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Figure.  Expected Annual Patient Out-of-Pocket Spending for Anticancer Medications in 2010 and 2019 Benefit Designs
Expected Annual Patient Out-of-Pocket Spending for Anticancer Medications in 2010 and 2019 Benefit Designs

The graph shows expected out-of-pocket spending for Medicare beneficiaries, assuming 12 months of therapy and the mean point-of-sale price for a 30-day or typical supply from the fourth quarter of 2010 and 2018, respectively. We also assumed that beneficiaries had no other medication use and used the standard benefit design (approximately 98% of plans required coinsurance for all drugs and years studied). Median prices resulted in similar spending and are not shown.

Table.  Mean Point-of-Sale Prices and Price Changes for Orally Administered Anticancer Drugs Under Medicare Part Da
Mean Point-of-Sale Prices and Price Changes for Orally Administered Anticancer Drugs Under Medicare Part Da
1.
Medicare Payment Advisory Commission. Report to the Congress: Medicare payment policy. http://www.medpac.gov/docs/default-source/reports/mar18_medpac_entirereport_sec.pdf. Published March 2018. Accessed April 11, 2019.
2.
Mailankody  S, Prasad  V.  Five years of cancer drug approvals: innovation, efficacy, and costs.  JAMA Oncol. 2015;1(4):539-540. doi:10.1001/jamaoncol.2015.0373PubMedGoogle ScholarCrossref
3.
Workman  P, Draetta  GF, Schellens  JHM, Bernards  R.  How much longer will we put up with $100,000 cancer drugs?  Cell. 2017;168(4):579-583. doi:10.1016/j.cell.2017.01.034PubMedGoogle ScholarCrossref
4.
Howard  DH, Bach  PB, Berndt  ER, Conti  RM.  Pricing in the market for anticancer drugs.  J Econ Perspect. 2015;29(1):139-162. doi:10.1257/jep.29.1.139PubMedGoogle ScholarCrossref
5.
Light  DW, Kantarjian  H.  Market spiral pricing of cancer drugs.  Cancer. 2013;119(22):3900-3902. doi:10.1002/cncr.28321PubMedGoogle ScholarCrossref
Research Letter
May 28, 2019

Specialty Drug Pricing and Out-of-Pocket Spending on Orally Administered Anticancer Drugs in Medicare Part D, 2010 to 2019

Author Affiliations
  • 1Department of Health Policy, Vanderbilt University School of Medicine, Nashville, Tennessee
  • 2Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
JAMA. 2019;321(20):2025-2028. doi:10.1001/jama.2019.4492

For Medicare beneficiaries, Part D provides access to prescribed drugs. However, access to high-priced specialty medications covered by Part D may be limited by increasing drug prices and Part D benefit designs requiring patients to pay a percentage of the drug’s price with every fill through coinsurance. To improve affordability of drugs for patients, the Affordable Care Act has gradually reduced the required coinsurance for branded drugs in the coverage gap (ie, doughnut hole) from 100% in 2010 to 25% in 2019.1 However, price increases over that same period might have offset expected savings for patients needing specialty drugs, including anticancer drugs.2-5 We assessed point-of-sale prices from 2010 to 2018 for orally administered anticancer drugs offered through Medicare Part D and estimated how out-of-pocket spending changed from 2010 to 2019 benefit designs as a result of decreasing coinsurance as the Part D coverage gap closed.

Methods

We used Medicare formulary and pricing files for the fourth quarter of 2010 through the fourth quarter of 2018 to describe point-of-sale prices (ie, excluding rebates and discounts) for a single fill of each anticancer medication. We compared prices in 2010 (or the first year a newer product was observed in the data) and 2018. We also calculated the percentage price increase or decrease for monthly fills over this period. We estimated price changes net of inflation, adjusting drug prices and out-of-pocket spending to 2018 US dollars using the Consumer Price Index.

Next, we calculated expected out-of-pocket spending for Medicare beneficiaries under the standard benefit design in 2010 and 2019 for the 13 drugs available during both years. This standard benefit design used coinsurance rather than copayments (98% of Part D plans required coinsurance for all drugs/years studied). We assumed beneficiaries used 12 months of therapy and no other medications for comparisons.

Results

In 2010, 13 anticancer medications were covered by Part D and 54 in 2018. The mean price per fill in 2010 was $7438 vs $13 992 in 2018. In 2018, 48 of 54 medications had monthly prices exceeding $10 000 per fill and 21 had prices exceeding $15 000 per fill (Table). Across all drugs and varying years of approval (pre-2010 through 2018), mean prices rose by 5.8% per year above inflation. Changes in mean per-fill price from the first observed fill year to 2018 was 40.4% overall, ranging from a reduction of 44% for generic imatinib ($8570 in 2016 vs $4822 in 2018) to an increase of 306% for gefitinib ($1960 in 2010 vs $7960 in 2018).

