Reducing Patient Costs: Three Health Policy Reforms We Need to See
In 2020, U.S. spending on healthcare grew 9.7% to $4.1 trillion or 19% of the GDP, which roughly translates to $12,530 per capita. While these increased costs were driven primarily by the COVID-19 pandemic, rising healthcare costs have frustrated Americans for years now, as they spend nearly 12% of their household income on deductibles and premiums. And today, nearly half of insured adults report difficulty affording their out-of-pocket costs. We’re seeing healthcare costs increase because of three factors: population growth, an aging population, and rising prices. As the cost of healthcare continues to rise, Americans are getting little to no relief.
A deeper look at spending across disease states also reveals a stark reality. People living with cancer, my area of focus, are paying a disproportionate share for their care — $16.22 billion annually in out-of-pocket costs on a range of healthcare services and treatments.
The number of people in America who are uninsured has significantly decreased over the last decade. However, the cost of accessing care remains exceedingly high for many, even for those with insurance. While it’s worth noting that prescription medicines make up just 14% of all healthcare spending, the financial burdens associated with paying for these medications have been rightly pushed to the forefront of the media, conversations with friends and family, and are a key focus on every policymaker’s agenda. With the public’s desire to see meaningful change, it’s time to put tangible solutions into action. In 2022, there are three policy reforms I’d like to see to help reduce the cost of healthcare for patients.
Incentivizing the uptake of biosimilars
Biosimilars are biological medicines that, according to the FDA, are “highly similar” to the innovator biological medicine they mimic and are often much cheaper than the name-brand versions (think of them like generics of traditional drugs). These therapies have been approved by the U.S. Food and Drug Administration (FDA) to treat autoimmune diseases, cancer and some genetic conditions and have demonstrated no clinically meaningful differences in terms of safety, efficacy and purity compared to the reference medicine. While biosimilars have found wide adoption in Europe, acceptance in the U.S. lags due to deep-rooted behaviors and policy challenges — even though it is estimated that oncology biosimilars alone could result in $54 billion in cost savings over the next 10 years in the U.S.
There are several things we can do to help increase the uptake of biosimilars in the U.S. First, we should ensure patients benefit from the lower cost of biosimilars by reducing or eliminating patient out-of-pocket costs. Second, we should increase access to biosimilars by implementing a “shared savings” model in which Medicare savings associated with prescribing a biosimilar would be shared with healthcare providers. Third, we should incentivize the use of biosimilars by increasing add-on payments for providers who administer biosimilars to patients, as proposed in H.R. 2815. Lastly, we should encourage Medicare Advantage programs to provide access to biosimilars for seniors through implementation of a Star Rating measuring biosimilar access, which was put forward in H.R. 2855. Both bills were introduced in the House as of last April, but unfortunately haven’t progressed.
Capping seniors’ out-of-pocket costs
About sixty-four million Americans are enrolled in Medicare, or 19% of the U.S. population. This figure is increasing as members of older generations enter retirement. According to a recent study in JAMA Health Forum, nearly 11% of Medicare beneficiaries, or 7 million seniors, said they worried about paying their medical bills and have delayed care because they can’t afford it. This fear can be compounded by the fact that there are no caps on seniors’ out-of-pocket costs under Medicare Part D, the outpatient prescription drug benefit.
The Part D program has a complicated benefit structure, with beneficiaries first subject to a deductible, then they enter the initial coverage period where they are subject to copays or coinsurance. Once their total drug costs (insurance cost + patient cost) reach about $4,100, they enter the coverage gap, where they pay 25% coinsurance. Finally, once their total out-of-pocket spending reaches about $3,000, they enter what is called the “catastrophic” phase of the benefit, where they must pay 5% coinsurance on their medicines for the rest of the year. To put this into context, a study of 1,409 Medicare beneficiaries with a new cancer diagnosis found that these beneficiaries incurred out-of-pocket costs that were an average of 23.7% of their household income and 10% of these beneficiaries incurred out-of-pocket expenditures that were 63% of their household income. Having a drug benefit with no limit on the amount seniors have to pay over the course of a year could cause them to forgo taking needed medications or limit their doses in ways that are not medically prescribed.
We should be removing the burdens seniors face in paying for their medicines. To do this, Congress needs to minimize the current cost-sharing burden in Medicare and cap the out-of-pocket costs seniors experience in the Medicare drug program. Another option that can help lower patient costs, is to ensure that the billions in discounts that pharmaceutical companies pay to Medicare Part D and other commercial plans are shared with patients at the point-of-sale. The positive impact of this change would be directly felt by our patients and could save seniors taking Pfizer medications an average of $270 per year.
Prohibiting restrictions on copay assistance programs, which cause financial hardship and limit patient access to treatment
To offset the high cost-sharing required under many insurance plans for innovative biological medicines, like those for cancers or rare diseases, biopharmaceutical companies and other third-parties offer copayment assistance programs. The problem is, insurance companies and pharmacy benefit managers (PBMs) have figured out that they can block the payments from counting towards a patients’ deductible and annual out-of-pocket limit. This means insurers and PBMs can collect amounts well beyond the patient’s annual limit and when the assistance is depleted, in some cases, the patient must pay their deductible again and it will take them longer to reach their annual limit.
In 2019, the Centers for Medicare and Medicaid Services (CMS) issued a regulation banning insurers and PBMs from engaging in these practices, but later reversed the policy citing potential conflict with other federal regulatory guidance. Patient advocates continue to push for CMS to restore the ban and have been actively pursuing state-level solutions. As of the Fall of 2021, 12 states and Puerto Rico had enacted legislation that requires state regulated insurance plans to apply payments made through these programs to count towards a patients’ deductible and out-of-pocket limit. In the long run, these programs should be prohibited for their anti-patient implications.
These policy changes make healthcare more accessible, affordable, and attainable. But ideas without action are just that. Let’s make 2022 the year patients spend less time worrying about healthcare costs and enact some real changes that keep them healthy and with more money in their pockets.
