Why Does the Inflation Reduction Act Exclude Expensive Cancer Treatments in Price Negotiations?

PURPOSE: The Inflation Reduction Act (IRA) includes provisions for price negotiations of certain high-spending drugs in Medicare Parts B and D. This provision received considerable attention from those interested in the costs of cancer care since Medicare covers most patients with cancer and many cancer drugs are expensive. We simulate how many cancer drugs may be eligible for IRA price negotiations and examine the reasons that many are likely to be excluded from negotiation. METHODS: This study uses 2021 Medicare Fee-for-Service Part B and Part D prescription drugs expenditure data. Cancer drugs were identified using the SEER Program list of cancer medications. Our measures included total spending, beneficiary users, and spending-per-beneficiary for all cancer drugs covered under Medicare. Each drug was evaluated for eligibility on the basis of IRA negotiation provisions, including estimated loss of patent exclusivity, current competitors, and orphan drug designation. RESULTS: We found that very few cancer drugs will meet the IRA eligibility thresholds to be included in negotiations. We estimate that only 2.2% of beneficiaries with cancer will see lower costs because of the IRA negotiations. The main reason for this is that although novel cancer drug treatments are priced high, they generally treat relatively few beneficiaries and thus do not meet negotiation eligibility criteria, which are primarily based on a ranking of total spending. CONCLUSION: The IRA negotiation provisions will have limited impact on cancer drug prices and will likely leave most patients with cancer exposed to high drug costs.

Prescription Drug Advertising and Drug Utilization: The Role of Medicare Part D.

This paper examines how direct-to-consumer advertising (DTCA) for prescription drugs influences utilization by exploiting a large and plausibly exogenous shock to DTCA driven by the introduction of Medicare Part D. Part D led to larger increases in advertising in geographic areas with higher concentrations of Medicare beneficiaries. We examine the impact of this differential increase in advertising on non-elderly individuals to isolate advertising effects from the direct effects of Part D. We find that exposure to advertising led to large increases in treatment initiation and improved medication adherence. Advertising also had sizeable positive spillover effects on non-advertised generic drugs. Our results imply significant spillovers from Medicare Part D on the under-65 population and an important role for non-price factors in influencing prescription drug utilization.

Biosimilar Competition and Payments in Medicare: The Case of Trastuzumab.

PURPOSE: Numerous biologic drugs will soon be facing biosimilar competition. We study the case of trastuzumab, a revolutionary drug approved in 1998 to treat human epidermal growth factor receptor 2-positive breast cancer, to understand how trends in the price and treatment cost of the originator brand and biosimilar forms of trastuzumab evolved following biosimilar entry. METHODS: We use average sales price data from the Centers for Medicare and Medicaid Services, adjusted for inflation to real 2020 dollars using the consumer price index, to describe price changes for the originator biologic and biosimilar versions of trastuzumab between 2019, when the first biosimilar was covered by Medicare, and 2022, when a total of five biosimilar competitors were on the market. We also estimate total treatment costs of biologic and biosimilar forms of trastuzumab from 2005 to 2022 and describe changes in their market share. RESULTS: We find that the first biosimilar entrant's price was 15% lower than the originator brand in 2019, and the fifth biosimilar entrant's price in 2022 was 58% lower than the originator brand in 2019. Contrary to expectations from prior research, the originator biologic price in 2022 decreased 29% from its 2019 average sales price. Average treatment cost for the biologic and biosimilar versions of trastuzumab combined was $45,659 US dollars lower in 2022 compared with the year before biosimilar entry, 2018. Finally, biosimilar market share grew from only 7% in the first year of entry to 32% in the second year, when three biosimilars were on the market. CONCLUSION: Biosimilar entry may be an effective means of decreasing the cost of biologic cancer treatments. Our findings suggest that policies that support biosimilar entry and encourage use may expand access to necessary treatment and reduce health care costs.

ORIGINS OF THE OPIOID CRISIS AND ITS ENDURING IMPACTS.

