Navigating today’s rising oncology costs

As highlighted in our 2025 State of the Market webinar, healthcare costs are continuing to rise, and this trend shows no signs of slowing down. A significant contributor to these increasing costs is cancer, particularly due to the growing innovation and expense of oncology specialty drugs. In 2023, the United States alone spent $99 billion on oncology, representing a significant 52% increase from $65 billion in 2019. As far as medical benefit spend goes, oncology medications drive approximately 40.6% of the total Per Member Per Month (PMPM) spend, with an average cost per claim of over $4,293 for commercial plans in 2023.

In this article, we aim to provide some key metrics to keep in mind when thinking about cancer prevalence and costs, the link between obesity and cancer, and site of care options and their impact on costs. We conclude with some options for plan sponsors and payers to consider when managing oncology costs.

Here are some figures to keep in mind when we consider cancer prevalence and costs:

• According to the American Cancer Society, over two million Americans are estimated to have been diagnosed with some form of cancer in 2024. This is in addition to the 18 million Americans with a history of cancer who are still living today.
• Global spending on all medicines used in the treatment of patients with cancer reached nearly $223 billion in 2023, with the U.S. representing 45% of that spend. By 2028, this spending is projected to reach $409 billion globally.
• Stop-loss provider Sun Life reported that from 2020 to 2023, over $1.3 billion in stop-loss reimbursements were due to cancer. Recent trends indicate that this percentage is likely to increase as new therapies emerge and cancer prevalence rises, with an average increase of nine percent annually since 2019, according to IQVIA.

Many employers have prioritized wellness programs, such as preventive care, anti-tobacco strategies, and diet and exercise initiatives, yet we still see an increase in cancers linked to excess weight. According to a recent study by the American Cancer Society, cancers associated with excess weight gain are on the rise for people under the age of 50. Another study featured in The Lancet saw that people born between 1981 and 1996 have a higher risk of developing six obesity-linked cancers when compared to people born in the 1950s. These cancers include cancer of the kidney, pancreas, gallbladder, endometrium, and colon or rectum, as well as multiple myeloma.

As oncology drugs gain prominence in the specialty drug pipeline and cancer prevalence rises, understanding the benefits and impacts of new therapies can help plan benefit managers (PBMs), payers, and plan sponsors decide on coverage and effective utilization management strategies. 

For instance, while Neulasta is highly effective in preventing infections in chemotherapy patients, the costs associated with how and where the drug is administered to patients, referred to as the site of care, can vary significantly. Similarly, Avastin, a cancer medication that inhibits the growth and spread of cancer cells, also shows considerable cost differences based on where and how it is administered. Generally, chemotherapy treatment administration costs two to four times more in hospital outpatient settings than in physician offices.

What can plan sponsors do to manage rising oncology costs? 

When managing oncology costs, payers and plan sponsors must weigh the costs and benefits of different strategies, including member impact. Traditional utilization management programs can only go so far when it comes to managing these costs. More aggressive approaches include site-of-care solutions, limited supply programs that aim to reduce waste, dose optimization programs that address issues with vial sizes, and genomic testing programs. 

For example, CVS Health just announced the Transform Oncology Care program, which uses genomics at the point-of-prescribing to help patients quickly start the most effective treatment based on their clinical and genetic profiles, while also matching eligible patients to clinical trials. This approach improves patient outcomes and reduces costs for late-stage cancer patients.

Innovations in digital health technology, particularly with generative AI, are also expected to enable clinical trial participants to receive physician support for adverse events, ultimately improving patient safety and overall outcomes. Alongside comprehensive support for members dealing with cancer, biosimilars like those offered through Johns Hopkins and Memorial Sloan Kettering should be explored. Employers should also consider more proactive pharmacy management strategies that can help reduce both the prevalence and overall costs related to oncology.

Reach out to a specialist today to learn more about how we can help.