a report released on Wednesday.

Oncology medicines are on track to become the third-largest contributor to increases in drug spending by 2015, up from seventh last year, according to the report from large pharmacy benefit manager Medco Health Solutions Inc.

Medco expects spending on cancer medicines to rise by 10 percent to 12 percent this year, and by 13 percent to 15 percent in 2012.

"New cancer drugs reaching the market are expected to double during the next several years," said Medco Chief Medical Officer Glen Stettin.

More than 900 drugs are in development for oncology, by far the single-largest category, the report said. Virtually every large drugmaker is seeking to make inroads in the cancer market.
Patients are using the medicines on a more chronic basis as certain cancers become more manageable, helping to drive up spending, Medco said.

The advances in treatment are having an effect: The number of U.S. cancer survivors is expected to increase by more than 30 percent over the decade, from 13.8 million in 2010 to 18 million by 2020, Medco said.

Last year, cancer drug spending rose about 8 percent, in part because of more frequent prescribing of newer treatments, such as Celgene Corp blood cancer drug Revlimid and Novartis AG leukemia treatment Gleevec, according to the report.

Medco also pointed to a scientific journal study that found more than 90 percent of recently approved cancer drugs cost more than $20,000 for a 12-week course of therapy.

Compared with other categories, Medco said, oncology is unlikely to see big savings from an expected influx of lower-cost copies of older biotechnology drugs, known as biosimilars.

Many biotech drugs—which tend to be injected or infused—are cancer treatments. But newer cancer drugs, many of them designed for certain genetic targets, have resulted in significant improvements in care, so biosimilar versions of the older drugs may not gain traction in the market, Medco Chief Executive David Snow said.

"Everyone is going to be moving to these more advanced, more precise drugs ... there's not actually a big demand to create the old ones," Snow told reporters on Wednesday. "So I don't think you'll see a lot of relief in the oncologic space because of the enormous improvement in the ways we can treat cancer at a genetic level."

The report, which tracks overall drug utilization and spending, comes as the medical and scientific focus on new oncology treatments increases over the next few weeks.

The annual American Society of Clinical Oncology meeting begins June 3 in Chicago, bringing thousands of doctors and researchers together to discuss the latest important studies in the field. Later on Wednesday, data from hundreds of clinical drug trials will be released ahead of the meeting.

Medco, which administers drug benefits for clients such as health plans and employers, says it serves about one in five Americans, making its data a good gauge of pharmaceutical trends in the country.

Overall last year, the report said, drug spending rose 3.7 percent. Use of drugs increased 2.1 percent, the biggest gain since 2005.

Diabetes treatments, including insulin and drugs to control blood glucose levels, ranked as the biggest contributor to pharmaceutical spending growth for the fourth consecutive year.
Respiratory ranked second as a driver of spending, while rheumatology drugs were third.