Overdose deaths involving opioids have increased dramatically since the 1990s, leading to the worst drug overdose epidemic in U.S. history, but there is limited empirical evidence about the initial causes. In this article, we examine the role of the 1996 introduction and marketing of OxyContin as a potential leading cause of the opioid crisis. We leverage cross-state variation in exposure to OxyContin's introduction due to a state policy that substantially limited the drug's early entry and marketing in select states. Recently unsealed court documents involving Purdue Pharma show that state-based triplicate prescription programs posed a major obstacle to sales of OxyContin and suggest that less marketing was targeted to states with these programs. We find that OxyContin distribution was more than 50% lower in "triplicate states" in the years after the drug's launch. Although triplicate states had higher rates of overdose deaths prior to 1996, this relationship flipped shortly after the launch and triplicate states saw substantially slower growth in overdose deaths, continuing even 20 years after OxyContin's introduction. Our results show that the introduction and marketing of OxyContin explain a substantial share of overdose deaths over the past two decades.

Impact of Oncology Drug Shortages on Chemotherapy Treatment.

Prescription drug shortages began to increase markedly in the mid-2000s, including sterile injectable products such as chemotherapy drugs. Using Medicare claims linked to Surveillance Epidemiology and End Results (SEER), we examined outpatient chemotherapy use during shortage periods relative to the months before and after a shortage for newly diagnosed patients with breast, colorectal, leukemia, lung, lymphoma, ovarian, or pancreatic cancer (N = 182,470). For most drugs, we found little impact of shortages on either the fraction of patients receiving that drug or the quantity provided. In some cases, we found declines in utilization: 4% for doxorubicin and fluorouracil; 2.9% for oxaliplatin; and about 1% for cytarabine, dacarbazine, and leuprolide. Although shortages for a few drugs resulted in substantial reductions in use, in most cases, they resulted in little to no reduction. We discuss potential explanations for these counterintuitive findings, including potential limitations of current drug shortage reporting methods.

A Transitioning Epidemic: How The Opioid Crisis Is Driving The Rise In Hepatitis C.

The hepatitis C virus is responsible for more deaths in the United States than any other infectious disease, and hepatitis C infections have been rising at an alarming rate since 2010. We evaluated the role of the opioid epidemic and, in particular, the 2010 introduction of an abuse-deterrent version of OxyContin. The OxyContin reformulation led some users of the drug to switch to heroin, which could have exposed them to the hepatitis C virus. We used difference-in-differences methods, using data for the period 2004-15, to assess whether states with higher rates of OxyContin misuse prior to reformulation-states where the reformulation had more impact-experienced faster growth in infections after the reformulation. States with above-median OxyContin misuse before the reformulation experienced a 222 percent increase in hepatitis C infection rates in the post-reformulation period, while states with below-median misuse experienced only a 75 percent increase. These results suggest that interventions to deter opioid misuse can have unintended long-term public health consequences.

Supply-Side Drug Policy in the Presence of Substitutes: Evidence from the Introduction of Abuse-Deterrent Opioids.

Overdose deaths from prescription opioid pain relievers nearly quadrupled between 1999 and 2010. We study the consequences of one of the largest supply disruptions to date to abusable opioids - the introduction of an abuse-deterrent version of OxyContin in 2010. Supply-side interventions which limit access to opioids may have the unintended consequence of increasing use of substitute drugs, including heroin. Exploiting cross-state variation in OxyContin exposure, we find that states with the highest initial rates of OxyContin misuse experienced the largest increases in heroin deaths. Our results imply that the recent heroin epidemic is largely due to the reformulation of OxyContin.

Evaluating The Role Of Payment Policy In Driving Vertical Integration In The Oncology Market.

The health care industry has experienced massive consolidation over the past decade. Much of the consolidation has been vertical (with hospitals acquiring physician practices) instead of horizontal (with physician practices or hospitals merging with similar entities). We documented the increase in vertical integration in the market for cancer care in the period 2003-15, finding that the rate of hospital or health system ownership of practices doubled from about 30 percent to about 60 percent. The two most commonly cited explanations for this consolidation are a 2005 Medicare Part B payment reform that dramatically reduced reimbursement for chemotherapy drugs, and the expansion of hospital eligibility for the 340B Drug Discount Program under the Affordable Care Act (ACA). To evaluate the evidence for these explanations, we used difference-in-differences methods to assess whether consolidation increased more in areas with greater exposure to each policy than in areas with less exposure. We found little evidence that either policy contributed to vertical integration. Rather, increased consolidation in the market for cancer care may be part of a broader post-ACA trend toward integrated health care systems.

