Patients Struggle With High Drug Prices

Dec 31, 2015

The Wall Street Journal
Patients Struggle With High Drug Prices
By Joseph Walker
December 31, 2015
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Jacqueline Racener ’s doctor prescribed a new leukemia drug for her last winter that promised to roll back the cancer in her blood with only moderate side effects.

Then she found out how much it would cost her: nearly $8,000 for a full year, even after Medicare picked up most of the tab.

“There’s no way I could do that,” Ms. Racener says. “It was just prohibitive.” Worried about depleting her limited savings, Ms. Racener, a 76-year-old legal secretary, decided to take the risk and not fill her prescription.

The pharmaceutical industry, after a long drought, has begun to produce more innovative treatments for serious diseases that can extend life and often have fewer side effects than older treatments. Last year, the Food and Drug Administration approved 41 new drugs, the most in nearly two decades.

The catch is their cost. Recent treatments for hepatitis C, cancer and multiple sclerosis that cost from $50,000 annually to well over $100,000 helped drive up total U.S. prescription-drug spending 12.2% in 2014, five times the prior year’s growth rate, according to the Centers for Medicare and Medicaid Services. High drug prices can translate to patient costs of thousands of dollars a year. Out-of-pocket prescription-drug costs rose 2.7% in 2014, according to CMS.

For many of the poorest Americans, medicines are covered by government programs or financial-assistance funds paid for by drug companies.

For those in the middle class, it is a different story. Though many patients can get their out-of-pocket costs paid by drug companies or drug-company-funded foundations, some patients make too much money to qualify for assistance. Others are unaware the programs exist. Medicare patients, who represent nearly a third of U.S. retail drug spending, can’t receive direct aid from drug companies.

The upshot is even patients with insurance and comfortable incomes are sometimes forced to make hard choices—tapping savings, taking on new debt or even forgoing treatment.

“Drugs are so expensive that once they flow through our ragtag insurance system, we have patients who can’t afford them, or they can barely afford them, so they’re not getting therapies,” said Peter Bach, a physician and health-policy researcher at Memorial Sloan Kettering Cancer Center in New York.

A quarter of U.S. prescription-drug users said it was difficult to afford them, in an August survey by the Kaiser Family Foundation. In another survey, published in the journal Lancet Haematology in September, 10% of insured U.S. patients with the blood cancer multiple myeloma said they had stopped taking a cancer drug because of its cost.

A look at how patients are coping with the cost of the medicine prescribed for Ms. Racener, called Imbruvica, illustrates the issues.

The drug blocks proteins that cause malignant cells to multiply and stay alive. Approved in 2013 for a rare illness called mantle-cell lymphoma, the medication, which is known generically as ibrutinib, was later approved to treat some patients with chronic lymphocytic leukemia, the condition Ms. Racener has.

Jacqueline Racener’s doctor recommended a drug called Imbruvica to treat her leukemia. The catch: Her annual income at the time disqualified her for copay-assistance programs for the costly treatment. Photo: Whitney Curtis for The Wall Street Journal

“People who had one foot in the grave after failing multiple prior chemotherapies, when given ibrutinib, had dramatic responses,” said Kanti R. Rai, a leukemia expert at North Shore-LIJ Cancer Institute in Lake Success, N.Y.

The drug’s wholesale list price is $116,600 a year for leukemia patients. For the higher dose needed for lymphoma, it is about $155,400. Producers gave insurers discounts averaging 11% in 2014, financial statements show.

For patients on Medicare—more than half of Imbruvica users—the federal insurance picks up the bulk of the cost under the Part D prescription-drug plan. But most Medicare patients still faced out-of-pocket costs of $7,000 or more a year.

For patients with insurance purchased privately or provided by an employer, out-of-pocket costs vary widely, from a small copay to thousands of dollars. The Affordable Care Act capped commercially insured patients’ out-of-pocket costs for all care, including drugs. The 2016 cap is $6,850.

Drug companies, aware that costs borne by insured patients can limit sales, have stepped up their spending on programs to defray them, such as copay coupons.

The aid programs can come with income limits and other restrictions. In the case of Ms. Racener in Belleville, a suburb of St. Louis, a hospital social worker looked into help from nonprofit foundations funded by drug companies. Her income was too high to qualify.

She earned about $80,000 between her job and Social Security. Her car payments, credit-card debt and a $600 monthly mortgage on her ranch house made the drug prescribed for her leukemia in February unaffordable.

Ms. Racener’s adult children offered to take out loans to help. “We’re middle-class, we don’t have that type of money in the bank,” said her oldest daughter, Rebecca Brawley.

Ms. Racener didn’t want to burden them. She decided to skip the drug and, if her symptoms got worse, to try chemotherapy, a therapy that would be covered by her insurance with minimal personal expense, but one she dreaded.

Then some good news came along—riding on bad news. In August, Ms. Racener’s work hours were cut back, and her pay fell by 40%. She applied for aid to a drug-maker-funded nonprofit called the Patient Access Network Foundation, and, with her much-reduced income, she qualified.

In October, eight months after Imbruvica was prescribed for Ms. Racener, she filled the prescription and began taking it. Her disease causes a proliferation of white blood cells. Their number has come down significantly, her doctor says.

“Thank you, Lord,” Ms. Racener remembers thinking. “Thank you that I’m going to be able to get this, and it’s not going to cost my family beaucoup bucks.”

Ms. Racener’s doctor, John DiPersio, chief of oncology at Washington University School of Medicine, says the expense of new cancer drugs is burdensome for growing numbers of patients whose insurance entails substantial copays. “The financial destitution that modern therapies bring on patients and their families is enormous,” he says.

