A new study by Avalere Health, presented at the recent meeting of the American Society of Clinical Oncology, analyzed the pharmacy claims of 10,508 commercially-insured and Medicare patients who required oral therapy for cancer. The purpose of the study was to assess the effects of cost-sharing on the abandonment of these medications. The analysis showed that 25 percent of patients who face a cost share of greater than $500 abandoned their oral cancer therapy. This is in contrast to an abandonment rate of 6 percent for patients with cost-sharing of less than $100 – making cost a dominant factor in predicting abandonment.

These results should force a critical review of the benefit design that has become the de-facto standard in the Medicare outpatient prescription drug benefit program. Specialty tiers – in which patients pay a significant percentage of the cost of selected medications – now dominate the Medicare marketplace. Virtually all Prescription Drug Plans (PDPs) (99 percent based on a recent Avalere analysis of Medicare Part D formularies) are imposing cost-sharing that ranges from 25-35 percent of the total costs of specialty medication for the oral oncology drugs in the Avalere study. For Medicare beneficiaries who get their drugs from managed care plans, the situation is similar with virtually all (97 percent) requiring co-insurance in excess of 25 percent of the cost for those oral oncology drugs included in the study.

In the Avalere study sample, 45.5 percent of the Medicare beneficiaries filling prescriptions faced cost- sharing of greater than $500. Of course, the typical benefit design of a Part D plan varies depending on how much the beneficiary has already spent out of pocket – and in particular, whether a patient is in the “catastrophic” portion of the benefit where Medicare already picks up much of the tab.

Also, the study did not track what actually happens to patients who abandon their medications. Our data did not allow us to assess whether these individuals obtained their medications from pharmaceutical company-run patient assistance programs, whether they pursued other therapies, or whether they wound up admitted to the hospital incurring unnecessary expenses.

How Should Medicare Respond?

Caveats aside, though, Medicare can do better. As we all learned in Health Policy 101, the role of cost-sharing should be to deter unnecessary utilization, not to serve as de-facto discrimination against patients with serious illness. In fact, the Medicare law has a specific provision that prohibits the use of benefit design to discourage certain types of patients from joining a plan. And no one doubts that it is Medicare’s responsibility to ensure that access to care is strong and improving.

Medicare presently has a range of regulatory options to address this issue. One approach would be to address abandonment as a compliance issue by requiring Part D plans to ensure that cancer patients are getting the oral therapies they need through the Medication Therapy Management program. The Centers for Medicare & Medicaid Services (CMS) has broad statutory latitude to ensure that plans are appropriately deploying telephonic and face-to- face medication management interactions. This could be implemented along with increased reporting to Medicare to make sure that there is clarity about what is happening to patients, and adequate payment to Part D plans to cover these costs.

A second strategy would be to limit the application of specialty tiers in oncology – either by capping the absolute level of cost-sharing to patients, or limiting the types of therapies that can be put in the specialty tier. This would have the advantage of improving compliance, but might result in modestly higher premiums for Medicare beneficiaries. A variant on this would be to fashion Part D plan rules to ensure that cost-sharing for oral cancer medication is comparable to cost-sharing for surgical and medical oncology interventions.

Certainly other options exist, and our goal is not to advocate for a specific answer to this problem. But CMS should look carefully at this issue over the coming year. And doing nothing shouldn’t be an option with 25 percent of patients opting out of oral cancer therapy when co-pays exceed $500.