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Proposed Drug Price Changes to Increase Patient Out-of-Pocket Costs

An Avalere analysis showed that patient out-of-pocket costs would increase under the Administration's drug pricing blueprint.

drug pricing patient out-of-pocket costs

Source: Thinkstock

By Sara Heath

- Proposed amendments to drug price coverage could adversely impact patient out-of-pocket costs, causing some patients to pay more for their treatments than they had before, according to a recent analysis from Avalere.

Earlier this month, the Trump Administration published a blueprint for overhauling drug pricing in Medicare and Medicaid. Among the many provisions listed in the blueprint was a proposal to shift certain Medicare Part B drugs to Medicare Part D.

Because of varying cost-sharing formulas in both of those programs, that change could cause some cancer patients to pay more for their medications. In turn, that could negatively impact patient access to treatment, as cost is often a significant barrier to obtaining prescription medications.

Under Medicare Part D, patients face complex cost-sharing formulas. Cost-sharing is higher for patients who do not qualify for low-income subsidies.

Under Medicare Part B fee-for-service, patients pay 20 percent coinsurance on all treatments. Most patients have some sort of supplementary insurance to help cover that 20 percent cost, such as employer-sponsored coverage or Medigap.

READ MORE: Clinician Org Says Trump Drug Price Plan Harms Patient Care Access

The differences in those coverage formularies create disparities in patient financial responsibility under either plan, according to Avalere senior director Richard Kane.

“Medicare beneficiaries typically have lower out-of-pocket costs in Part B – especially since so many seniors carry supplemental coverage,” Kane said in a statement. “Any proposal for shifting drugs to Part D needs to account for these differences.”

To be fair, both Part B and Part D can yield high patient financial responsibility. In 2016, 72 percent of Part D patients did not qualify as low-income and faced about $4,400 in out-of-pocket costs for new medications. About 25 percent of patients in Part B did not qualify for supplemental coverage and faced nearly $10,000 in out-of-pocket costs.

Should CMS shift some Part B drugs to Part D, the supplemental insurance those Part B patients had obtained will disqualify them for low-income subsidies offered under Part D, the researchers predicted. This would considerably increase the amount patients could pay for prescription drugs and cancer treatments.

However, there is a minority of patients who do not obtain supplemental coverage for Part B who would actually benefit from their drugs shifting to Part D. Those patients would likely qualify for low-income subsidies that make for lower patient financial responsibility for drug costs.

READ MORE: Trump Calls for Drug Price Transparency to Lower Patient Health Costs

Considering the transition of some prescription drugs from Part B to Part D will call for careful consideration of numerous different factors, according to Avalere executive vice president Matt Brow.

“Beneficiary out-of-pocket costs under Part B and Part D are based on a combination of many factors,” Brow said. “The financial impact of a transition of certain Part B drugs into Part D would not be uniform across patients, but rather will differ for particular groups of beneficiaries.”

Factors such as the mix of drugs prescribed to the patient, drug price, and beneficiary income level all influence how Part B and Part D coverage will impact out-of-pocket costs.

Other groups have found similar issue with the Administration’s drug pricing blueprint, including the Community Oncology Alliance (COA). Per the group’s analysis, the proposed shift of some Part B drugs to Part D would limit patient access to care because it would increase the cost of prescription drugs.

COA explained that the proposals issued in the blueprint had noble intentions – few healthcare professionals want to see patients paying more for their treatments. However, the proposals require careful consideration.

READ MORE: Top Strategies for Collecting Patient Financial Responsibility

“Cancer patients have endured decades of health ‘reform’ and big ideas from Washington that have backfired, making it more difficult and much more expensive for them to receive care. Policymakers must be careful that patients do not have to suffer through more half-baked, poorly conceived changes,” noted COA president Jeffrey Vacirca, who is also CEO of NY Cancer Specialists.

COA conducted a clinician survey, finding that 85 percent of providers believe the proposed shift of Part B and Part D drugs would increase drug costs. Eighty-nine percent of providers said this could delay patient access to care, and 92 percent said these changes would limit the number of treatment choices patients feasibly have.

Other industry groups have taken a critical view of the drug pricing blueprint, including the Pharmaceutical Research and Manufacturers of America (PhRMA). In a statement issued following the blueprint’s release, the agency said the Administration’s proposals could have unintended consequences on patient treatment access.

“These far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain,” said PhRMA president and CEO Stephen J. Ubl. “While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients’ access to innovative treatments.”

 

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