Oncologists Look at Oncology: The Prognosis for US Cancer Care Results of a Benchmark National Survey SEPTEMBER 2008

1. Oncologists Look at Oncology: The Prognosis for US Cancer Care Results of a Benchmark National Survey SEPTEMBER 2008 Confidential. Copyright National Analysts Worldwide, 2008 Not to be reprinted without permission

2. TABLE OF CONTENTS Page # • EXECUTIVE SUMMARY……………………………………………………………….……… 1 • INTRODUCTION: OBJECTIVE AND METHOD …………………………………….…….6 • DETAILED FINDINGS …………………………………………………………………….…..10 • CONCLUSIONS………………………………………………………………………………… 29

3. EXECUTIVE SUMMARY 1

4. EXECUTIVE SUMMARY • Study Objectives • This benchmark study, “Oncologists Look at Oncology: The Prognosis for US Cancer Care,” is a web-based national survey of 199 oncologists and hematologist/oncologists designed to take the pulse of physicians who treat cancer – specifically with respect to the cross-pressures they experience based on changing clinical outcomes and practice economics. • This study was motivated by our observations in recent years that oncologists are becoming increasingly concerned and frustrated by the changing reimbursement environment and its impact on both quality of care, and professional gratification. • This study was not commissioned by or for any client; it is, rather, an independent inquiry into oncologists’ evolving perspectives on their profession and the care they deliver to patients. • The goal has been to characterize the environment in ways that may be useful to drug manufacturers, healthcare professionals, policy-makers and consumers. • Method • Study participants were sampled from the Epocrates Panel, the nation’s largest verified physician panel: • All are board-certified or board-eligible in oncology or hematology/oncology, in practice for 6 to 30 years, and treating at least 50 cancer patients per month. • These eligibility criteria were designed to ensure that respondents had adequate clinical experience and could offer a longitudinal perspective on the profession. • The plan is to repeat the survey on an annual basis to spot trends and shifting perspectives. (Continued) 2

5. EXECUTIVE SUMMARY (Cont’d) Key Findings • Six in ten oncologists (59%) express some degree of optimism about the future of oncology care in this country; a quarter (24%) are pessimistic and the rest (17%) are on the fence. Most of the misgivings expressed about the practice of oncology center on financial concerns that are altering certain aspects of treatment and may be narrowing patient options. • Oncologists report, for instance, that their presentation of therapy options is frequently influenced by patients’ ability to pay: • Currently, they estimate that the conversation is shaped by finances as often as 39% of the time, and they project that this figure will reach 55% over the next five years; five years ago, oncologists put that estimate at 20% of the time. • The presentation of therapy options is clearly influenced by a patient’s insurance status: • Conversations with patients who have private insurance are shaped by therapy costs only 35% of the time compared with 44% of the time for patients with Medicare only, and 52% for patients who are uninsured. • One specific way the conversation between physicians and patients has changed as a result of economic pressures is the tendency for oncologists to be more candid when framing outcomes: • Nearly six in ten (57%) agree that the need for patients to consider out-of-pocket costs has led them to be more explicit about what treatment is likely to offer. • High out-of-pocket costs have not only influenced the dialogue between physicians and patients; they have also led patients to shift priorities in making decisions about therapy: • Half (53%) believe that patients are prompted by treatment costs to place financial well-being over their chances to live longer, and a similar percentage (47%) believe that high out-of-pocket costs have led patients to place more emphasis on quality of life than on duration. (Continued) 3

