For patients with certain cancers, out-of-pocket spending can exceed $15,000 a year. Legislation could take aim at prices and the amounts Medicare patients are charged.
As a diabetes doctor in Baltimore, Sally Pinkstaff saw her patients struggle to pay for insulin. They told her they would take half the normal amount, delay doses, even skip entire months. She would try to help them by adjusting their prescriptions — and sometimes by giving them cash.
Then, after she received a diagnosis of smoldering multiple myeloma, she began to see firsthand what it meant to depend on a costly drug.
Her disease, a type of blood cancer, is often treated with an oral medication, Revlimid, that can keep the disease at bay for years. At first, the insurance from her medical practice charged her a $50 co-payment a month. But when she retired and went on Medicare, the first bill was nearly $4,000, and she became the patient who stopped taking her medicine for a month.
“It’s a prohibitive cost,” Dr. Pinkstaff said. “You have to have a lot of retirement money to pay for it.”
Many Democrats in Congress ran on a promise to lower prescription drug prices, and their big social policy bill may offer their best chance to do it. As they struggle toward an overall agreement this week, lawmakers are sparring over policies that would lower the prices drug companies could charge for drugs like Revlimid; that would reduce how much they could increase those prices each year; and that would, for the first time, impose a cap on how much Medicare patients can be asked to pay for their medications.
The legislation could allow Medicare to demand price cuts on dozens of expensive drugs, including treatments for cancer, diabetes and multiple sclerosis. The proposal could also save Medicare hundreds of millions of dollars — which the Democrats could then use to finance other priorities in the bill, such as expanding health coverage to the uninsured and offering new vision, hearing and dental benefits to those with Medicare.
But the details of drug regulation are still unclear, and passage will require assent from every Democrat in the Senate and almost all those in the House. Several Democratic lawmakers remain skeptical of policies that might hurt the drug companies or stymie future drug development. And the pharmaceutical industry, along with allies, has spent more than $26 million on advertising this year to defeat the measure, according to Patients for Affordable Drugs, an influential patient group advocating price negotiations.
Insurance companies and patients in the United States pay the highest prices for prescription drugs in the world. On average, drugs in the U.S. cost about 250 percent of the average for the 38 advanced nations in the Organization for Economic Cooperation and Development, according to the RAND Corporation. The United States is unusual in declining to negotiate directly for drug prices with manufacturers.
Revlimid has become so identified with high drug prices that the House Oversight Committee last year called in Mark Alles, the C.E.O. of Celgene, which developed the drug. He was grilled over just how innovative it was — it’s a modification of the old sedative thalidomide — and how the drug’s steep annual price increases had helped the company hit earning targets and allowed him to collect a bonus.
Bristol Myers Squibb, the company that has sold the drug since 2019, charges $16,744.24 for each 28-day course, a price that has more than tripled since 2005, when it was first approved. Revlimid costs Medicare and its patients more than $4.7 billion a year — the second-highest cost of any drug in the program.
There is not always a straight line between the list price a drugmaker charges and the price patients pay. The price at the pharmacy counter has usually been filtered through a complicated and opaque system of rebates, formularies and cost-sharing policies.
For a drug as expensive as Revlimid, the relationship is simpler. Like Dr. Pinkstaff, nearly all beneficiaries blow through their deductibles, their normal cost sharing and a coverage period limit that leaves them in a gap of higher payments, in one very expensive first month.
Then they graduate to what Medicare calls its “catastrophic benefit.” Once that happens, patients are responsible for 5 percent of the drug’s price until the end of the year. Any reduction in the price of Revlimid would also lower the price Medicare beneficiaries pay each month. A generic version of Revlimid is scheduled to hit the market next year in a limited fashion, but that may lower costs for only a fraction of the patients who currently take it.
“The reason I’ve been doing this for five years is because of Revlimid,” said David Mitchell, a former communications executive who founded Patients for Affordable Drugs. He’s a myeloma patient who was staggered by the high and rising costs of the drug. He now takes a similar myeloma drug called Pomalyst, for which he pays more than $15,000 a year out of pocket.
For most of its history, Medicare did not cover prescription drugs. But when Congress added a drug benefit to the program in 2006, it came with an important caveat: The program, which is administered by competing private insurance plans, could not negotiate directly with drugmakers on price. It was also a different era of drug pricing. Common prescriptions for heart disease, diabetes or depression tended to be relatively inexpensive. Very few patients ever used the catastrophic benefit.
