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. 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.

1. 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.

2. Munich Re
MEDICAL RISK RADAR
Cancer immunotherapy
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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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MEDICAL RISK RADAR
Cancer immunotherapy
Page 3/4
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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MEDICAL RISK RADAR
Cancer immunotherapy
Page 4/4
NOT IF, BUT HOW
Contact
Dr. Özer Bebek
Senior Medical Consultant
Munich Health
Tel.: +49 89 38 91-97 80
obebek@munichhealth.com
Dr. Nihat Erol Canizci
Senior Medical Consultant
Munich Health
Tel.: +49 89 38 91-82 66
ncanizci@munichhealth.com
Literature
© 2016
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Gesellschaft
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Germany
Order number 302-08883
Münchener Rückversicherungs-
Gesellschaft (Munich Reinsurance
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organised under the laws of Germany.
In some ­countries, including in the
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Company holds the status of an
­unauthorised reinsurer. Policies are
underwritten by Munich Reinsurance
Company or its affiliated ­insurance
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­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.researchand­markets.com/
research/cvf974/global_and_usa.