6. EXECUTIVE SUMMARY (Cont’d) • One concrete trend is the tendency of private practice oncologists to send more patients to hospital centers for IV therapy because reimbursement is inadequate (73%), often requiring patients to travel further to receive care: • Shrinking reimbursement and high out-of-pocket costs have forced roughly half of private oncology practices to stop administering certain costly IV therapies • The majority of oncologists (68%) believe that the trend of sending patients to hospitals for IV therapy is an unwelcome one • Looking ahead, roughly three in four oncologists (74%) believe that rising costs will eventually exceed society’s collective ability to pay for optimal oncology care. • Oncologists offer a mixed prognosis on the price-value of therapies in development: • Six in ten (57%) agree that they are “optimistic” that new drugs will offer significant improvement in outcomes but nearly as many (46%) express some cynicism about the therapeutic value of expensive new cancer drugs • On balance, two-thirds of oncologists (63%) believe that drug costs have outpaced efficacy gains over the past five years • Technologies about which oncologists are most optimistic include novel biologics and small molecules as well as targeted therapies; there is considerably less optimism about anti-tumor vaccines and gene therapies • Financial factors are influencing not only patient care; they are also influencing how much financial and professional satisfaction oncologists derive from their practice. It is clear, however, that oncologists find their pocketbooks more adversely affected than their professional gratification: • Half (51%) find oncology less financially rewarding than expected but only three in ten (29%) find it less personally satisfying than expected (Continued) 4

7. EXECUTIVE SUMMARY (Cont’d) • These misgivings are leading more oncologists to say that they would discourage young people from pursuing oncology (or medicine generally) than five years ago (20% vs. 5%). • Whether or not this mindset will ultimately lead to a real reduction in the absolute supply of oncologists is unclear but there are signs that oncologists already in practice may respond to reimbursement shortfalls and cost pressures by being more selective about the patients they treat: • Nearly three in ten (28%) predict they will refuse Medicare-only patients in the next few years and roughly a third (35%) expect to refuse uninsured patients. For further information on this study, please contact either: Susan S. McDonald, CEO or Debbie Kossman, SVP (smcdonald@nationalanalysts.com) (dkossman@nationalanalysts.com) 5

8. INTRODUCTION: OBJECTIVE AND METHOD 6

9. Introduction: Objective and Method … THIS INAUGURAL SURVEY WAS CONDUCTED BY NATIONAL ANALYSTS WORLDWIDE TO DEVELOP A BENCHMARK VIEW OF THE ONCOLOGY LANDSCAPE THROUGH THE EYES OF MEDICAL ONCOLOGISTS • Waged aggressively over more than three decades, the "War on Cancer" (declared by President Nixon in 1971 with the enactment of the National Cancer Act) appears to be yielding results: • Since the mid-1990s, cancer mortality has been declining steadily, and some dare to talk of certain cancers as “chronic disease.” • New biologic agents and small molecules, in particular, have improved certain cancer outcomes in striking ways. • At the same time, declining death rates have, predictably, been secured at the price of rising care costs, and “Baby Boomers” will add substantially to that economic burden as they age: • Along with the availability of costly new drugs, changing reimbursement policies appear to be shifting therapy costs: for the first time, the cost-benefits of aggressive cancer treatment are a topic of serious discussion and public debate. • Spurred by these trends and the conversations around them, this survey of US oncologists was developed to help us see this changing landscape from their perspective. • In particular, the study focuses on oncologists’ views on the clinical performance and cost-benefits of cancer therapies, as well as the impact of changing economics and reimbursement policy on the practice of oncology – including the nature of MD-patient dialogue: • It does not address specific therapies; it is meant, instead, to illuminate how oncologists think and feel generally about cancer care and where it may be heading. 7

10. Introduction: Objective and Method … THIS STUDY WAS AN INTERNET SURVEY OF 199 U.S. ONCOLOGISTS CONDUCTED IN JUNE – JULY 2008 • Questionnaire development (and ultimately, data analysis) were informed by extensive in-depth conversations with physicians prior to fielding the survey in order to identify issues and develop hypotheses. • Survey respondents were drawn from the Epocrates physician panel – the nation’s largest, verified physician panel. • Epocrates Honors Market Research program has the largest opted-in, verified physician panel in the industry with over 130,000 U.S.-based physicians, as well as 400,000 allied healthcare professionals. • Respondents were required to meet several eligibility criteria designed to ensure adequate experience and a longitudinal perspective on the practice of oncology: • Nearly all (98%) are board-certified in medical oncology or hematology/oncology; the remaining 2% are board-eligible. • All have been in practice between 6 and 30 years since completing their fellowship. • All see at least 50 cancer patients per month (mean = 270). • The majority of respondents (six in 10) are private practice owners; the remainder are salaried – generally in hospitals or other institutional settings (see Sample Characteristics, p.9). 8

