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A key part of the Affordable Care Act intended to make prescription drugs more affordable for seniors may not provide much help for cancer patients who need expensive pills, according to a new study.

A health reform provision intended to close a “coverage gap” in Medicare prescription drug plans would still leave patients shelling out between $4,000 and $10,000 for a course of pricey oral cancer treatments, according to the study published in the Journal of Clinical Oncology this week. That’s a hefty portion of the average Medicare beneficiary’s annual budget – around $34,000 in 2012.

The change, part of the Affordable Care Act, works by closing a gap in prescription drug coverage known as the “donut hole.” Here’s what that means: In 2010, seniors covered under Medicare’s prescription drug plan, known as part D, had to start paying the full coinsurance for a drug once they hit $2,960 in prescription drug spending -- and keep paying until they'd spent $4,700. By 2020, the donut hole won't be such an abyss and seniors will also get out of it faster: They will pay only a quarter of their coinsurance costs each month, and the drug companies will chip in half. The patients will exit the donut hole once they and the company have collectively reached $4,700 in spending.

Once they’ve maxed out, seniors enter a phase called catastrophic coverage in which they only pay five percent of their coinsurance. For many drugs -- even many expensive ones -- this framework will have clear benefits.

But in the age of $10,o00-a-month cancer drugs with rising prices, researchers wanted to find out precisely how much money people could expect to save who are paying for the most expensive treatments. After all, a five percent coinsurance is still $500 a month for many of these medications. What the researchers found is that closing the coverage gap will save money – about $2,500 at current cancer drug prices. But that still means around $4,000 to $10,000 out-of-pocket spending for patients, which may be unattainable for people on a fixed income. And that assumes that drug prices stay stable and do not increase, as they've been doing for many cancer drugs.

"In general, when you look at the policy, it really works for a lot of people," said Stacie Dusetzina, an assistant professor of pharmacy and global public health at the University of North Carolina at Chapel Hill. "But for people with specialty drug needs, it doesn’t really work at all."

A recent report by the Kaiser Family Foundation examined 2016 drug prices and coverage to project that many specialty drugs would push seniors into the catastrophic coverage territory, leaving them on the hook for thousands of dollars, as the chart below shows.


 

Dusetzina said it is hard to know what portion of Medicare beneficiaries are hit with such high prescription drug costs. She noted that it's possible to rule out about a third of beneficiaries, who have a low-income subsidy, and added that it isn't everyone on Medicare -- the drugs are used by very sick people with rare cancers. There's plenty of evidence that closing the coverage gap helps seniors broadly.

A study published in Health Affairs last year found that out-of-pocket spending dropped a quarter in 2011 as changes to the donut hole began to be implemented.

Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said that people with Medicare were saving money on both brand-name and generic drugs due to the Affordable Care Act. Since the passage of the law in 2010, Albright said that nearly 10 million people with Medicare have saved over $17.6 billion on prescription drugs through July of this year as a result of the discounts in the donut hole and rebates in 2010 -- an average of $1,796 per beneficiary.

But with drug costs on the rise, Dusetzina thinks it will become a bigger problem and hinder access to important therapies.

"I think as more and more expensive therapies are developed this will become a problem for more people," Dusetzina said, "and maybe that’s one reason it hasn’t been at the forefront of people's attention."

The savings modeled in the paper -- of about $2,500 per beneficiary -- are significant, but it depends on the assumption that drug prices stay at 2014 levels. Researchers also took a look at what would happen if drug prices increased by 50 percent by 2020.

It’s hard to know what will happen in the future. As patents expire and generic competition enters, some prices may drop. As has become clear, the recent trend has been for many brand name drugs to escalate in price. If drug prices go up by half over the next five years, closing the donut hole becomes even less beneficial. A cancer patient taking one of these pricey pill regimens would save, on average, $621 on the 2010 prices.