Targeted Oral Anticancer Agents and the Part D Donut Hole: Need for a New Policy Strategy?

August 7, 2017

New research has found that the steady increase in the price of targeted oral anticancer medications is washing out the potential for savings that patients would experience in their out-of-pocket payments following closure of the Medicare Part D coverage gap.

New research has found that the steady increase in the price of targeted oral anticancer medications is washing out the potential for savings that patients would experience in their out-of-pocket (OOP) payments following closure of the Medicare Part D coverage gap. The researchers recommend exploring methods of harnessing the surge in competition so Medicare enrollees are not faced with high OOP costs.

For their study, published in the Journal of Clinical Oncology, the authors utilized data from the Medicare-linked SEER data, gathered between 2007 and 2012, and identified 42,111 patients who took an oral anticancer agent during that study period. Monthly drug costs and OOP payments for each patient were calculated.

While the prescription drug consumer price index for the period between 2007 and 2012 grew at a 3% annual rate, the mean price of anticancer agents rose by nearly 12% annually—it reached $7719 per patient per month (PPPM) in 2012, up from $4427 in 2007. The launch cost for these agents PPPM increased substantially before and after 2010: from a range of $3000 to $6000 for approvals before 2010 to $8000 to $10,000 for approvals after 2010. Five drugs approved before 2012 had double-digit rates of inflation during the study period; these included imatinib (15.5%), dasatinib (13.7%), erlotinib (10%), sorafenib (12%), and everolimus (11%).

While prices rose over time for new and previously launched oral anticancer agents, patient OOP costs reduced by 4% annually over the study period—it rose from $980 to $1200 from 2007 to 2010, but dropped below $850 in 2011 (about a 40% drop), when the coverage gap began to close.

The authors explained that a continued increase in the OOP payments, at the rate observed prior to 2011, would have resulted in OOP costs growing by 50% by 2012—which indicates a substantial impact of the coverage gap closure. This, the authors wrote, was most beneficial for enrollees with high OOP PPPM, some of whom could not have sustained taking their medication with 100% coinsurance payments and could not reach the catastrophic phase with 5% coinsurance.

The financial burden faced by Medicare enrollees who need Part D medications is substantially higher that that faced by those who carry private health insurance: $832 versus $198 mean OOP PPPM in 2011, respectively. The high cost of the oral agents means patients rapidly enter the catastrophic phase of Part D coverage, which can stop them from taking life-saving medications. The authors propose several policy changes that can help the process:

  • Allow Part D plans to have 2 specialty drug tiers, instead of 1, similar to formularies of commercial plans (value-based insurance design) Cap patient cost sharing on the preferred specialty drug tier Current specialty tier should be reserved for competitor drugs with high prices
  • CMS’ Oncology Care Model, with its emphasis on care coordination and shared savings, has made provision for value-based selection of oral agents under Medicare Part D and intravenous agents under Part B

Such reform, they wrote, could move Medicare toward more efficient and equitable purchasing of oral drugs for patients.

Reference

Shih YT, Xu Y, Liu L, Smieliauskas F. Rising prices of targeted oral anticancer medications and associated financial burden on Medicare beneficiaries. J Clin Oncol. 2017;35(22):2482-2489. doi: 10.1200/JCO.2017.72.3742.