11. Introduction: Objective and Method … SAMPLE CHARACTERISTICS • Note: circles throughout report are used to designate subgroup numbers significantly larger than the total column (p ≤ .05). * For the sake of brevity, all MDs are referred to in this report simply as “oncologists.” 9

12. DETAILED FINDINGS 10

13. Detailed Findings … A SLIGHT MAJORITY ARE AT LEAST SOMEWHAT OPTIMISTIC ABOUT THE FUTURE OF ONCOLOGYCARE IN THE US BUT ANOTHER QUARTER (24%) DESCRIBE THEMSELVES AS PESSIMISTIC DEGREE OF OPTIMISM ABOUT OVERALL FUTURE OF US ONCOLOGY CARE • Salaried oncologists are a little more buoyant about the future than Practice Owners • The source of their misgivings is related to the changing economics of cancer care and oncology practice (as subsequent tables will show) Q.3ai: For each item, indicate your level of optimism or pessimism: 1 = Very Pessimistic; 3 = No Opinion; 5 = Very Optimistic 11

14. Detailed Findings … ONCOLOGISTS ESTIMATE THAT THEIR PRESENTATION OF THERAPY OPTIONS IS SHAPED BYPATIENTS’ ABILITY TO PAY NEARLY 40% OF THE TIME TODAY, AND THEY EXPECT THIS TRENDTO INCREASE SIGNIFICANTLY OVER THE NEXT FIVE YEARS MEAN % OF TIME MD-PATIENT TREATMENT DISCUSSIONS ARE SHAPED IN ADVANCE BY MD SENSITIVITY TO PATIENTS’ ABILITY TO PAY Q.5a: What percent of the time, if any, are the treatment options that you discuss with patients or the way you present them shaped in advance by your sensitivity to patients’ ability – or inability – to bear the out-of-pocket costs that would likely be associated with specific treatment options? 12

15. Detailed Findings … PATIENTS WITH PRIVATE INSURANCE TEND TO HAVE A DIFFERENT DISCUSSION WITH THEIR MDs THAN PATIENTS WITH MEDICARE OR NO INSURANCE MEAN % OF TIME MD-PATIENT TREATMENT DISCUSSIONS ARE SHAPED IN ADVANCE BY MD SENSITIVITY TO PATIENTS’ ABILITY TO PAY – By Type of Health Insurance – Q.5b: For each type of patient below, estimate the percent of the time that the treatment options you discuss with patients are shaped in advance by your sensitivity to patients’ ability – or inability – to bear the out-of-pocket costs that would likely be associated with specific treatment options. 13

16. Detailed Findings … WITHIN THE NEXT FIVE YEARS, 1 IN 3 ONCOLOGISTS – AND 4 IN 10 PRIVATE PRACTICE OWNERS –ANTICIPATE REFUSING TO ACCEPT UNINSURED PATIENTS, AND AS MANY AS 3 IN 10 EXPECT TO TURN AWAY MEDICARE-ONLY PATIENTS PROJECTIONS ABOUT FUTURE LIMITS ON PATIENTS ACCEPTED INTO PRACTICE − Next Five Years − • Private practice owners expect to be sending these patients to hospitals which, in turn, struggle to subsidize inadequately compensated care Q.9a: Within the next five years, do you expect to: 14

17. Detailed Findings … ONCs ALSO OBSERVE THAT THE ESCALATING NEED FOR PRE-AUTHORIZATION IS ERODINGTHE AMOUNT OF TIME THEY AND THEIR STAFF SPEND WITH PATIENTS IMPACT OF PRE-AUTHORIZATION ON ONCOLOGY CARE Has escalated dramatically* Is eroding time with patients* • In informal conversations, oncologists lament that this time burden is a significant drain on staff and adversely affects their own ability to offer the level of support that patients require • Some comment that intensive patient interaction was one of the things that drew them to oncology in the first place * n = 150; question added after pretest Q.7c: Please indicate whether you agree, disagree, or have no opinion about each of the following statements: 1 = Disagree; 2 = No Opinion; 3 = Agree 15