Imbruvica was developed by Johnson & Johnson and Pharmacyclics LLC, a company AbbVie Inc. acquired in May. AbbVie has pegged global sales of the drug at $1 billion this year and $5 billion in 2020.

AbbVie declined to comment on the drug’s price. Pharmacyclics’ former CEO, Robert Duggan, said in a June interview the price represents its value in the marketplace. After patents expire in about 15 years, a generic version will be much cheaper, he said, adding: “That’s where society wins. People look at it in the very short term.”

The other producer of Imbruvica, Johnson & Johnson, says new drugs are helping turn some cancers from life-threatening to manageable, but “more costs are being shifted to patients, making it hard for some to get the medicines they need.”

Health insurers say patients pay more for their care because costs continue to climb. Drug prices are one of the main drivers of insurance-premium increases, says Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an industry group. Lowering patients’ share of expensive drugs’ cost would mean even higher premiums, she says.

Drug companies point to aid they provide. J&J says it helps patients manage costs both through its own programs and by donating to charities.

Pharmaceutical companies can’t provide copay aid directly to Medicare recipients. Doing so could be construed as a violation of the U.S. anti-kickback statute, which prohibits companies from using financial incentives to encourage the sale of their products to federal health-care programs. Companies can, however, point the patients to nonprofit organizations they finance, which cover copays for patients who meet income tests.

For commercially insured patients, drugmakers can directly provide copay aid, and frequently do. The makers of Imbruvica will cover all but $10 of such patients’ monthly copays, regardless of income.

More broadly, about 44% of commercially insured patients’ prescriptions for so-called specialty drugs—costly medicines for serious diseases that sometimes need special handling or storage—involved copay coupons in 2013, said a study in the journal Health Affairs.

Copay assistance is only relevant, of course, if insurance is covering the bulk of the drug’s cost. That isn’t the case for Brien Johnson of Sterling, Va.

Mr. Johnson never expected to be unable to afford medicine he needed. He and his wife own a legal-advertising company that has provided a good living.

A few years ago, after his doctor noticed swollen lymph nodes, Mr. Johnson was diagnosed with mantle-cell lymphoma. Treatment with chemotherapy was ineffective. He began taking Imbruvica around December 2013. In about a month, he says, his disease went into remission.

His health insurance paid for it for about a year. Early in 2015, according to Mr. Johnson, the insurer said it wouldn’t continue paying for the drug under the medical portion of his policy, which covers services provided in doctors’ offices. Instead, Imbruvica—an oral drug taken at home—would fall under the policy’s prescription-drug benefit, and that has a maximum yearly payment of $5,000, or only about 4% of Imbruvica’s annual price at the time. The Affordable Care Act banned such limits except for existing health plans for individuals.

Though the Johnsons earned nearly $200,000 a year, the cost would be too much. “If the drug was a couple thousand a month, I could’ve worked it out,” Mr. Johnson says. “But at $12,000 a month, it would have wiped us out in a year.”

His insurance is a Blue Cross Blue Shield policy from Anthem Inc. A spokeswoman for Anthem said the insurer notified Mr. Johnson he could change policies to one that included full prescription-drug coverage, but he chose not to. Anthem agreed to pay for his Imbruvica in 2014 but “clearly communicated that these additional benefits” wouldn’t extend into 2015, said the spokeswoman, Jill Becher.

She said Anthem recognizes the cost of cancer drugs has risen substantially and is “committed to working with our members to ensure that they are able to access the most effective therapy.”

Mr. Johnson says he considered switching his coverage but decided not to because other plans had higher deductibles and he feared his current doctors wouldn’t be available in them.

He got one free month’s supply of Imbruvica from its manufacturers, he says, but was ineligible for continued aid because of his income.

When the drug ran out, his “cancer kicked into a more aggressive level,” he says. He has lost 80 pounds, and his lymph nodes have swollen again.

He made plans for a stem-cell transplant, which his insurance covers, but which carries risks of serious side effects. In mid-December Mr. Johnson, 56, began intensive chemotherapy aimed at putting his disease in remission so he can have the transplant.

“I don’t know how much longer I have to live, and I don’t want to spend my last days fighting Blue Cross Blue Shield over Imbruvica,” Mr. Johnson says.

Mr. Johnson is undergoing intense chemotherapy aimed at putting his disease in remission so that he can have a stem-cell transplant. Photo: Lexey Swall for The Wall Street Journal

Patients on Medicare are starting to feel some relief from out-of-pocket expenses through a provision in the Affordable Care Act that requires a gradual lowering of patient contributions. When the reduction is complete in 2020, the median out-of-pocket cost for Medicare patients taking oral cancer drugs will be $5,660 a year, according to a study in the Journal of Clinical Oncology. Even that is more than the average beneficiary’s household spends on food in a year, the study said.

Leukemia patient Michele Steele ’s doctor prescribed Imbruvica last year after she finished her fourth round of chemotherapy. Though shocked at the nearly $8,000 out-of-pocket expense for the year, she and her husband, Bill, who are retired and live in Laguna Niguel, Calif., decided to put the cost on their credit card and find a way to sort it out later.

“How are we going to do this?” Ms. Steele, 68, remembers thinking. “I was just really scared.”

They cut back on nonessentials such as movies and restaurants. “There’s nothing else to cut back on,” Ms. Steele says. “We’ve always lived very frugally.”

In August, they found a way out. They read in an online newsletter for leukemia patients about the Patient Access Network Foundation’s copay grants. After striking out on aid requests in the past, Mr. Steele says, “I just didn’t want to get my hopes up.” But it turned out the couple’s combined income of around $82,000 was just below the cutoff point.

Ms. Steele’s reaction? “Relief, huge relief,” she says.