In the intervening years, the types of prescription drugs available — and their prices — have changed. Revlimid is just one of several very expensive cancer drugs. About 1.5 million Medicare beneficiaries qualified for the catastrophic benefit in 2019, often running up thousands of dollars in bills. Many piece together financing by applying for foundation grants, running GoFundMe campaigns or refinancing their homes. Researchers have developed an entire field of study about “financial toxicity,” which worsens the health outcomes of cancer patients.
“Patients forgo vacations, they forgo retirements, they forgo what they can buy at the grocery store — it’s just tragic,” said Craig Cole, a hematologist who treats myeloma patients and is an assistant professor at Michigan State University. When he diagnoses the disease in a patient, he always has the patient meet with a social worker, too, to discuss how to pay for the medicine. “You have a cancer, and, yes, you can put the cancer in remission. But you have to live with the specter of financial toxicity.”
The drug companies argue that their high profits enable them to invest in research into new treatments and cures that can be financially risky to develop. Most scholars of the industry agree that a less profitable pharmaceutical sector would be one with fewer new drugs in the future, though they disagree about how few. The Congressional Budget Office estimated that a drug price system like one passed by the Democratic House in 2019 would mean about 30 fewer new drugs over the next decade, a reduction of about 10 percent.
“The real fear is you would see venture capital drying up in the small biotech industry, because the risk has gone up significantly,” said Lori Reilly, the chief operating officer at the industry group PhRMA. “The biggest impact is on the patients, quite honestly, who are waiting for someone to develop a therapy for them or someone they love.”
Patients and clinicians dealing with multiple myeloma feel this tension, too. Revlimid can extend life expectancy, but for most patients, myeloma is still a fatal illness. The hope is that a future drug will be an actual cure.
Even as he supports the push for price controls, Dr. Cole also said, “A fear that I have is, what if we do too much?”
Where the Budget Bill Stands in Congress
Democrats are scaling back the ambitious bill. After weeks of bickering and negotiations, the party is hoping to reach a compromise between its moderate and progressive wings by substantially shrinking President Biden’s initial $3.5 trillion domestic policy plan to an overall price tag of about $2 trillion.
Bristol Myers Squibb defends Revlimid’s high price by pointing to its big health effects, and the company’s continuing research into myeloma treatments. “Revlimid’s value is demonstrated by its significant contributions to improved multiple myeloma patient survival rates,” said Caitlin Craparo, a spokeswoman for the company. Her statement noted the company supports efforts to lower costs for patients.
Drug price regulation remains an extremely popular part of the Democratic agenda. In a recent Kaiser Family Foundation survey, 83 percent of adults said they supported efforts to lower drug prices. When they were told that lower prices might mean fewer new drugs in the future, 82 percent still favored the policy.
Very few patients pay the full price of drugs, but insurance plans increasingly ask patients to pay a percentage of the drug’s price instead of a flat fee. And patients are typically asked to pay their share at the pharmacy counter, up front. So high drug costs tend to be more salient to patients than other health care expenses.
The median Medicare patient taking Revlimid faced $14,461 in out-of-pocket costs in 2019, according to an analysis by the Kaiser Family Foundation.
“There is a Facebook group I belong to, where patients communicate that so-and-so assistance program has been replenished now, and you should go apply,” said Yelak Biru, 51, who has lived with myeloma for 25 years and become very active in support groups and cancer research.
He has insurance through his job, and he has qualified for additional financial help with his co-payments. Still, he said he must often consider which credit card to use at the pharmacy each month. He said the disease — and its costs — had taught him how to “juggle multiple things and live through uncertainty.”
The uncertainty of drug bills is a common experience for myeloma patients. Dr. Pinkstaff paid $3,930 one month, and $935 the next, before qualifying for a grant that lowered her costs further. Mr. Mitchell says his monthly drug bill has ranged from $1,041 to $3,283. Mr. Biru’s monthly costs have ranged from $24.90 to $4,550.
“It’s unbelievably confusing that you can’t know from one time you go to the pharmacy to the next how much you might be asked to pay,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt who studies drug costs. Her research has shown that cost sharing can cause patients to leave the pharmacy counter without their drugs. “We require a lot of energy for people to anticipate the next fill cost.”
The congressional effort to limit out-of-pocket costs might address this consumer stress most directly. Even the drug companies want to limit how much patients can be asked to pay, in part because it would increase the market for their drugs by making sure more patients filled their prescriptions.
But limiting patient expenses without lowering the prices would probably cost, rather than save, the government money. That makes the reform unlikely to succeed on its own.
In the meantime, Dr. Pinkstaff finds her drug costs bewildering. “I felt angry,” she said, when she learned about the price. “This is kind of disrespectful here. I didn’t dream up getting this disease.”
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This May Be Democrats’ Best Chance to Lower Drug Prices - The New York Times
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