Effects of payment reform in more versus less competitive markets.

Policymakers are increasingly interested in reducing healthcare costs and inefficiencies through innovative payment strategies. These strategies may have heterogeneous impacts across geographic areas, potentially reducing or exacerbating geographic variation in healthcare spending. In this paper, we exploit a major payment reform for home health care to examine whether reductions in reimbursement lead to differential changes in treatment intensity and provider costs depending on the level of competition in a market. Using Medicare claims, we find that while providers in more competitive markets had higher average costs in the pre-reform period, these markets experienced larger proportional reductions in treatment intensity and costs after the reform relative to less competitive markets. This led to a convergence in spending across geographic areas. We find that much of the reduction in provider costs is driven by greater exit of "high-cost" providers in more competitive markets.

The anticipatory effects of Medicare Part D on drug utilization.

While health care policies are frequently signed into law well before they are implemented, such lags are ignored in most empirical work. This paper demonstrates the importance of implementation lags in the context of Medicare Part D, the prescription drug benefit that took effect two years after it was signed into law. Exploiting the differential responses of chronic and acute drugs to anticipated future prices, I show that individuals reduced drug utilization for chronic but not acute drugs in anticipation of Part D's implementation. Accounting for this anticipatory response substantially reduces the estimated total treatment effect of Part D.

How will provider-focused payment reform impact geographic variation in Medicare spending?

OBJECTIVES: The Institute of Medicine has recently argued against a value index as a mechanism to address geographic variation in spending and instead promoted payment reform targeted at individual providers. It is unknown whether such provider-focused payment reform reduces geographic variation in spending. STUDY DESIGN: We estimated the potential impact of 3 Medicare provider-focused payment policies-pay-for-performance, bundled payment, and accountable care organizations-on geographic variation in Medicare spending across Hospital Referral Regions (HRRs). We compared geographic variation in spending, measured using the coefficient of variation (CV) across HRRs, between the baseline case and a simulation of each of the 3 policies. METHODS: Policy simulation based on 2008 national Medicare data combined with other publicly available data. RESULTS: Compared with the baseline (CV, 0.171), neither pay-for-performance nor accountable care organizations would change geographic variation in spending (CV, 0.171), while bundled payment would modestly reduce geographic variation (CV, 0.165). CONCLUSIONS: In our models, the bundled payment for inpatient and post acute care services in Medicare would modestly reduce geographic variation in spending, but neither accountable care organizations nor pay-for-performance appear to have an impact.

Post-acute referral patterns for hospitals and implications for bundled payment initiatives.

BACKGROUND: Under new bundled payment models, hospitals are financially responsible for post-acute care delivered by providers such as skilled nursing facilities (SNFs) and home health agencies (HHAs). The hope is that hospitals will use post-acute care more prudently and better coordinate care with post-acute providers. However, little is known about existing patterns in hospitals׳ referrals to post-acute providers. METHODS: Post-acute provider referrals were identified using SNF and HHA claims within 14 days following hospital discharge. Hospital post-acute care network size and concentration were estimated across hospital types and regions. The 2008 Medicare Provider Analysis and Review claims for acute hospitals and SNFs, and the 100% HHA Standard Analytic Files were used. RESULTS: The mean post-acute care network size for U.S. hospitals included 57.9 providers with 37.5 SNFs and 23.4 HHAs. The majority of these providers (65.7% of SNFs, 60.9% of HHAs) accounted for 1 percent or less of a hospital׳s referrals and classified as "low-volume". Other post-acute providers we classified as routine. The mean network size for routine providers was greater for larger hospitals, teaching hospitals and in regions with higher per capita post-acute care spending. CONCLUSIONS: The average hospital works with over 50 different post-acute providers. Moreover, the size of post-acute care networks varies considerably geographically and by hospital characteristics. These results provide context on the complex task hospitals will face in coordinating care with post-acute providers and cutting costs under new bundled payment models.