18. Detailed Findings … FINANCIAL CONSIDERATIONS ARE ALSO AFFECTING THE LOGISTICS OF ONCOLOGY CAREBY DIVERTING MORE PATIENTS TO HOSPITAL SETTINGS ATTITUDES CONCERNING IMPACT OF COST AND REIMBURSEMENT TRENDS • One trend is the tendency of private practices to send more patients to hospitals because reimbursement is inadequate, requiring patients to travel further for care … The majority of those observing this trend declare it undesirable Q.7a: Please indicate whether you agree, disagree, or have no opinion about each of the following statements: 1 = Disagree; 2 = No Opinion; 3 = Agree 16

19. Detailed Findings … NOT ONLY ARE ONCOLOGISTS MORE CANDID IN DEPICTING THE BENEFITS OF CARE; THEY ALSO SEE SOME PATIENTS PLACING FINANCIAL SECURITY OVER LIFE EXTENSION CONSEQUENCES OF OUT-OF-POCKET COSTS … you to be more explicit and candid about what treatment is likely to offer … patients to place their own/their family’s financial well-being above chance to life longer … patients to place more emphasis on quality of life than on living as long as possible • Note that only small proportions actually disagree, but a third or more are “on the fence” Q.6d: Please rate the degree to which you agree or disagree with each of the following statements: 1 = Disagree; 2 = No Opinion; 3 = Agree 17

20. Detailed Findings … ON BALANCE, ONCOLOGISTS CONCLUDE THAT A QUARTER OF PATIENTS RECEIVE DIFFERENT THERAPIES THAN THEY OTHERWISE WOULD HAVE BASED ON FINANCIAL CONSIDERATIONS,AND THEY EXPECT THIS RATE TO REACH ONE-THIRD WITHIN FIVE YEARS IMPACT OF COST ON THERAPY CHOICE – Mean % of Time Patients Receive Less Expensive Therapy or Forego Entirely – Q.6a: What percent of the time, if any, do patients receive a less expensive treatment option – or forego treatment altogether – because they cannot afford the care that you think would be best for them? 18

21. Detailed Findings … AT THE SAME TIME, THERE IS NO CONSENSUS ABOUT WHETHER RISING COSTS ARE REQUIRINGPATIENTS TO ACCEPT “SUBSTANDARD” CARE OR, CONVERSELY, TO MAKE BETTER-INFORMED THERAPY CHOICES CONSEQUENCES OF RISING OUT-OF-POCKET COSTS Q.6d: Please rate the degree to which you agree or disagree with each of the following statements: 1 = Disagree; 2 = No Opinion; 3 = Agree 19

22. Detailed Findings … LOOKING AHEAD, HOWEVER, ROUGHLY 3 IN 4 ONCOLOGISTS BELIEVE THAT RISING COSTSWILL EVENTUALLY EXCEED OUR COLLECTIVE ABILITY TO PAY FOR OPTIMAL ONCOLOGY CARE PREDICTIONS ABOUT WHETHER COSTS WILL EXCEED COLLECTIVE ABILITY TO PAY Q.7c: Please indicate whether you agree, disagree, or have no opinion about each of the following statements: 1 = Disagree; 2 = No Opinion; 3 = Agree 20

23. Detailed Findings … ALREADY, ALMOST TWO-THIRDS OF ONCOLOGISTS BELIEVE THAT DRUG COSTS HAVEOUTPACED EFFICACY GAINS IN THE PAST FIVE YEARS, ESPECIALLY FOR METASTATIC BREAST,NON-SMALL CELL LUNG CANCER, AND PANCREATIC TUMORS CHANGE IN DRUG EFFICACY RELATIVE TO DRUG COST IN PAST 5 YEARS Q.6c: Indicate how the relationship between anti-tumor drug efficacy and cost have changed over the past five years for: 21

