Chemotherapy Parity Laws Ignore Cost-Quality Question

With the FDA approval of several oral chemotherapy agents, the cost of medications to treat cancer is increasing rapidly. To control costs, legislators, patient advocates, and physicians have pushed for oral chemotherapy parity laws.

But, according to a recent viewpoint article by Bo Wang, PharmD, and colleagues at the Brigham and Women’s Hospital and Harvard Medical School published in a November 2014 edition of JAMA Internal Medicine, these parity laws are an inadequate response to the problem of escalating medication costs.

In a traditional chemotherapy reimbursement setting, medical benefits cover the cost of outpatient administration of chemotherapeutic drugs. These flat co-pay costs contrast with the tiered cost structure of pharmacy benefits, which may be higher for more expensive medications.

With the move to oral oncologic drugs, the out-of-pocket cost is increasing. In the past, a patient receiving treatment for chronic myelogenous leukemia might have paid a flat co-pay of $20 to $50 per session for outpatient intravenous chemotherapy. Today, the same patient might pay in excess of $2500 per month for treatment with oral oncologic drugs.

Chemotherapy parity laws approved by a bipartisan congressional effort in 2013 help some patients, but do not address the important issue of the high cost of oral cancer drugs. Rather than providing a solution to high drug costs, parity laws ignore the cost of each agent per quality-adjusted life-year gained, and simply mandate that insurers cover the cost of very expensive chemotherapeutic drugs. By ignoring the balance between cost and quality, Congress is ultimately promoting the inefficient use of limited health care dollars.

In addition, the law has led to unfair competitive practices between hospitals and private practice in offering services at a lower cost to patients—outcompeting many outpatient oncologists. For instance, a 2010 provision of the Affordable Care Act expanded the 340B discount purchasing program to enable hospitals to obtain chemotherapeutic agents at a highly discounted price. As a result of anticompetitive 340B pricing, many private practice oncologists are being forced to merge into larger practices, while other oncologists are selling their private practices to hospitals to take advantage of the more competitive reimbursement rates. Some physicians may even retire as a result of the pricing differences.

For insurers, the high cost of oral oncologic agents may require exclusion of these agents from formularies. The lack of competitive pricing has forced insurers like Express Scripts to stop covering high-cost medications such as the oral rheumatoid arthritis drug, tofacitinib. Expensive oncologic agents may be the next drugs to be affected by this policy.

Ultimately, Congress will need to enable pricing of drugs based on rational pharmacoeconomic decisions, rather than a patchwork of policies that endanger the availability of outpatient care while saddling insurers with arbitrary costs. Chemotherapy parity laws do not remedy the problem of high drug costs; they simply ignore the real question of balancing cost and quality in health care.

Reference:

Wang B, Joffe S, Kesselheim AS. Chemotherapy parity laws: a remedy for high drug costs? JAMA Intern Med. 2014;174(11):1721-1722.