Medicare Could Have Saved $33 Million on Prostate Cancer Drugs

By prescribing clinically similar luteinizing hormone—releasing hormone agonists for the treatment of prostate cancer, Medicare could have saved 13% of its total budget for monthly injections, according to a study from the Office of the Inspector General.

Medicare and its beneficiaries spent more than $12 billion for drugs covered under Part B in 2011. According to a new report from the Department of Health and Human Services’ (HHS) Office of the Inspector General (OIG), Medicare expenditures would have been reduced significantly if drugs covered under this section were subject to least costly alternative (LCA) policies.

Although most outpatient prescription drugs paid for by Medicare are covered under the well-known Part D plan, there are certain specialty therapies covered under Part B, including “physician-administered injectable drugs, certain self-administered oral anticancer and immunosuppressive drugs, and drugs used in conjunction with durable medical equipment,” according to the OIG.

Many drugs covered under Medicare Part B, including prostate cancer drugs, were subject to LCA policies between 1995 and 2010. This meant that their reimbursement was based on the least costly of a group of clinically comparable drugs. In April 2010, the Centers for Medicare & Medicaid Services discontinued all LCA policies after a court ruling determined that Medicare law did not authorize the use of such a policy.

The study released by the OIG examined the cost of monthly injections of luteinizing hormone—releasing hormone (LHRH) agonists for the treatment of prostate cancer between the beginning of the third quarter of 2010 and the end of the second quarter of 2011 and compared them with the costs Medicare would have incurred if the LCA policy for these types of therapies had not been rescinded. The researchers also tracked quarterly shifts in utilization from 1 year before the policies were halted to 1 year after.

According to their results, researchers determined Medicare could have saved $33.3 million dollars if the LCA policies had not been withdrawn. During the study period, if LCA policies had been in place, payment amounts for Lupron (leuprolide injection), Eligard (leuprolide injection), and Zoladex (goserelin acetate) would have been based on the cheapest alternative, Trelstar (triptorelin pamoate). Of the $33.3 million saved, 20% (or $6.7 million) of these savings would have been transferred to the patient in the form of reduced coinsurance amounts, the researchers noted.

They also found that after the policies were removed utilization patterns shifted towards using more expensive therapies for the treatment of prostate cancer. Lupron and Eligard, the more expensive options, were administered at about twice the rate of Trelstar 1 year before the policy was rescinded—but utilization of Trelstar began to rise during this period until almost immediately after the LCA policies were withdrawn. Once the pricing policies were withdrawn, utilization of Trelstar dropped 74%.

The researchers admit that in general there has been an overall reduction in hormone therapy for the treatment of prostate cancer from 2003 to 2007. They argue that this is because there are fewer appropriate candidates for LHRH agonists due to “a decrease in Medicare payment amounts following the implementation of the [average sales price]-based reimbursement methodology, the increased use of intermittent hormone therapy, and an increased recognition of the adverse effects associated with hormone therapy.”

Even though some clinical factors may have affected the use of certain hormone therapies, the OIG researchers involved in the study still conclude that CMS should seek legislative authority to reinstate LCA policies for Part B medications “under appropriate circumstances.”