Benefits of Extending Medicare Coverage to All Oral Anti-Cancer Drugs

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Benefits of Extending Medicare Coverage to All Oral Anti-Cancer Drugs
Cohen, Steve
Hall, John ( Mentor )
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University of Florida
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Benefits of Extending Medicare Coverage to All Oral Anti-Cancer Drugs

Steven Cohen


Cancer is the second leading cause of morbidity and mortality in the United States, exceeded only by heart

disease. The American Cancer Society estimates that a little less than 1 in 2 men and a little more than 1 in 3

women have a lifetime risk of developing some type of cancer. In 2003, about 1,334,100 new cancer cases

were expected to be diagnosed, while about 556,500 Americans were expected to die - more than 1,500 people

a day (1).

The National Heart, Lung, and Blood Institute estimates that the direct and indirect costs of cancer in the year

2003 will reach $189.5 billion (2). However, using a flat-line forecasting approach, cancer costs over the next

ten years are projected to exceed $3.4 trillion1 (Table 1).

Table 1

Projected Direct and Indirect Costs of Cancer (in Billions)2

Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(Yo) (Y1) (Y2) (Y3) (Y4) (Y5) (Y6) (Y7) (Y8) (Y9) (Y10)

Cost $189.50 $209.27 $231.10 $255.20 $281.82 $311.22 $343.68 $379.53 $419.12 $462.84 $511.12

To better understand the impact of current and future costs of cancer, it is necessary to analyze the $189.5

billion figure as the sum of its three components: $64.2 billion for direct medical costs, $16.3 billion for

indirect morbidity costs, and $95.2 for indirect mortality costs.

According to the accompanying analysis in the National Heart, Lung, and Blood Institute (NHLBI) Fact Book,

the direct medical costs are based on personal health care expenditures for home care, hospital and nursing

home care, drugs, physical services, and other professional services. This number was estimated by the Centers

for Medicare & Medicaid Services (CMS) and the National Center for Health Statistics (NCHS) using their

projections for total 2003 health care expenditures by type of direct cost. The indirect morbidity costs

were approximated by the NCHS by multiplying their estimates from 1980 by an inflation factor of 4.8

percent (derived from the increase in mean earnings as calculated by the Bureau of the Census). The

indirect mortality costs were estimated via a three-step approach: first, the number of deaths in 1999, grouped

by age and sex, was multiplied by the 1999 present value of lifetime earnings and then discounted at 3

percent (since the latest data was collected in 1999); next, these estimates were summed by group (age and

sex); finally, these figures were multiplied by an inflation factor of 1.26 percent based on the change in

mean earnings between 1999 and 2003 (3). Though inflation factors were employed in two of the preceding

three cases to yield 2003 estimates, each of these three components was calculated reasonably. Thus, the high

costs of cancer, which will only continue to increase over time, accentuate the need for Congress to act

immediately to improve the quality of life for current and future cancer patients.

Since cancer is disproportionately a disease of the elderly, with more than sixty percent of all cancer diagnoses

made in persons age 65 or older, millions of Americans rely on the Medicare program to cover the costs

associated with cancer care (4). Despite the development of new potentially life-extending oral anti-cancer

drugs, Medicare coverage is limited to injectable drugs or oral drugs that have an injectable version (5).

Other commonly prescribed anti-cancer agents such as thalomid, for a deadly blood cancer called multiple

myeloma; gleevec, for certain types of leukemia and gastrointestinal tumors; and tamoxifen citrate, used to

treat breast cancer, are not covered by the program (6) (Table 2).

Table 2

Commonly Prescribed Oral Cancer Drugs not Covered by Medicare3

Number of Retail Minimum Annual
Generic Name Trade Name _ . Strength ..

Capsules4 Price5


Thalomid Thalidomide 240 50 mg $3,536.57 $42,438.86

Gleevec Imatinib Mesylate 120 100 mg $2,284.80 $27,417.60

Tamoxifen Citrate Nolvadex 60 10 mg $132.28 $1,587.36

Related Footnotes:

4 This is the number of capsules typically required by the average patient each month.

5 This is the approximate price charged by Eckerds, a leading national drugstore, to consumers for a one month supply of

the drug.