24. Detailed Findings … ONCOLOGISTS ALSO OFFER A MIXED PROGNOSIS ON THE CLINICAL AND ECONOMIC VALUE OF FUTURE THERAPIES IN DEVELOPMENT EXPECTATIONS FOR PRICE-VALUE OF NEW CANCER DRUGS • Nearly 6 in 10 agree they are “very optimistic” that new drugs will offer significant improvement in outcomes but nearly as many agree they are “increasingly cynical” about the therapeutic value of expensive new cancer drugs Q.7c: Please indicate whether you agree, disagree, or have no opinion about each of the following statements: 1 = Disagree; 2 = No Opinion; 3 = Agree 22

25. Detailed Findings … LOOKING AHEAD, THOUGH, A LARGE MAJORITY ARE OPTIMISTIC ABOUT NEW DISCOVERIES IN THE UNDERLYING BIOLOGY OF CANCER (WHICH, IN TURN, INSPIRE NEW TREATMENTAPPROACHES) OPTIMISM ABOUT NEW DISCOVERIES IN THE UNDERLYING BIOLOGY OF CANCER * n = 150; question added after pretest Q.3ai: For each item, indicate your level of optimism or pessimism: 1 = Very Pessimistic; 3 = No Opinion; 5 = Very Optimistic 23

26. Detailed Findings … THE TREATMENT MODALITIES ABOUT WHICH ONCOLOGISTS ARE MOST OPTIMISTIC INCLUDE“NOVEL BIOLOGICS” AND “SMALL MOLECULES” BUT MANY ALSO HAVE HIGH HOPES FOR THEABILITY TO TAILOR THERAPY TO PATIENTS EXPECTATIONS FOR THE FUTURE OF SELECTED CANCER TREATMENT MODALITIES • There is considerably less optimism about anti-tumor vaccines and gene therapies than about other modalities Q.3ai: For each item, indicate your level of optimism or pessimism: 1 = Very Pessimistic; 3 = No Opinion; 5 = Very Optimistic 24

27. Detailed Findings … BIG PHARMA/BIOTECH IS EXPECTED TO PLAY THE LARGEST ROLE IN ADVANCING CANCERCARE IN THE COMING DECADE, ECLIPSING ALL OTHER SOURCES OF INNOVATIONS ANTICIPATED ROLE OF VARIOUS SOURCES OF CANCER INNOVATION • This reflects recognition that government funding has been curtailed Q.3aii: Rate the degree to which you expect each of the following to contribute to advances in cancer care in the coming decade. 25

28. Detailed Findings … ONCOLOGISTS DESCRIBE A STEADY DOWNWARD TREND IN PROFESSIONAL AND, ESPECIALLY,FINANCIAL SATISFACTION WITH THEIR PROFESSIONAL CAREERS FINANCIAL AND PERSONAL/PROFESSIONAL SATISFACTION OF PROVIDING ONCOLOGY CARE VS. EXPECTATIONS • Half find the practice of oncology today to be less financially rewarding than they had hoped and almost 7 in 10 expect to feel that way five years from now • Note that we have no data for other specialties against which to compare Q’s 8a,b: All things considered, how financially rewarding/personally/professionally satisfying do you find it to provide oncology care? 26

29. Detailed Findings … AS A RESULT, FEWER THAN HALF WOULD ENCOURAGE A YOUNG PHYSICIAN TO PURSUE ACAREER IN ONCOLOGY, COMPARED WITH TWO-THIRDS FIVE YEARS AGO ONCOLOGISTS’ ADVICE ABOUT CAREERS IN MEDICINE AND IN ONCOLOGY • Indeed, 1 in 5 would now discourage them from entering medicine as a profession and oncology as a specialty, although oncologists still show signs of allegiance to their chosen careers Q.9ci: Imagine that a college student asked you about whether he/she should pursue a career in medicine. How would you respond? Q.9cii: Now imagine that a medical student/resident asked you about whether he/she should pursue oncology as his/her specialty vs. some other specialty. How would you respond? 27

