Building back better from COVID-19 should mean improving America’s cancer infrastructure, not destroying it by causing higher costs and less access to community cancer doctors. Sadly, with Congress rushing through massive changes to Medicare in the Build Back Better (BBB) Act, the fine print in the way drug negotiations are implemented will have toxic side effects for patients with cancer and other serious diseases.
A big part of the sales pitch for BBB has been Medicare drug-price negotiations. America is being promised relief from high drug costs, a concern we all have — particularly oncologists who see the impact on patients every day. However, rather than tackle the problem head-on, the BBB Act will cause massive cuts to cancer-care payments, cuts that history clearly shows will do the opposite of what we are being promised, resulting in higher costs for patients, increased taxpayer spending, and a broken cancer-care system.
The problem lies in the details of how BBB operationalizes Medicare drug-price negotiations. Rather than have drug manufacturers rebate the government directly for lower negotiated drug prices, BBB holds doctors that administer drugs as hostages in the negotiations. This puts oncologists and other physicians treating serious diseases in the full-risk position of receiving massively lower payments.
A recent, independent analysis by Avalere Health on the BBB’s impact on providers shows it will lead to a devastating 42.9 percent cut in Medicare payments to independent cancer-care providers. Practices rely on these payments to cover the costs of providing chemotherapy to patients, including the procurement, specialized handling and disposal of often-toxic materials related to cancer treatments. While a practice’s payments will be cut almost in half, none of its ongoing costs will be reduced — in fact, those are increasing due to inflation pressures, ongoing pandemic costs and new shortages of drugs and supplies.
History has clearly documented that repeated cancer-care payment cuts cause independent providers to close or merge with expensive hospital systems. My organization, the Community Oncology Alliance (COA), tracks these practice trends in a biennial report. Our 2020 Practice Impact Report found that 1,748 community oncology clinics or practices have closed, acquired by hospitals, undergone corporate mergers or reported that they have been struggling financially since 2008.
If community oncology practices close because of the dramatic BBB payment cuts, the result will be higher patient costs and more Medicare spending, not less. Research shows that hospitals are far more expensive sites of service that exorbitantly mark up drug prices for patients with cancer and charge much more for related care. A recent COA study using hospitals’ own drug price data showed that hospitals charge patients and insurers an average of 3.8 times the cost for already expensive cancer treatments. Another recent study from researchers at the University of California, Berkeley found that hospital outpatient department prices were double those paid in independent physician offices for cancer drugs, and that patient out-of-pocket costs are substantially higher. And these are just the most recent studies to show the data.
It’s a cruel irony, and Americans will be shocked to learn, that the BBB drug-pricing provisions Congress is pushing through to “lower” drug costs will actually increase them, as well as overall health care spending.
Fortunately, the fix is relatively simple for Congress to make, and it would preserve the BBB’s drug-price negotiation goals while not unintentionally hurting cancer care. The act’s language can be fixed so that drug manufacturers directly refund the government excess costs above the negotiated price. This creates a direct transaction between the government and drug manufacturers and does not put physicians in the middle, exposed to untenable financial risk.
Drug prices are too high, and something clearly needs to be done. Community oncologists see this every day and are dedicated to finding and supporting solutions that will truly result in lower costs for patients. However, the fine print in the BBB Act is a mistake that history shows will destroy community cancer care. Congress must do the right thing and fix the BBB Act before it is too late.
Ted Okon is executive director of the Community Oncology Alliance, a national nonprofit association that represents independent cancer practices.