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April 05, 2016

High cancer drug costs lead to delays in filling prescriptions, study finds

Penn study examines effect of out-of-pocket costs on elderly patients on Medicare Part D with chronic myeloid leukemia

It's well-known that specialty drugs for cancer and other life-threatening diseases can have astronomical costs — and not just in terms of money. A new study from the University of Pennsylvania has found a hidden cost as well: In the case of one specialty cancer drug covered under Medicare, elderly patients who had to pay out-of-pocket costs waited twice as long to start treatment as similar patients who got subsidies.

The study used federal data from 2011 to 2013 to compare two groups of cancer patients enrolled in the Medicare Part D prescription drug insurance plan. All of them had chronic myeloid leukemia, which can be very effectively treated with a class of specialty drugs known as TKIs (tyrosine kinase inhibitors).

The total cost of a TKI drug, on average, was $6,800 per month. One group qualified for low-income subsidies and paid almost nothing out of pocket. The other group had to pay $2,600 for the first month alone.

"The whole purpose of Medicare Part D is to improve access for prescription drugs...our study clearly shows that Medicare Part D is not playing that role, especially when it comes to specialty drugs," said Jalpa Doshi, the study's lead author and an associate professor at the Perelman School of Medicine.

These high out-of-pocket costs led to serious delays in taking necessary medication. People with high out-of-pocket costs waited, on average, 51 days to fill out a prescription after getting a diagnosis, while the subsidized group waited only 24 days.

That was assuming they filled out a prescription at all. Two-thirds of the subsidized group filled out a TKI prescription within six months of diagnosis, while only 45 percent of the non-subsidized group did so.

"Upfront, there's an enormous amount of out-of-pocket costs," said Doshi. 

As a result, patients put off filling out their prescriptions until they find a way to pay for it.

Specialty pricing tiers

Out-of-pocket costs are so high because of Medicare Part D's tiered pricing structure. If a drug costs most than $600 per month, patients must pay 25 to 33 percent of the cost of a drug themselves until they reach a limit on out-of-pocket costs. After that, "catastrophic coverage" sets in and they are responsible for 5 percent.

Not only that, but there's also the infamous "Medicare gap" loophole. When a drug plan reaches a certain spending threshold ($3,310 in 2016), but has not yet reached the catastrophic coverage phase, patients are responsible for 45 percent of the cost of a brand-name drug.

The Affordable Care Act instituted measures that will eliminate the Medicare gap by 2020, but patients will still pay 25 percent until the catastrophic coverage limit, which can be up to $4,700.

Moreover, even paying 5 percent of a drug's cost can challenge a senior on a fixed income. Unlike most private insurance plans, there are no out-of-pocket maximums on Medicare Part D.

"They will continue to spend out of pocket for the entire year," said Doshi. "They will not receive any relief."

Doshi also noted that there's no lower-cost alternative to these drugs. Some patients not counted in the federal data may have been able to get discounts directly from the manufacturers, but that involves jumping through extra hoops and goes against the purpose of having Medicare Part D in the first place.

The paper suggests that Medicare should take into account the effectiveness of the drug, not just its cost, before putting it on a specialty tier. It also proposes allowing seniors pay for drugs in gradual installments, thus spreading out the cost.

"Policymakers could consider a way of smoothing out, of distributing the out-of-pocket costs throughout the year," said Doshi.

Correction: A previous version of this article stated that the Medicare coverage gap begins when the patient has reached a certain threshold on spending. However, the gap begins when the patient and the drug plan together have reached a certain threshold on spending.