As we grow ever-nearer to election day, more public attention is being cast on our nation’s health policy and each candidate’s vision for Medicare.
Central to that conversation is the Inflation Reduction Act of 2022 (IRA), which sparked heated debate—and a few lawsuits—over its drug price negotiation provisions. But there is another very impactful provision of the IRA that has received far less attention—and it may just prove to be key to sustaining the Biden-Harris administration’s Cancer Moonshot, regardless of what transpires in November.
I am talking about the spending caps introduced for Medicare part D beneficiaries in the so-called “catastrophic” phase of insurance coverage. That is when a Part D beneficiary surpasses an annual out-of-pocket expenditure on oral drugs—set at $8,000 for the year 2024. Prior to the IRA, that patient would be responsible for just 5% of further drug costs. And for most conditions, that was actually pretty reasonable.
For cancer patients, however, 5% can be a very heavy burden, due to the high cost of cancer medications. Now, because of the IRA, Part D enrollees in the catastrophic phase of treatment are only liable for $3,300 per year in 2024, dropping down to $2,000 in 2025. And for cancer patients, this could literally be the difference between life and death.
For Americans, cancer is frequently “catastrophic”
In the USA, cancer patients enter the “catastrophic” phase of coverage quite routinely, due to the exorbitant price of drugs. Oral cancer drugs Olaparib, used against ovarian, breast, prostate, and pancreatic cancers, and Imbruvica, used to treat various blood cancers, cost over $150,000 per year each. Other oral cancer drugs like Lenalidomide, for multiple myeloma and other cancers, and Enasidenib, for Acute Myeloid Leukemia, cost between $200,000-$300,000 per year of treatment.
A 5% co-pay on drugs like these works out to be between $7,500-$15,000 per year. When considered with the tens of thousands of dollars that many cancer patients already bear in premiums, deductibles, co-pays, and other costs of care, this additional toll can indeed be “catastrophic” for older Americans.
Keep in mind as well that many Medicare cancer patients on Part D medications are undergoing maintenance therapy after taking even more expensive infusion drugs covered primarily under Medicare Part B.
Common immunotherapies Keytruda and Opdivo, used to fight a wide variety of cancers, each cost around $150,000 per year, for example. CAR-T therapies like Yescarta, for large B-cell lymphoma, and Kymriah, which fights leukemia and lymphoma, come in at $300,000-$500,000 per course. There are even specialty treatments like Danyelza, for high-risk neuroblastoma, which cost $1.2 million annually.
This, of course, is the problem of “financial toxicity” that is often discussed in relation to cancer treatment. Out-of-pocket costs for cancer care exceed $16 billion annually, saddling nearly half of all cancer patients with medical debt. The problem is so severe that between 21-60% of Americans say they would consider forgoing cancer treatment altogether if diagnosed. When cancer treatment is so expensive that some patients would consider risking death rather than paying the high cost of care, it’s well past time to reign things in.
IRA caps will help ensure older Americans get the drugs they need—but at what cost?
If it isn’t obvious that copay ceilings have the potential to ensure access to those most likely to skip out on treatment, the IRA caps on insulin that went into effect in January, 2023 provide a hint of their efficacy. Since commencement of cost controls, prescription fills increased significantly among Medicare Part D members, even as they declined amongst non-members. As data becomes available for the impact that the IRA has had on cancer drugs, I expect that we will see a similar effect, expanding access to life-saving cancer drugs for more lower-income seniors.
Although this feature of the IRA has been given relatively short shrift compared to the issue of drug price negotiations, it is not without controversy. Critics of the Part D caps say that lower out-of-pocket costs for patients will simply translate into higher premiums, as private Part D payers work to make up their losses. (The act does, however, impose a 6% limit on annual premium increases as well.)
Opponents also suggest that the elimination of ongoing liabilities for Part D beneficiaries will drive demand for higher-cost name-brand drugs, rather than their generic equivalents, adding an additional cost burden that will be hard for payers to bear. Meanwhile, pharmaceutical manufacturers, who are required to provide a 20% discount on drugs for patients beyond the catastrophic threshold, may simply increase prices on new drugs to maintain their overall profit margins.
Politics aside, cancer needs to be a key part of healthcare policy
The debate about the best way to expand care access for older Americans will likely rage on, and it's anybody’s guess if the IRA will come through a potential administration change fully intact. But what’s clear is this: Making patients pay “just 5%” out of pocket for expensive cancer drugs in the catastrophic phase of treatment is a barrier to fulfilling the access and equity goals of the Cancer Moonshot. That could prove to be a life-or-death provision for many of the 2 million Americans diagnosed with cancer each year.
We need mechanisms that deliver optimal treatments to older Americans facing catastrophic health issues, regardless of their income bracket. Being thoughtful about how prescription drug policy impacts cancer patients will help us make meaningful strides toward overall improvement of our healthcare system.
Brad Diephuis, M.D. is a primary care physician and the President & Chief Operations Officer at Thyme Care, the leading value-based cancer care partner, collaborating with payers and providers to transform the experience and outcomes for individuals living with cancer. In this role, he oversees operations, commercial growth, finance, and health economics.