30. Detailed Findings … MANY PREDICT A SHORTAGE OF ONCOLOGISTS, ALTHOUGH ONLY HALF SENSE THATONCOLOGY WILL STRUGGLE MORE THAN OTHER SPECIALTIES TO ATTRACT NEW MDs EXPECTATIONS REGARDING FUTURE AVAILABILITY OF ONCOLOGISTS* Within the next two decades … * n = 150; question added after pretest Q.7c: Please rate your agreement or disagreement with each of the following statements: 1 = Disagree; 2 = No Opinion; 3 = Agree 28

31. CONCLUSIONS 29

32. Conclusions … CONCLUSIONS As expected, oncologists express frustration about the ways in which changing economic pressures are intruding into their professional lives and influencing the delivery of oncology care in ways they do not believe are for the better. Those frustrations are evident in both statistics and in heart-felt conversations about how the “business” of oncology sometimes weakens the “clinical contract” that binds oncologists to their patients. It is certainly true that oncologists are unhappy to find themselves absorbing the financial losses or declining margins associated with uninsured patients or those unable to afford co-pays. Notably, though, their dissatisfactions seem to stem less from erosion of their personal income than from the time and paperwork demanded by an increasingly Byzantine reimbursement bureaucracy. Indeed, private practice oncologists describe an office culture in which they and their staff spend less time with patients and more time ensuring payment for the care they deliver. They resent it and they perceive that their patients sense and resent it as well The inability to spend sufficient time with patients is doing serious damage to morale among a group of professionals who were drawn to oncology precisely because they saw it is as a medical specialty that would let them treat “the whole patient” in a way that few others do with stakes that remain high and odds that are sometimes dishearteningly low. The implications go beyond the dwindling satisfaction they derive from their professional careers to an even deeper source of concern: They believe that the quality of care they are dispensing is now declining as a result of the changing logistics and economics of oncology. Oncologists can point directly and concretely to the need for many patients to travel farther for care when physicians are unable to shoulder the financial burden associated with this changing economic landscape. This is a trend they generally find disruptive and unwelcome. On the other hand, the impact on the therapies they offer and the way in which they present them to patients represent a more complex and dynamic picture, whose future implications are not yet clear. While claiming that they can still find ways for most patients to receive very good care, they foresee a time when the current system of healthcare financing collapses to the point that all of us – physicians and patients – are facing harder choices about what we are willing to sacrifice for the latest treatment options, especially when life extension gains are measured only in months. (Continued) 30

33. Conclusions … CONCLUSIONS (Cont’d) If there is something like a silver lining in this cloud, it is the perception that sensitivity to cost may have had at least one salutary effect: An increasing sensitivity to cost on both sides of the physician-patient dialogue and a more realistic presentation of what therapy offers. We know that physicians can and do shape patient decisions by the way they present options and tradeoffs – and we hypothesize (as do oncologists) that a more specific presentation of outcomes will influence the way patients weigh those factors, inspiring a more thoughtful evaluation of what it costs in dollars and quality of life. Of course, both physicians and patients are faced with the uncertainty of whether a given patient will benefit from therapy, and population statistics can be “spun” either way depending on physician inclination. Here physicians hope that the ability to identify which patients will benefit from particular therapies will help address both the expense and morbidity associated with treating patients who benefit little, if at all, from costly regimens. For now, physicians do their best to give patients reasonable expectations about therapy and to find ways for patients to receive the best available care despite the expense. It is probably worth noting that oncologists were delighted to have the opportunity to talk with us about their views of their profession, why they entered it, and how it is changing. It is a conversation they would like to have more often, unanchored to any of the specific product marketing objectives that we, as an industry, tend to attach to our dialogue with customers. We invite you to propose questions that you would like included in future years of this ongoing inquiry – questions that are free of therapy-driven specifics but that will add to or clarify our understanding of the prognosis for US oncology care from this unique, aerial perspective. 31