The cost and availability of pharmaceuticals is a prime area for reform as there is a lack of equity, said Clifford Goodman, PhD, senior vice president, The Lewin Group.
Goodman moderated a panel discussion on advancing pharmacoequity and enhancing access to essential medications at the Value-Based Insurance Design (V-BID) Summit, hosted by the University of Michigan’s V-BID Center.
Pharmacoequity was coined by Utibe Essien, MD, MPH, in 2021, and is defined as “ensuring that all individuals, regardless of race and ethnicity, socioeconomic status, or availability of resources, have access to the highest-quality medications required to manage their health needs.”
The panelists were:
- Jalpa Doshi, PhD, professor of medicine at the Perelman School of Medicine, director of Value-Based Insurance Design Initiatives at the Center for Health Incentives and Behavioral Economics, and director of the Economic Evaluations Unit of the Center for Evidence-based Practice, University of Pennsylvania
- Amy Niles, chief advocacy and engagement officer for the Patient Access Network (PAN) Foundation
- John O’Brien, PharmD, MPH, president and CEO of the National Pharmaceutical Council (NPC)
More than 2 decades ago, the need to improve access to medications first came to Doshi’s attention when she was working on research that ultimately supported the creation of the Part D benefit in Medicare. However, it became apparent that the cost-sharing requirements under the Part D benefit were “so poorly designed that they would continue to result in medication access barriers and disparities for many beneficiaries,” she said.
While Congress did enact some changes in 2010 to the Part D benefit to address the so-called “donut hole”—the coverage gap when total drug costs reach a certain limit and the beneficiary is responsible for a higher percentage of the cost of drugs—there remained issues with the Part D cost-sharing design that were going to represent major challenges for patients needing specialty drugs, Doshi explained.
“There were a number of factors. The number of specialty drug treatments that offered therapeutic advances over traditional medicines was increasing rapidly across multiple disease areas,” she said. “Second, many of these novel drug treatments cost tens of thousands of dollars.”
In addition, it was becoming clear that despite the donut hole fix, patients needed to pay 25% to 33% coinsurance for the cost of these specialty medications, and there was no annual out-of-pocket maximum.
Lastly, large racial and ethnic disparities in the income and assets of Medicare beneficiaries were well known by then. “The lack of affordability for the very high out-of-pocket costs for the specialty drugs under Part D were only likely going to exacerbate the inequities in access that already exist,” Doshi said. “So, it was a perfect storm in the making.”
She pivoted her team’s research into specialty drugs in 2011 to work in 4 major areas:
- Highlighting the problem, which she called “too much, too soon”
- Showing the negative consequences associated with the problem
- Proposing policy solutions to fix Part D cost-sharing issues
- Disseminating the work to reach audiences that could make a difference
The “too much” aspect of the problem was that specialty drug users would spend thousands of dollars OOP in a year, and half of that annual spending was occurring in the 5% catastrophic coverage base. The “too soon” aspect was that the OOP costs were all front-loaded at the beginning of the calendar year. Even if there was an annual OOP maximum of $2000 put in place, beneficiaries would have to pay the entire amount in January alone if they were on an expensive drug.
“This was a critical issue, because many Medicare beneficiaries…cannot afford to pay that kind of money in January at the beginning of the year,” Doshi said.
As for the negative consequences, there was a series of studies showing that Part D cost-sharing for specialty drugs resulted in high rates of prescription drug abandonment, delays in treatment initiation, nonadherence to drugs, and early discontinuation of specialty drug treatments. There was more than enough evidence showing that the problem was generating negative outcomes, she said.
In 2016, Doshi and her research team came up with a potential solution: an annual Part D OOP cap combined with a monthly cap, which would distribute the costs more evenly throughout the year. This solution is now called “smoothing.” Through this process, a patient with an annual OOP of $2000 would be able to spread out that money owed in January over the entirety of the year.