By: Arlene Weintraub
From: forbes.com
When state legislators started enacting laws in 2011 to prevent insurance companies from charging patients more for oral cancer drugs than they do for cheaper, infused medicines, the idea was to shield the public from sky-high, out-of-pocket drug costs. But a new study is raising disturbing questions about the effectiveness of these “parity” laws, which have been enacted in 43 states and the District of Columbia.
The bottom line finding: Cancer patients whose drug spending was the highest actually saw their out-of-pocket costs increase under parity laws. In fact, for those whose medication costs were 95% higher than those of other cancer patients before parity, the out-of-pocket burden increased by $143.25 a month after the laws were enacted. The study was conducted by researchers at the University of North Carolina and Harvard Medical School and published today in the journal JAMA Oncology.
The findings raise serious questions about whether parity laws are actually achieving what their designers hoped they would, says lead author Stacie Dusetzina, Ph.D., assistant professor in the UNC Eshelman School of Pharmacy. “Advocates of parity laws are interested in making sure that the out-of-pocket prices paid by patients are affordable and equitable across the types of therapies that they’re getting,” Dusetzina says. “But we saw an increase in the proportion of prescriptions that cost over $100. That was really concerning to us.”
It’s likely to trouble the multiple state and federal legislators who continue to gripe about high drug prices, too. Several members of Congress have raised proposals for forcing down drug costs, ranging from allowing Americans to buy low-priced prescription drugs from Canada to speeding up FDA approvals of generic drugs. In October, President Donald Trump—who famously blasted the pharma industry for “getting away with murder” on drug prices—went on the attack again, suggesting prices are too high because of campaign contributions to members of Congress.
On Tuesday, a ballot measure to limit drug pricing in that state failed to pass. It would have required that the state pay no more for drugs that the deeply discounted prices paid by the Department of Veterans Affairs.
Parity laws are distinct because they’re aimed directly at the companies that determine how much patients have to pay for drugs out of their own pockets in copayments and other cost-sharing measures—insurers. There are some limitations to parity laws, however. They don’t apply to “self-funded” health plans, which are managed directly by large employers, or to government-funded plans like Medicare. Still, parity laws have the potential to take some of the burden for rising drug prices off of patients, particularly in oncology, where new drugs costing tens of thousands of dollars or more per year are hitting the market on a regular basis.
Dusetzina and her co-authors analyzed insurance claims data for 63,780 adults, half of whom were covered by fully-funded insurance plans subject to parity laws, from 2008 to 2012. All of the patients were treated with cancer remedies that were available in pill form.
There was one piece of good news: The proportion of patients who were charged zero in copays for their cancer drugs jumped from 15% to 53% after parity. But that may have been more about insurers reducing their administrative headaches than it was about doing the right thing for patients, Dusetzina says. “Making cost-sharing for patients the same between the medical and pharmacy benefits is difficult,” she explains. “If you’re only charging people $30 for a pill, the easiest thing to do is drop the price to zero, because everything else introduces an administratively complex problem.”
The UNC/Harvard study did have some limitations. Most notably, the timeframe of 2008-2012 didn’t capture two big trends that happened later. The first was the influx of new immuno-oncology treatments, like “checkpoint inhibitors” that allow the immune system to recognize and attack cancer. The entry of these new drugs into the market is expected to drive overall cancer spending up over time.
More importantly, Dusetzina says, the proportion of people covered by high-deductible health plans continues to increase, raising questions about just how big an impact parity laws can have on overall out-of-pocket medical costs. “The number of people who are having to pay a certain percentage of a drug’s price is increasing over time, and we know that today it’s much higher,” she says. “This analysis suggests we’re seeing early evidence of that. But even when we removed the deductible part of the payment, we still saw higher spending among fully-insured [cancer] patients at the upper end of the spending distribution curve.”
This study comes on the heels of another UNC paper highlighting worrisome cost trends in cancer care. In September, Dusetzina led a study that revealed that the average price of Roche’s chemo pill Xeloda (capecitabine) had dropped only 36% three years after four generic versions hit the market. Normally a drug’s price falls by 61% when there’s that much generic competition. The authors concluded that encouraging generic competition might not be enough to shield cancer patients from having to pay a bigger share for drugs that could save their lives.
Two federal parity laws with bipartisan support have been proposed, and if either were to be passed, they could extend the mandate to self-funded insurance plans. The most recent bill, sponsored by U.S. Representative Leonard Lance (R-NJ), was last updated in March but seems to have stalled.
Dusetzina says the results of this latest study suggest that lawmakers considering parity legislation shouldn’t assume the laws will benefit all patients. “When we’re thinking about parity moving forward, there are some gaps we need to fill,” she says. “We need to think about how we can limit costs for the higher spenders. It’s a complex problem.”
Barbara Jacoby is an award winning blogger that has contributed her writings to multiple online publications that have touched readers worldwide.