Study Finds Cap on Out-of-Pocket Costs Saves Cancer Patients $7,000
The Inflation Reduction Act’s cap on patient out-of-pocket spending would have saved Medicare patients with cancer more than $7,000 a year, according to a new study published in JAMA Network Open.
Benjamin Pockros, M.D., M.B.A.
“People with cancer are already vulnerable to financial distress and medical debt. Our analysis suggests that legislative policy can have a big impact on the cost of cancer care. This is especially critical as lawmakers now consider extending an out-of-pocket cap to commercial insurance,” said lead study author Benjamin Pockros, M.D., M.B.A., a urology resident at Michigan Medicine.
Researchers from the University of Michigan’s Institute for Healthcare Policy and Innovation and Rogel Cancer Center used the online Medicare Part D Plan Finder tool to assess how much patients were paying for the most commonly prescribed oral chemotherapies. They compared data from 2023, when no out-of-pocket cap was in place, to 2024, when the policy first took effect.
They assessed the top 10 oral brand name cancer drugs by Part D spending in 2020 in Ann Arbor, Mich., as a representative sample. There were 24 Part D plans in Ann Arbor in 2023 and 20 plans in 2024.
Researchers found that for Medicare Part D beneficiaries, annual out-of-pocket costs for oral cancer medications averaged $11,284 in 2023. In 2024, the average annual cost for the same medications is estimated to be $3,927. The median cost saving from 2023 to 2024 is estimated to be $7,260.
The range of annual out-of-pocket savings was $5,694.47 for Xtandi (enzalutamide) to $9,872.12 for Venclexta (venetoclax). Xtandi is used to treat men who have prostate cancer. Venclexta is used to treat patients with acute myeloid leukemia.
The Inflation Reduction Act established a cap of out-of-pocket savings of about $3,500. In 2025, an out-of-pocket cap will be set at $2,000, which the researchers predict will result in even greater savings for patients.
Researchers said that high out-of-pocket costs can impact patient adherence and lead to increased rates of hospitalizations and death.
One limitation is that this research focuses on a single zip code, which researchers said may not be precisely representative of other areas. Additionally, the cost information was from an online database and may differ from actual costs.
“Despite these limitations, we found that patients prescribed brand name oral cancer medications may save thousands of dollars in annual drug spending due to legislative effects of the IRA,” researchers wrote.
These findings are similar to other research about impact of out-of-pocket costs for Part D beneficiaries. The $2,000-per-year cap on Medicare Part D out-of-pocket costs that goes into effect next year will benefit about 3.2 million, or 8.4%, of the Part D plan enrollees, according to recent research commissioned by AARP. That number will increase to 4.1 million, or 9.6%, or Part D enrollees in 2029, according to AARP, which hired Avalare to conduct the research.
In February 2024, an analysis from KFF found that more than 1 million Medicare beneficiaries are expected to benefit from the Inflation Reduction Act’s Part D out-of-pocket cost cap. The KFF analysis looked at out-of-pocket drug spending in 2021 and the impact of the IRA’s spending cap if it had been in place that year.
They found that if the cap been in place in 2021, 1.5 million Medicare beneficiaries would have benefited. Of the total 1.5 million, 68% spent between $2,000 and $3,000 out of pocket. But 20% spent between $3,000 and $5,000, and 12% spent more than $5,000 in out-of-pocket drug costs.
