Despite Medicare Part D closing the infamous donut hole, the prices of some drugs are still on the rise, and they have been for over a decade. What’s more alarming is that many of the life-saving cancer drugs covered by Part D have not been immune to these price hikes.
Price hikes
Researchers from the University of Vanderbilt School of Medicine and Harvard Medical School found that prices of cancer drugs covered by Part D rose an average eight percent every year for the past decade. In 2010, seniors paid an average $8,794 for these drugs, but they now pay about $10,470.
During the study, researchers found that 48 of the 52 oral cancer drugs covered by Part D had a monthly list price of $10,000. Twenty-one of these drugs exceeded a list price of $15,000 per month.
The largest increase was seen in the price of Gefitinib (Iressa), a drug used to treat lung cancer. Between 2010 and 2018, the list price of the drug rose 306 percent, from $1,960 to $7,960.
Eliot Fishman, senior director of health policy for a health consumer advocacy group, Families USA, said, “There is no major increase in the cost of manufacture of those drugs. These quite substantial cumulative increases are just a result of the power of these drug manufacturers to set price and increase price.”
Medicare and cancer drug coverage
While cancer drugs must be covered by Medicare by law, there’s a loophole many drugmakers are exploiting: drugmakers can essentially charge whatever they want for drugs covered under Part D. In other words, guaranteed coverage does not guarantee affordable prices.
Most cancer drugs are administered intravenously in a hospital or doctor’s office and covered by Medicare Part A and Part B, respectively. However, Part D plans are provided by private insurance companies approved and regulated by Medicare. Due to the semi-hands-off nature of these drug plans, Medicare cannot negotiate these prices with drugmakers. That means drugmakers can charge top dollar for these oral cancer drugs.
Donut hole
Before 2019, patients in the donut hole were responsible for 100 percent of the cost of their drugs. Although manufacturer discounts frequently offset these prices, many drugs were still cost prohibitive. This is why the Affordable Care Act set out to close the donut hole and save Medicare beneficiaries money at the pharmacy counter.
However, some pharmaceutical companies met the measure by increasing drug prices at a higher rate than the closing of the donut hole would have saved beneficiaries. For example, if a patient paid $4 for a prescription after the donut hole closed, some pharmaceutical companies responded by hiking the price of the drug to $6.
Lawmakers respond
While reluctant to give Medicare the power to directly negotiate drug prices with drugmakers, the Trump administration has made an effort to make drug prices more transparent.
Three proposals are up for a vote in the House (HR 1499, HR 965, and HR 938) which would allow more generics on the market, increase competition, and decrease prices. However, this would not happen until a drug’s patent runs out–about 12 years after it hits the market.
Senator Ron Wyden (D-OR) has also introduced a bill which has even garnered support from some inside the pharmaceutical industry. The bill would cap prescription drug costs by shifting the cost burden from seniors onto taxpayers.
While none of these proposals are necessarily a long-term fix, they do illustrate a willingness to fix the problem Medicare beneficiaries face at the pharmacy counter month after month.