6 Retail Cost x 12 months.

Noncoverage of these drugs and new oral therapies obligates patients to choose between substantially greater out-

of-pocket costs or less effective treatments. Since the majority of these patients are not able to bear the costs of

the revolutionary oral therapies, they are forced to utilize one or more of the other treatments currently covered

by the Medicare program that may not be best suited for their specific diagnosis. Medicare's failure to cover all

anti-cancer drugs leaves many patients at risk of shortened life spans and increased suffering from blood-

related cancers, including leukemia, lymphoma, and myeloma, and from other cancers of the lung, breast,

and prostate (7). By ensuring Medicare coverage of all oral anti-cancer drugs, more Americans will have access to

life-saving therapies that fit their individual needs.


During the 107th Congress, Congresswoman Deborah Pryce and Senator Olympia Snowe introduced the Access

to Cancer Therapies Act of 2001, H.R.1624/S.913, to provide a crucial update to Medicare's reimbursement policy

for oral anti-cancer agents. Delayed by the Subcommittee on Health, this bill was reintroduced in March 2003

during the 108th Congress as the Access to Cancer Therapies Act of 2003, H.R.1288/S.1037, with strong support

in both the House and the Senate (8). This legislation would amend title XVIII of the Social Security Act to

ensure that seniors with cancer would have access to all anti-cancer drugs, especially newly manufactured

oral therapies.

Though the intent of the Access to Cancer Therapies Act of 2003 is clear, this legislation has been read twice

and referred to the Committee on Finance, indicating that some members of Congress may be concerned about

the bill's implementation costs. However, in order to properly evaluate the true costs of the bill, it is important

to note the relationship between the proposed legislation and the pending Medicare Prescription Drug

and Modernization Act of 2003, H.R.1/S.1. The Access to Cancer Therapies Act of 2003 would provide the

funding necessary to cover all anti-cancer drugs for Medicare recipients from 2004 until 2006 since the

Social Security Act would not reflect the changes provided by the Medicare Prescription Drug and Modernization Act

of 2003 until the year 2006. In 2006, the revised Social Security Act would contain Part D coverage, a

new prescription drug benefit that would provide seniors with many more therapy choices (9). This change

would ensure that anti-cancer drugs are as accessible as other prescription drugs. Hence, The Access to

Cancer Therapies Act of 2003, in combination with the Medicare Prescription Drug and Modernization Act of

2003, would provide cancer patients with greater treatment options.

The Congressional Budget Office does not evaluate the implementation costs of legislation until after it has

been passed into law. Nevertheless, Congresswoman Pryce's Office has received a verbal estimate from the

CBO, putting the two year cost of The Access to Cancer Therapies Act of 2003 at $400 million (10). Critics of

this legislation may propose that Congress simply wait until 2006, when the changes provided by the

Medicare Prescription Drug and Modernization Act of 2003 will be implemented, to save the government

from spending this money. However, it would be more economical to implement this legislation immediately,

thereby covering oral anti-cancer drugs for current patients rather than paying the high costs of routine doctor

visits associated with injectable cancer treatments. By extension, the proposed changes outlined in the Access

to Cancer Therapies Act of 2003, which would be incorporated into the Medicare Prescription Drug and

Modernization Act of 2003, would result in a reduced net outlay of government funds since future cancer

patients would rely more heavily on oral anti-cancer agents, resulting in fewer doctor visits. Clearly, this

reduction would be realized only if Congress passed both pieces of legislation in a timely manner.

Despite the economic savings generated through the implementation of these bills, opponents may still argue

that this type of commitment (related to the costs of implementing the Access to Cancer Therapies Act of 2003

and the Medicare Prescription Drug and Modernization Act of 2003) is simply too high. Though the

expanded coverage will cost the government money, the amount necessary is marginal when compared to the

costs associated with delaying the passage of the proposed legislation.

Besides cost-related concerns, some medical professionals are concerned that Medicare coverage of oral anti-

cancer drugs will lead to difficult compliance issues. These professionals worry that patients will either forget

or choose not to take their prescribed oral treatments, since physicians would not be administering these anti-

cancer drugs themselves. However, while this issue would be present independent of the proposed legislation

since Medicare currently covers oral drugs with an injectable equivalent, further concern can be reduced or

eliminated through patient education programs.


In order to ensure that Americans have access to the best available cancer treatments, the Congress of the

United States should adopt legislation that will amend Medicare Part B, such that this federal health

insurance program covers the costs of all oral anti-cancer treatments. Medicare Part B currently covers doctor

visits, outpatient hospital care, and other services and supplies that are medically necessary, but it does not

provide adequate coverage for most of the newer and more effective cancer treatments. The original

Medicare legislation, passed by Congress in 1965, did not include coverage for "self-administered drugs." In

1993, Congress treated cancer drugs differently when legislators extended Medicare coverage to oral drugs

with intravenous equivalents (11). However, only seven drugs meet these criteria (Table 3).

