Panelists at the Value-Based Insurance Design Summit discussed research and reforms to address the high cost of medications and the impact it has on equitable access to treatment.
The cost and availability of pharmaceuticals is a prime area for reform as there is a lack of equity, said Clifford Goodman, PhD, senior vice president, The Lewin Group.
Goodman moderated a panel discussion on advancing pharmacoequity and enhancing access to essential medications at the Value-Based Insurance Design (V-BID) Summit, hosted by the University of Michigan’s V-BID Center.
Pharmacoequity was coined by Utibe Essien, MD, MPH, in 2021, and is defined as “ensuring that all individuals, regardless of race and ethnicity, socioeconomic status, or availability of resources, have access to the highest-quality medications required to manage their health needs.”1
The panelists were:
More than 2 decades ago, the need to improve access to medications first came to Doshi’s attention when she was working on research that ultimately supported the creation of the Part D benefit in Medicare. However, it became apparent that the cost-sharing requirements under the Part D benefit were “so poorly designed that they would continue to result in medication access barriers and disparities for many beneficiaries,” she said.
While Congress did enact some changes in 2010 to the Part D benefit to address the so-called “donut hole”—the coverage gap when total drug costs reach a certain limit and the beneficiary is responsible for a higher percentage of the cost of drugs—there remained issues with the Part D cost-sharing design that were going to represent major challenges for patients needing specialty drugs, Doshi explained.
“There were a number of factors. The number of specialty drug treatments that offered therapeutic advances over traditional medicines was increasing rapidly across multiple disease areas,” she said. “Second, many of these novel drug treatments cost tens of thousands of dollars.”
In addition, it was becoming clear that despite the donut hole fix, patients needed to pay 25% to 33% coinsurance for the cost of these specialty medications, and there was no annual out-of-pocket maximum.
Lastly, large racial and ethnic disparities in the income and assets of Medicare beneficiaries were well known by then. “The lack of affordability for the very high out-of-pocket costs for the specialty drugs under Part D were only likely going to exacerbate the inequities in access that already exist,” Doshi said. “So, it was a perfect storm in the making.”
She pivoted her team’s research into specialty drugs in 2011 to work in 4 major areas:
The "too much" aspect of the problem was that specialty drug users would spend thousands of dollars OOP in a year, and half of that annual spending was occurring in the 5% catastrophic coverage base. The "too soon" aspect was that the OOP costs were all front-loaded at the beginning of the calendar year. Even if there was an annual OOP maximum of $2000 put in place, beneficiaries would have to pay the entire amount in January alone if they were on an expensive drug.
“This was a critical issue, because many Medicare beneficiaries…cannot afford to pay that kind of money in January at the beginning of the year,” Doshi said.
As for the negative consequences, there was a series of studies showing that Part D cost-sharing for specialty drugs resulted in high rates of prescription drug abandonment, delays in treatment initiation, nonadherence to drugs, and early discontinuation of specialty drug treatments. There was more than enough evidence showing that the problem was generating negative outcomes, she said.
In 2016, Doshi and her research team came up with a potential solution: an annual Part D OOP cap combined with a monthly cap, which would distribute the costs more evenly throughout the year. This solution is now called “smoothing.” Through this process, a patient with an annual OOP of $2000 would be able to spread out that money owed in January over the entirety of the year.
In the end, an OOP max combined with smoothing as part of the implementation was part of the Inflation Reduction Act (IRA) that goes into effect January 1, 2025, Doshi explained.
The PAN Foundation has been a strong advocate for Medicare Part D reforms over the years and is one of the platforms that researchers like Doshi have been able to utilize to get their findings in front of policy makers. In addition to advocating for the OOP max and smoothing, the organization has called for the expansion of the Low-Income Subsidy Program, explained Niles. Her organization provides charitable assistance to help patients pay for their medications.
But even as these reforms are enacted, the work is not done. “We want to make sure that as the smoothing reform is implemented, there are standardized patient protections, which right now are lacking in the language in the IRA,” she said. “We want to make sure there's standardized language that all plans can use. And we want to make sure that there's easy ways for patients to opt into this program.”
PAN recently commissioned research from Avalere Health that found even when the IRA reforms go into effect in 2025, more than 200,000 Medicare beneficiaries will spend more than 10% of their income on prescription medications.2
Additional national polling3 from PAN found that even with the cap in place, 75% of adults on Medicare said it would be difficult to afford $2000 in OOP prescription costs annually. In addition, these concerns were especially high among Black and Hispanic adults.
“So, the analysis and the polling reinforces, at least for us, that we think there's going to be continued need for financial assistance and that the PAN Foundation will continue to play a critical role providing the safety net,” Niles said.
O’Brien echoed Niles’ belief that despite the reforms passed, no one can get complacent, because something new will appear to underscore the importance of identifying the issues and spearheading reforms. For instance, the pandemic highlighted the disparities for populations of color and those from a lower socioeconomic status, but they existed long before COVID-19.
“For many, COVID[-19] was the sounding alarm, but not for NPC,” he said.
The organization is conducting research related to improving access to appropriate care and addressing the cost of care, and as part of it, NPC has found wage status has a significant impact on specialty drug utilization and overall health care costs. For instance, non-White individuals with autoimmune conditions are less likely to fill their prescriptions for specialty medication compared with White counterparts in all but the top wage category. In addition, those individuals had higher hospital admissions and emergency department use.
“So, the population of folks who needed the medicines most were using them least and ultimately costing the system more and suffering health-related complications,” O’Brien said.
These findings highlighted contributors to inequities, such as benefit design, enrollee health literacy, and provider prescribing bias. All of the research projects NPC has concluded has identified more research is needed to meaningfully address drivers of disparities.
Currently, NPC is working on research around co-pay accumulator adjustment programs, and so far, the data has shown they affect people of color worse than a matched White cohort.
“The term pharmacoequity may be relatively new, but our equity-related research and discussions are not,” O’Brien concluded.
1. Essien UR, Dusetzina SB, Gellad WF. A policy prescription for reducing health disparities—achieving pharmacoequity. JAMA. 2021;326(18):1793-1794. doi:10.1001/jama.2021.17764
2. Stengel K, Yip R, Donthi S, Brantley K. Some enrollees may face affordability challenges under Part D redesign. Published January 17, 2023. Accessed March 24, 2023. https://avalere.com/insights/some-enrollees-may-face-affordability-challenges-under-part-d-redesign
3. National polling: adults face challenges affording prescriptions, even with $2,000 Medicare Part D cap. PAN Foundation. November 15, 2022. Accessed March 24, 2023. https://www.panfoundation.org/national-polling-adults-face-challenges-affording-prescriptions-even-with-medicare-part-d-cap/