Biologics Have High Financial Burden Despite Medicare Part D

Janis C. Kelly

April 22, 2015

The first national study of how Medicare pays for biologic disease-modifying antirheumatic drugs (DMARDs) for rheumatoid arthritis (RA) found that patients' copays averaged 29.6% of drug cost for the agents, some of which cost more than $20,000 per year. In addition, the average coinsurance rates were actually higher for patients on Medicare Advantage plans than for those using stand-alone drug plans.

The researchers published their study of high-cost RA speciality drugs and Medicare Part D online April 21 in Arthritis & Rheumatology.

"Figuring out how to pay for the rapidly growing number of specialty drugs will require completely rethinking our current coverage models," lead author Jinoos Yazdany, MD, MPH, associate professor of medicine at the University of California, San Francisco, School of Medicine, told Medscape Medical News. "To address the issue of rising costs, we need to perform cost-effectiveness analyses to understand which drugs provide value for patients and for society. We need these value determinations to inform clinical care, coverage decisions, and drug price negotiations. Patients who are grappling with huge costs for these drugs, also need to be proactive in understanding all of their treatment options, including lower-cost alternatives."

Dr Yazdany and colleagues included 2737 Part D plans' formularies in 50 states and the District of Columbia in the cross-sectional analysis of data from the January 2013 Centers for Medicare & Medicaid Services Prescription Drug Plan Formulary and Pharmacy Network Files.

More Patients Likely to Fall Into the Donut Hole

Four of the top-selling drugs in terms of revenue in 2013 were biologic agents with indications for RA. According to Dr Yazdany, spending on biologic DMARDs in 2009 exceeded a billion dollars, a fact that has influenced attempts to rein in Medicare Part D spending by requiring prior authorization (required by 95% of plans), copayments during the unreimbursed "donut hole" period of up to $2700 per year, and copayments after that based on a percentage of drug price rather than a fixed fee for these drugs.

"Although all plans covered at least one biologic, nearly all required prior authorization, and percentage coinsurance created significant financial burdens," Dr Yazdany said.

In contrast, the researchers found that most conventional DMARDs were covered by nearly all plans without requiring prior authorization and for fixed copayments of $5 to $10 per month.

Market Competition Under Part D Has Not Lowered Cost to Patients

"We were initially surprised to see so little variation in coinsurance requirements (30%) across plans," Dr Yazdany continued. "This may be because there is no incentive for plans to offer more generous benefits, since that would risk drawing sicker patients. This suggests that competition in the healthcare market is unlikely to lead to a significant reduction in out-of-pocket costs for RA patients. Other approaches are urgently needed."

During the last decade, RA disease control became possible for many patients, thanks to early, aggressive therapy, often including biologic DMARDS such as abatacept, adalimumab, anakinra, certolizumab, etanercept, golimumab, infliximab, rituximab, or tocilizumab.

Regardless of the biologic DMARD, the researchers found that the high initial copayments could reach $2850 and drive the patient into the coverage gap or "donut hole" by February or March of each year. Patients' cost-sharing then increased to 47.5% of drug costs during the donut hole until their out-of pocket costs and manufacturers' discounts reached $4450, which triggered catastrophic coverage, after which patients paid 5% of the cost of the biologic DMARD.

The researchers write that increased cost-sharing was associated with underuse of biologic DMARDs "and appears to shift financial burden to other medical and non-medical areas."

Affordable Care Act Likely to Have Little Effect

Hope that the Affordable Care Act would lessen the financial burden for patients with RA has run aground. The act dropped cost sharing during the Part D coverage gap from 47.5% coinsurance for brand-name drugs in 2014 to 25% coinsurance by 2020, but Dr Yazdany's analysis showed it is likely to have little effect on the patient's total financial burden.

The authors write, "Many Part D beneficiaries requiring biologic DMARDs will have sufficient out-of-pocket costs to reach catastrophic thresholds in total drug spending each year. Clinicians caring for individuals with RA should be aware of this and be prepared to discuss long-term affordability as well as relative efficacy of biologic DMARDs with their patients to help them make informed decisions about treatment. Currently, cost discussions occur in only one-third of RA office visits where changes are made to RA drug treatment."

Dr Yazdany said, "Cost discussions have to be part of RA clinical care. For many patients, lower-cost oral DMARDs are very effective and should be tried first. For patients needing higher-cost biologic DMARDs, having accurate information handy to discuss potential out-of-pocket costs and determining what the patient is comfortable paying will remain important until policy reforms can address high out-of-pocket costs."

The study was funded by Agency for Healthcare Research and Quality grant R03HS016772 and the Hawaii Medical Services Association. The authors have disclosed no relevant financial relationships.

Arthritis Rheum. Published online April 21, 2015. Abstract

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