Part D may need an overhaul

The program began before specialty drugs became such a major expense for Medicare and its beneficiaries. Congress is considering legislation that would cap payouts to recipients and require price rebates from manufacturers.

Carol Thompson is a 77-year-old retired accountant in Lawrenceville, Georgia, who couldn’t afford the drugs her doctor prescribed her earlier this year for chronic lymphocytic leukemia, a form of blood cancer. .

As retirees, Thompson and her husband, Tom, live on their social income
Security income and some retirement savings and we were delighted to learn that the first month’s prescription of Imbruvica (ibrutinib) from Janssen Pharmaceuticals (a unit of Johnson & Johnson) was free. But they couldn’t afford the $3,200 fee for the second month, even though they were all enrolled in Medicare Advantage with Part D prescription drug coverage.

“It’s an oral chemotherapy drug that my doctor recommended to me,” Thompson said. “There’s a trial period for the first month where it’s free, and I don’t have a copayment. I thought, wow, that’s great. But then I found out that it was only during the trial period, so when my pharmacist went to renew it for the second month, he said the co-payment would be $3,200 per month.

According to a January report by the federal Department of Health and Human Services titled “Prescription Drug Affordability Among Medicare Beneficiaries. Their plight has increased interest in redesigning Part D so that expensive drugs, many of which are cancer treatments, may not be out of reach for so many Medicare beneficiaries.

Currently, the Part D program has no cap on reimbursable expenses for recipients. Bills before Congress would cap beneficiary spending at several thousand dollars a year.

Details vary, but the bills would also shift more of the cost of expensive drugs from Medicare to Part D plans. At high spending levels in the “catastrophic phase” of coverage, the bills also include a requirement that manufacturers set the price of their discounted products.

Not designed for specialty drugs

One of the reasons the Part D overhaul is needed is that the Medicare program has seen spending on expensive specialty drugs soar, notes Leigh Purvis, MPA, director of healthcare cost and access for AARP’s Public Policy Institute. “When Part D started in 2006, we didn’t have a lot of high-priced specialty drugs,” she says. “But we’re doing it now, and those costs are increasing.” Consequently, Medicare spends much more in the catastrophic phase.

Medicare spending on Part D drug benefits more than doubled, from $44.3 billion in 2006, when the benefit began, to $102.3 billion in 2019, according to a 2021 report from the Commonwealth fund entitled “Medicare Part D Redesign”. Most of this growth is for patients who are in the catastrophic phase of coverage that begins after beneficiaries exceed annual disbursements of $6,550, the threshold in 2021. The threshold for 2022 is $7,050.

“The most important elements of the Part D overhaul are reducing beneficiary costs, which will be primarily achieved by setting a spending cap for the elderly,” says Ryan Urgo, chief executive of consultancy Avalere Health. . “It’s a very important main objective.” Another important goal is to reduce Medicare prescription drug spending, which is on an unsustainable upward trajectory, he adds.

“By giving health plans more responsibility for the cost of care in what’s called the catastrophic phase, you could reduce the government’s role for spending in this phase by creating more skin in the game for sponsors of diet,” says Urgo.

Urgo says shifting the cost burden of Part D coverage so that more of it falls on health plans and less on Medicare and beneficiaries could cause health plans to be harder to negotiate lower prices. with drug manufacturers.

“At the same time, you could release the federal government from responsibility for what is the fastest growing segment of the Part D program, which is this catastrophic phase,” he notes. “This increase in spending is largely due to the proliferation of specialty drugs and new products for patients with specialty conditions that tend to have high prices.”

However, shifting costs to health plans raises the prospect of a common trade-off in health insurance: Ask insurers to take on more costs or expand coverage, and they’ll soon be asking for higher premiums. . But Urgo says, “Part D is an extremely competitive market, where premium is king. Rather than increasing premiums, plans can limit access to certain drugs, ask manufacturers for higher discounts or reassess their provider networks, he says. There are also other provisions of the Part D benefit overhaul proposals that would oppose premium increases.

Will the pharmaceutical companies raise their prices? With patients insulated, to some extent, from the cost of expensive drugs if there was a “hard” cap on out-of-pocket costs, drugmakers might face less public pressure to set high list prices.

But Urgo says there could still be some pushback from Part D plans. “Depending on the details of a final Part D redesign package, some manufacturers’ costs will be higher than others,” observes Urgo. Therefore, some drug companies may try to raise prices, he says, but if they do, the larger Part D health plans would likely push back and demand higher drug discounts.

Skyrocketing costs

When the Part D benefit was designed, a relatively small number of beneficiaries had drug expenses that pushed them into the catastrophic phase of coverage, when Medicare pays 80% of expenses; the plans of part D, 15%; and beneficiaries, 5%.

That 5% share may seem small, but with many drugs priced at $100,000 per year or more, a small proportion of a large expense ends up being a large amount. “For expensive drugs for cancer and other conditions, patient costs in Part D are so high that the lack of a true spending cap can create financial pressure on recipients throughout the year,” says Urgo. Under this arrangement, health plans, pharmaceutical companies, and drug benefit managers have limited incentives to contain drug costs.

In a Health Affairs article published in April 2022, Stacie B. Dusetzina, Ph.D., a researcher at Vanderbilt University Medical Center, and her colleagues found that many beneficiaries who were not eligible for grants that offered some financial protection against coinsurance of 5 % did not start prescribed therapy. Specifically, Dusetzina and colleagues found that 50% had not started drug treatment for immune system disorders or high cholesterol, 30% had not picked up their first prescriptions for cancer drugs, and 22% did not hadn’t started their Hep C medications.

The fact that so many Medicare beneficiaries with critical illnesses cannot afford their treatments shows that the Part D design is outdated, Dusetzina noted in a medical center press release about the research reported in Health Affairs. Almost all other health plans in the United States include reimbursement limits to protect members from unlimited spending on prescriptions, she added. When Part D members don’t start their medications, their symptoms worsen, driving up health care costs, she and her colleagues wrote.

AARP’s Purvis says it’s “a huge cause for concern when a Medicare beneficiary with an income of about $30,000 a year has to pay over $10,000 for prescriptions. It’s just not sustainable.

Thompson says that after her diagnosis of chronic lymphocytic leukemia, she did not need treatment until 2017, when her doctor prescribed her chemotherapy drug which was infused at the hospital once a month for six months, which was the protocol at the time. The infusions were covered by Medicare Advantage without out-of-pocket. “It went well and when I finished my numbers were all low and good,” she said. “But now, five years later, I need treatment again.” She was prescribed Imbruvica, a drug she may have to take for the rest of her life.

In an opinion piece published in the December 23, 2021 issue of New England Journal of Medicine Dusetzina noted that the first fill of Imbruvica costs $3,223 and each subsequent fill costs the patient $800 due to 5% coinsurance during the catastrophic phase of Part D coverage. Thompson’s case is different. cases identified by Dusetzina and her colleagues because since her first prescription, she was allowed to participate in the drugmaker’s financial assistance so that she would get drugs at no cost this year.

High prices for specialty drugs and the growing number of prescriptions for them led to a doubling of Medicare spending on Part D coverage for patients who reached the catastrophic phase between 2013 and 2017, according to the Fund’s 2021 report. of the Commonwealth. Even when catastrophic recipients are required to pay 5% of their drug costs, many do not fill their prescriptions, the report authors added.

Joseph Burns is a freelance journalist in Brewster, Massachusetts, covering health care, health policy and health insurance

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