A new study shows that closing of the Medicare “Donut Hole” had no effect on patient out-of-pocket costs for cancer drugs. They are simply too expensive.

This week we get some insight into how ineffective government policy can be in the face of exorbitant drug pricing courtesy of this little research letter appearing in the Journal of the American Medical Association.

To understand the article, you need to recall a few basic facts. In 2010, Medicare Part D had the infamous “donut hole”, which worked like this:

After an initial deductible, patients were required to pay 25% of the price of their medications up to $2,830. After that point, they were responsible for 100% of price, up until $6,440 when Medicare would cover all but 5% of the drug costs.

It was… unpopular. But that donut hole has been filled since 2010. Here is the state of play as of 2018.

You can see the donut hole is a bit smaller – going only up to $5000, and patients are only responsible for 25% of the costs while they are in it.

This is better, right? Well, it turns out that closing the donut hole hardly matters in an era of $10,000 a month prescriptions.

The article examines out-of-pocket costs for oral anti-cancer drugs – think sorafenib and vorinostat. And, despite substantive closing of the doughnut hole, Medicare patients are spending more money to get these drugs in 2018 than they were in 2010 – on average $1600 a year more – and yes that accounts for inflation.

But that’s just the average..

Annual out-of-pocket spending for a patient taking lenalidomide, often used to treat multiple myeloma, was $11,000 in 2010. It’s $15,000 dollars today.

What’s happening? Well, the prices of the drugs are increasing. Lenalidomide cost $12,000 a month in 2010 – it costs $21,000 a month today. In fact, Of 54 orally available anti-cancer drugs on the market in 2018, 3 – only 3 – had a lower list price today than when they first came on the market.

Virtually every single drug in this class gets more expensive year-after-year its on the market.

And when I say expensive, I mean expensive. 48 out of the 54 medications cost more than $10,000 per month and 21 cost more than $15,000 per month.

And that’s why that doughnut hole closure doesn’t matter much. 

For example, a patient taking Pomalidomide- another myeloma-agent- starting on January 1st 2018, would hit the doughnut hole after their first day of therapy.

They would reach the other side of the donut hole on January 5th. Which means for the other 360 days of the year, they are in catastrophic coverage territory. Yes, that means they are only responsible for 5% of the cost of the drug – but that 5% adds up to $15,000 dollars a year.

Yes, I know, not everyone is taking these drugs all year – but the point is that even catastrophic coverage can’t help you when drugs are this expensive.

Now it may seem that the obvious solution is to have some maximum out-of-pocket limit for Medicare beneficiaries. But we need to recognize that that ultimately shifts the costs from the patient to the government, AKA all of us. This is unsustainable. The issue can really only be addressed two ways. One, by deciding as a society that we find it acceptable that certain drugs are only available to patients who can afford them – not a solution I’m comfortable with - or two, by regulating the price of drugs directly. Any other solution is simply robbing Peter to pay Pfizer.  

This commentary first appeared on medscape.com.