Table 2

Commonly Prescribed Cancer Drugs Covered by Medicare (Footnote 7)

Number of Retail
Generic Name Trade Name Number of Strength Retail Minimum Annual Cost
Capsules Price

Temozolomide Temodar 5 150 mg $718.43 $8,621.20

Etoposide VePesid 10 50 mg $517.81 $6,213.66

Capecitabine Xeloda 120 150 mg $468.24 $5,618.88

Busulfan Myleran 120 2 mg $257.68 $3,092.16

Cyclophosphamide Cytoxan 30 50 mg $114.39 $1.372.68

Melphalan Alkeran 20 2 mg $57.55 $690.56

Methotrexate Amethopterin 40 2.5 mg $23.73 $284.80

While 90-95% of therapies are currently covered by Medicare, as much as 25% of cancer treatments that will

soon be available in the form of oral drugs are not covered by the program (12). The proposed legislation will

enable more patients to take the most beneficial and cost-effective treatments in the comfort of their own homes.

For many cancer patients, especially those living in rural areas, oral anti-cancer drugs are absolutely necessary

to increase their chances of achieving remission.

Beyond the changes proposed by the Access to Cancer Therapies Act of 2003, Congress should consider the impact

of including financial incentives for pharmaceutical companies that reduce the costs of oral anti-cancer treatments

to the American public. By offering a combination of tax breaks and government grants for cancer-related

research and development, pharmaceutical companies will lower drug costs, thereby decreasing Medicare

coverage costs and increasing development of future cancer therapies. As biomedical breakthroughs continue

to provide more alternatives to intravenously administered drugs, it is imperative that oral therapies

remain accessible and affordable. This type of incentive would jointly benefit the pharmaceutical industry and

the patient population.


More than two million Medicare beneficiaries will be diagnosed with cancer in 2003, making the Medicare program

the single largest provider of cancer care in the United States. At least 43 percent of these patients will incur

$2,000 or more in outpatient drug costs and 82 percent will face other life-threatening chronic conditions such

as diabetes or heart disease at the same time (13). Without the proposed legislation, many of these patients will

be forced to not only pay the out-of-pocket costs for therapies not covered by the Medicare program, but will

also incur additional expenses to secure the medications needed to fight the other chronic conditions.

Due to the recent advancements in the diagnosis and treatment of cancer, many patients are more hopeful than

ever that they will achieve remission. But without Medicare coverage of these new oral anti-cancer

therapies, Americans who are unable to afford the new treatments will likely die. Put simply, Congress must

act immediately to ensure that current and future cancer patients have access to the best possible cancer

care alternatives.


1. I[Cost(Y1)+ Cost(Y2)+ . . . + Cost(Y10)]

2. Estimates for the direct and indirect costs of cancer grew from $171.6 billion in 2002 to $189.5 billion in 2003.

This change represents a 10.431% increase in the costs of cancer from 2002 to 2003. The flat-line forecast

estimate assumes an identical increase in these costs year over year for the next ten years.

3. Sources: AstraZeneca -; Novartis -; Celgene - http://


1. "Cancer Facts & Figures 2003." American Cancer Society. lx Cancer_Facts Figures_2003.asp.

2. "Direct and Indirect Economic Costs of Illness by Major Diagnosis." National Heart, Lung, and Blood Institute.

3. Ibid.

4. "Cancer Pharmacology and Treatment in Older Patients." National Institutes of Health.


5. "Medicare Coverage of Oral Anti-Cancer Agents." Leukemia & Lymphoma Society. 17068.

6. "Medicare Pays for More Services." Jefferson Regional Medical Center: Senior Scene.

7. "Cancer Screening Overview." National Cancer Institute.

8. "Access to Cancer Therapies Act of 2003." Thomas: U.S. Congress Online.

9. Reiher, Shiloh (Legislative Director for Congresswoman Deborah Pryce). Phone Interview. 9 Sept. 2003.

10. Ibid.

11. "Medicare Payment for Cancer Drugs Is Seen as Likely." Cancer Research and Treatment Fund.

12. "The Access to Cancer Therapies Act." U.S. House of Representatives.

13. "Cancer Patients and Medicare: A 'Welcome to Medicare' Check-up & A Rx Drugs Benefit." American Cancer

Society. lx_Cancer_Patients and Medicare.asp?sitearea=gi.


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