More than a decade has passed since the FDA approved the first pill to fight cancer. Designed to battle metastatic colorectal cancer, capecitabine(Drug information on capecitabine) (Xeloda) marked a significant change in chemotherapy, untethering some cancer patients from office-based intravenous drug infusions. Other such drugs have since been commercially released, including temozolomide(Drug information on temozolomide) (Temodar) and imatinib(Drug information on imatinib) (Gleevec), but the reimbursement system in this country has failed to keep up.
Intravenous infusions continue to dominate patient choices for chemotherapy, even when oral agents promise to do at least as well. One reason is an economic disincentive against the use of these oral oncolytics.
Insurers are willing to pay tens of thousands of dollars a year for individual IV therapies, placing only a small proportion, if any, of the financial burden on patients. But oral chemotherapeutics are often accompanied by copayments that reach deep into patients’ pockets.
“IV drugs typically are covered under major medical which may not have as many payment restrictions as they do on oral drugs, which are generally a pharmacy benefit,” said Joseph S. Bailes, MD, chair of the ASCO government relations committee.
A substantial hurdle
Such economic disincentives against oral anticancer agents exist, even though pills offer advantages over IV infusions. And payers know it. In a survey conducted by the market research firm Reimbursement Intelligence, managed care medical and pharmacy directors from top U.S. health plans acknowledged that pills are more convenient for patients than IV drugs. They also stated that patients generally do better when they spend less time in the hospital or at an infusion center. Making it easier for patients to choose oral medications could even help payers by helping them track pharmacy benefit data for drug utilization reviews and cost management analyses.
The majority of insurers are also aware that the current reimbursement system serves as a substantial hurdle to the use of oral agents. In a survey of 60 decision makers representing the top health plans in the U.S., Reimbursement Intelligence found that 96% agreed (highly to somewhat) that patients prefer oral agents over IV cancer drugs. The survey also found that 54% of respondents believe that the cost burden to patients is a disadvantage for oral therapies versus office-administered therapies. One respondent opined that “some patients may prefer an IV drug because it is part of the medical benefit and orals are included in pharmacy benefit, which usually comes with a higher copay” (see Figure 1 and Figure 2 below).
Looking at the other side of the coin, Reimbursement Intelligence found that between 60% and 80% of oncology dollars are spent through the medical benefits side and the remainder through pharmacy. This, in itself, is a key reimbursement hurdle for oral agents, according to the report.
The doughnut hole
The problem stems at least partly from the way insurance coverage is set up. Because a year’s supply of oral medication may cost between $20,000 and $40,000, hefty copays under the pharmacy benefit put these alternatives beyond the economic grasp of many patients.
This is especially so for elderly patients covered under Medicare Part D, which has a 25% copay for prescription drugs and an annual doughnut hole that appears after Medicare patients chew through their first $2,700 or so of their prescriptions. This hole sticks patients with thousands of dollars in prescription bills before coverage kicks in again. “It is unlikely that payers will say they will lower the copay or coinsurance on oral agents,” said Rhonda Greenapple, president of Reimbursement Intelligence.
Restructuring insurance plans to cover IV and oral drugs more equitably may not be a total solution, because the problem is not nearly as simple as it may seem. Oral and IV drugs are generally not interchangeable, according to Dr. Bailes. “It’s really apples and oranges,” he said. “The use of a drug is determined by the clinical trial and the tumor type. You don’t get head-to-head comparisons of oral and IV drugs in clinical trials.”