Despite efforts to close the coverage gap between 2010 and 2019, mean expected out-of-pocket spending in 2019 benefit designs increased for 11 of 13 orally administered anticancer drugs available in both years (mean 12-month out-of-pocket spending in 2010 was $8794 and in 2019 is expected to be $10 470; mean increase, $1676) (Figure). Estimated annual out-of-pocket spending in 2019 is expected to be lowest for lapatinib ($7220) and highest for lenalidomide ($15 472).

Discussion

The number of orally administered anticancer medications covered under Part D has increased since 2010, with mean monthly point-of-sale prices for anticancer drugs reaching nearly $14 000 in 2018. Anticancer drug prices have increased beyond inflation between 2010 and 2018, resulting in higher out-of-pocket spending for patients despite the Part D coverage gap closing.

Limitations of this study include use of point-of-sale prices, which do not reflect rebates or discounts. However, out-of-pocket spending for patients facing coinsurance is based on the point-of-sale price. Moreover, rebates are likely to be limited for anticancer drugs on Part D because they lack head-to-head competitors in most instances. Because anticancer drugs are part of a protected class in Part D, these findings may not generalize to other drugs.

Savings expected through closing the Part D coverage gap or through other policy changes, such as point-of-sale rebates, will be unlikely to offer financial protections to patients needing anticancer drugs. Moreover, because beneficiaries pay a percentage of the drug’s price and have no out-of-pocket spending limits on Part D, even large price decreases may not provide sufficient financial relief to patients requiring long-term anticancer drug use. Efforts to reduce drug prices and limit beneficiary out-of-pocket spending are needed to improve access to high-cost drugs.

Section Editor: Jody W. Zylke, MD, Deputy Editor.
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Article Information

Accepted for Publication: March 25, 2019.

Corresponding Author: Stacie B. Dusetzina, PhD, Department of Health Policy, Vanderbilt University School of Medicine, 2525 West End Ave, Ste 1203, Nashville, TN 37203 (s.dusetzina@vanderbilt.edu).

Correction: This article was corrected online July 9, 2019, to fix column alignment in the last 3 rows of the Table and typographical errors in the Results section and in the Figure.

Author Contributions: Dr Dusetzina had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: All authors.

Acquisition, analysis, or interpretation of data: All authors.

Drafting of the manuscript: Dusetzina.

Critical revision of the manuscript for important intellectual content: All authors.

Statistical analysis: All authors.

Obtained funding: Dusetzina.

Conflict of Interest Disclosures: Dr Dusetzina reported being a member of the Institute for Clinical and Economic Review’s Midwest Comparative Effectiveness Public Advisory Council and serving on the National Academy of Sciences, Engineering, and Medicine Committee’s Ensuring Patient Access to Affordable Drug Therapies. Dr Dusetzina also reported receiving grants from the Commonwealth Fund, Leukemia and Lymphoma Society, and Laura and John Arnold Foundation. Drs Huskamp and Keating reported receiving grants from the Commonwealth Fund and the Leukemia and Lymphoma Society.

Funding/Support: This study was supported by the Commonwealth Fund (Dr Dusetzina) and the Leukemia and Lymphoma Society (Dr Dusetzina).

Role of the Funder/Sponsor: The funders had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

Additional Contributions: We thank Leonce Nshuti, MSc (Department of Health Policy, Vanderbilt University School of Medicine), for programming assistance related to this project. His salary is supported by the Commonwealth Fund and the Leukemia and Lymphoma Society.

References
1.
Medicare Payment Advisory Commission. Report to the Congress: Medicare payment policy. http://www.medpac.gov/docs/default-source/reports/mar18_medpac_entirereport_sec.pdf. Published March 2018. Accessed April 11, 2019.
2.
Mailankody  S, Prasad  V.  Five years of cancer drug approvals: innovation, efficacy, and costs.  JAMA Oncol. 2015;1(4):539-540. doi:10.1001/jamaoncol.2015.0373PubMedGoogle ScholarCrossref
3.
Workman  P, Draetta  GF, Schellens  JHM, Bernards  R.  How much longer will we put up with $100,000 cancer drugs?  Cell. 2017;168(4):579-583. doi:10.1016/j.cell.2017.01.034PubMedGoogle ScholarCrossref
4.
Howard  DH, Bach  PB, Berndt  ER, Conti  RM.  Pricing in the market for anticancer drugs.  J Econ Perspect. 2015;29(1):139-162. doi:10.1257/jep.29.1.139PubMedGoogle ScholarCrossref
5.
Light  DW, Kantarjian  H.  Market spiral pricing of cancer drugs.  Cancer. 2013;119(22):3900-3902. doi:10.1002/cncr.28321PubMedGoogle ScholarCrossref
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