Should payment policy be changed to allow a wider range of EMS transport options?

The Institute of Medicine and other national organizations have asserted that current payment policies strongly discourage emergency medical services (EMS) providers from transporting selected patients who call 911 to non-ED settings (eg, primary care clinics, mental health centers, dialysis centers) or from treating patients on scene. The limited literature available is consistent with the view that current payment policies incentivize transport of all 911 callers to a hospital ED, even those who might be better managed elsewhere. However, the potential benefits and risks of altering existing policy have not been adequately explored. There are theoretical benefits to encouraging EMS personnel to transport selected patients to alternate settings or even to provide definitive treatment on scene; however, existing evidence is insufficient to confirm the feasibility or safety of such a policy. In light of growing concerns about the high cost of emergency care and heavy use of EDs, assessing EMS transport options should be a high-priority topic for outcomes research.

The state of innovative emergency medical service programs in the United States.

BACKGROUND: The primary objective of this study was to determine how EMS organizations that are piloting patient-centered treatment and transport protocols are approaching the challenges of implementation, reimbursement, and quality assurance. We were particularly interested in determining if these pilot efforts have raised any patient safety concerns. METHODS: We conducted a set of discussions with a small group of key EMS stakeholders regarding the status of pioneering efforts to develop and evaluate innovative approaches to EMS in the United States. RESULTS: We had discussions with 9 EMS agencies to better understand their innovative programs, including: the history of their service policy and procedure for transports that do not require emergency department care; the impact of their innovative program on service costs and/or cost savings; any reimbursement issues or changes; patient safety; patient satisfaction; and overall impression as well as recommendations for other EMS systems considering adoption of this policy. CONCLUSIONS: In general, EMS systems are not reimbursed for service unless the patient is transported to an ED. Spokespersons for all nine sites covered by this project said that this policy creates a powerful disincentive to implementing pilot programs to safely reduce EMS use by directing patients to more appropriate sites of care or proactively treating them in their homes. Even though private and public hospitals and payers typically benefit from these programs, they have been generally reluctant to offer support. This raises serious questions about the long-term viability of these programs.

Giving EMS flexibility in transporting low-acuity patients could generate substantial Medicare savings.

Some Medicare beneficiaries who place 911 calls to request an ambulance might safely be cared for in settings other than the emergency department (ED) at lower cost. Using 2005-09 Medicare claims data and a validated algorithm, we estimated that 12.9-16.2 percent of Medicare-covered 911 emergency medical services (EMS) transports involved conditions that were probably nonemergent or primary care treatable. Among beneficiaries not admitted to the hospital, about 34.5 percent had a low-acuity diagnosis that might have been managed outside the ED. Annual Medicare EMS and ED payments for these patients were approximately $1 billion per year. If Medicare had the flexibility to reimburse EMS for managing selected 911 calls in ways other than transport to an ED, we estimate that the federal government could save $283-$560 million or more per year, while improving the continuity of patient care. If private insurance companies followed suit, overall societal savings could be twice as large.

A socioeconomic profile of older adults with HIV.

The objective of this study was to assess the socioeconomic circumstances of older patients with HIV and acquired immunodeficiency syndrome (AIDS). The investigators compared subjects from a national probability sample of 2,864 respondents from the HIV Cost and Services Utilization Study (HCSUS, 1996) with 9,810 subjects from Wave 1 (1992) of the Health and Retirement Survey (HRS). Bivariate analyses compare demographic characteristics, financial resources, and health insurance status between older and younger adults and between older adults with HIV and the general population. It was found that nearly 10% of the HIV-positive population is between the ages of 50 and 61 years. Older whites with HIV are mostly homosexual men who are more well educated, more often privately insured, and more financially stable than the HIV population as a whole. In contrast, older minorities with HIV possess few economic resources in either absolute or relative terms. The success of new drug therapies and the changing demographics of the HIV population necessitate innovative policies that promote labor force participation and continuous access to antiretroviral therapies.