Medicare price negotiations, cancer care and ‘unintended consequences’

The drug pricing proposal that made it into the Build Back Better Act (BBB) in November was deemed the biggest proposed reform in decades. But Senator Joe Manchin’s statement that he wouldn’t support the bill led most observers to believe it’s mostly dead, or in jeopardy at best.

Still, the pricing debate is far from over. While the current iteration of reform may not pass the Senate, some industry experts are calling on lawmakers to develop a new pathway to lowering prices. Oncology groups in particular have pointed to the potential negatives of the BBB provision for cancer care — and suggested what they believe to be a better path forward, especially in regard to Medicare negotiations on drug prices.

“It’s very clear based on our extensive working relationships in clinical practices that there’s real fear that the current scheme for Medicare to negotiate prices will have significant detriment to cancer research,” said Steve Alperin, CEO at cancer content platform SurvivorNet. “I’m a patient advocate. If there’s less money here, they’re going to cut jobs. This is a profound issue.”

The current BBB pricing scheme would allow the federal government to negotiate prices for a limited set of high-priced drugs, which have not yet been specified. Pharma advocacy groups have opposed the pricing provision from day one, with PhRMA CEO Stephen Ubl noting in a November 2021 statement that, if it is passed, “It will upend the same innovative ecosystem that brought us life-saving vaccines and therapies to combat COVID-19.”

Still, the current plan has more than its share of boosters within the industry and outside it, and there has long been bipartisan support for lowering drug costs. In November, Real Chemistry practice leader, value and access communications Brian Reid told MM+M that certain BBB provisions would “cost the pharma industry money, but the companies want to do it because it fixes a broken system for patients.”

Alperin counters that argument by referencing the current “incredible inflection point” in cancer treatment, which has seen huge steps forward in genomics and immunotherapy. Those, he noted, have been helped along by the “tremendous amount of money going into cancer.

“At the very moment when there’s a massive boom in treatments that are actually working to save lives, there’s an existential systemic threat to that,” Alpern explained.

In November, the Community Oncology Alliance (COA) began running ads claiming that payments for cancer care would be cut by nearly 43% if the proposed Medicare negotiations went into effect. This, they argued, would result in the shutdown of cancer clinics — and ultimately less access for cancer patients. That percentage was linked to independent analysis from healthcare consulting firm Avalere Health.

COA noted in a press release that Avalere’s analysis “shows that community medical oncology will see a 42.9% decrease in Medicare payments because of the way the BBB operationalizes drug pricing negotiations. Rather than have drug manufacturers rebate the government directly for lower negotiated drug prices, the BBB Act puts oncologists and other physicians treating serious diseases in the full-risk position of receiving lower payments.”

Nicolas Ferreyros, director of communications for COA, noted that the BBB’s current pricing structure could prove “completely devastating” for independent cancer providers.

“When you reduce the payments to oncologists by almost half, you ultimately put them in a very precarious position. They can either give a patient treatment and lose money, or stop treating patients and ultimately close,” he explained. “When a patient loses access to an independent oncology provider, they lose access to local cancer care, and the alternative providers are generally hospitals, which are a much more expensive side of care. That hurts patients and taxpayers who are funding Medicare, and it’s not a good way to have a healthy competitive healthcare system.”

The analysis did indeed confirm the potential 43% cut — but only on a certain segment of revenue for Medicare providers: The add-on payments for the high-priced Part B drugs chosen for negotiation.

In the BBB proposal, only 10 drugs would be chosen for price negotiation starting in 2025, with the list growing to 20 by 2028. It’s safe to say that Medicare negotiations would result in lower prices paid for those specific drugs, and subsequently lower revenue for those doctor’s offices.

But according to fact-checking nonprofit PolitiFact, the COA wording that community cancer clinics would lose nearly half of revenue is probably not entirely accurate. Rather, the provision would only affect some of the drugs provided by oncologists.

Other industry experts asserted that allowing Medicare to negotiate certain drug prices wouldn’t dampen innovation as much as companies fear.

“Pharma’s arguments that drug reform will stop innovation have not been resonating with the public,” Jon Bigelow, executive director at the Coalition for Healthcare Communication, told MM+M in November. “It’s the most visible cost issue to consumers and both parties want limits.”

Ferreyros is quick to note that he isn’t against reducing drug prices. Rather, he believes that drug pricing reform should be “more holistic” to avoid any potential losses among oncology clinics.

“The high cost of cancer care and the high cost of drugs is a multifaceted issue,” Ferreyros stressed. “It’s not just pharma setting a price and then everyone else suffers because of that. We’ve built an incredibly convoluted healthcare system where you have a lot of intermediaries that ultimately end up increasing the cost for everybody.”

Ferreyros added that the legislators who penned the current BBB provision “don’t seem to be taking the pricing issue very seriously in terms of looking at the whole system. We get a lot of headlines vilifying the pharma industry, but what we need is for legislators to seriously look into all the dysfunction of the system and broken public policies.”

The Association for Clinical Oncology (ASCO) expressed a similar viewpoint in a letter to Congress, noting it supported the bill’s goal of reducing the cost of prescription drug treatments, but urged lawmakers to address the “unintended consequences” of the drug pricing provision.

For now, BBB is in purgatory. But experts agree that with or without BBB, the drug pricing debate will continue.

“Just because Build Back Better has, for the moment, been put on pause, it doesn’t mean that this issue won’t come back, particularly with the midterm elections coming up,” Ferreyros said. “It’s going to continue to be brought up, because we haven’t achieved any meaningful reduction in healthcare costs for a very long time in this country.”