Your Money or Your Life? Will a $2,000 Drug Cap Save Lives?

Over 50 million Americans are enrolled in the Medicare Part D prescription drug program. As of January 1, 2025, they will benefit from a $2,000 drug cap on out-of-pocket medication costs. This applies only to products prescribed by a physician. This is part of the IRA (Inflation Reduction Act). It could save a lot of people from bankruptcy, especially if they suffer from cancer or some other expensive health condition. For these older adults, drug companies may no longer get to ask: YOUR MONEY OR YOUR LIFE?

What Happened to the Pharmaceutical Industry?

In 1987, the Food and Drug Administration approved the first drug against AIDS. AZT (zidovudine) was a breakthrough antiviral medication against HIV (human immunodeficiency virus).

The Burroughs Wellcome (BW) company that developed AZT announced the cost of the new medication at around $10,000 a year. That made it the most expensive drug ever sold in the United States at that time.

Protests over the price of this medication were intense. AIDS advocates formed an organization called ACT UP, and protestors took to the streets. They invaded BW headquarters in North Carolina and the New York Stock Exchange. There was also a national boycott of popular Burroughs Wellcome OTC products such as Actifed and Sudafed.

The attention prompted a Congressional inquiry which was followed by a substantial price reduction of AZT to $8,000 annually. That was still considered an exorbitant price for a medication, though.

It was around that time that we met a secret AIDS activist who was highly placed in the pharmaceutical industry. He told us about a meeting he had attended earlier with drug company executives.

Someone asked these industry leaders what they would charge for a hypothetical cure for cancer. The answer: they would have to give it away. These PhRMA thought leaders feared that the American public would not stand for price gouging on a life-saving breakthrough medicine.

The Astronomical Cost of Cancer Drugs:

Fast forward to the 21st century. Pharmaceutical companies are making tens of billions of dollars a year on cancer treatments. An article in the New England Journal of Medicine on June 9, 2022 was titled:

“Your Money or Your Life — 

The High Cost of Cancer Drugs under Medicare Part D“

Prior to the 21st century, cancer research had produced quite a few interesting compounds. Some of them could extend a desperate patient’s life for months or occasionally even longer. In the last two decades, though, the advances have been extraordinary. Immunotherapy has made a huge difference in outcomes. The only problem with cancer breakthroughs is the price.

A Reader Shared This Story About Costly Cancer Drugs:

In 2016 we received this painful message. In those days there was no such thing as a $2,000 drug cap:

Q. I could only gasp when I saw the Medicare summary after I took Opdivo for metastatic melanoma. For each infusion the charge from the hospital pharmacy was over $13,000, plus $800 for administration.

To make matters worse, it did not work. Now I am scheduled to get Keytruda, if my insurance will cover it.

Opdivo and Keytruda for Metastatic Melanoma:

We responded this way:

A. Immunotherapy for cancer is unbelievably expensive. Both nivolumab (Opdivo) and pembrolizumab (Keytruda) are considered important advances in the treatment of metastatic melanoma. FDA has also approved them to treat many other cancers, including certain lung cancers, some lymphomas and colorectal cancers, and esophageal cancer. To learn more, you can read about these medications here, here and here. These are incredibly costly cancer drugs.

The original estimate on both these drugs was that they would cost in the range of $12,500 a month. More than 100 leading oncologists have called such prices unsustainable. (You can listen to an NPR interview with one of them, Ayalew Tefferi, MD, of the Mayo Clinic in Rochester, MN.)

Fast Forward to June 9, 2022 — Still No Drug Cap!

Dr. Stacie Dusetzina is affiliated with the Department of Health Policy at Vanderbilt University School of Medicine and the Vanderbilt-Ingram Cancer Center.

She noted in the New England Journal of Medicine that:

“Undergoing cancer treatment is physically, emotionally, and financially burdensome. For people whose treatment regimens include orally administered anticancer drugs, the financial burden associated with these medications can be overwhelming.”

The author goes on to describe the cost of a breast cancer drug called Ibrance (palbociclib). This medication:

“…would cost approximately $3,100 out of pocket for the first fill and more than $10,500 for 1 year of use for a Medicare Part D beneficiary who doesn’t qualify for low-income subsidies.”

Dr. Dusetzina detailed other treatments for costly cancer drugs:

“Because most beneficiaries would reach Medicare’s catastrophic-coverage phase — in which coinsurance is 5% — the first time they fill their prescription, out-of-pocket costs for subsequent fills would range from $600 to $1,000 for the remainder of the year. Assuming beneficiaries filled prescriptions for these drugs every month, they would spend between $10,000 and $15,000 out of pocket for 1 year of treatment with a single drug.”

Keep in mind that these people carry insurance through Medicare! What happens to people without such insurance?

Uninsured Patients? The List Price of Costly Cancer Drugs!

An article in JAMA (June 7, 2022) describes “Trends in Prescription Drug Launch Prices, 2008-2021.”

They relied upon “…a database with quarterly wholesale acquisition cost (ie, list prices) and estimated net prices after manufacturer discounts for more than 1230 brand-name products.”

Hold onto your hat! Here is what they found for costly cancer drugs:

“…oncology drugs (median, $155, 091 [$109, 832-$233,916] per year).”

Cancer Drugs Are Not the Only Problem:

Pharmaceutical manufacturers have also been charging unbelievable amounts for treating a number of rare diseases. Many of these products are called “orphan drugs.” That is because they fit in a particular FDA category of medicines.

Congress passed the Orphan Drug Act in 1983. Under this plan, drug companies would develop medications for which they probably would lose money. The FDA referred to such products as:

“significant drugs of limited commercial value.”

You can read about the history and perversion of the Orphan Drug Act at this link.

The researchers writing in JAMA described how drug prices have skyrocketed over the years:

“Median launch prices increased from $2,115 per year ($928-$17, 866) per year in 2008 to $180, 007 ($20, 236-409 732) per year in 2021. The proportion of drugs priced at $150, 000 per year or more was 9% (18/197) in 2008-2013 and 47% (42/89) in 2020-2021.”

What Happens When Drug Companies Kill Their Golden Goose?

There is growing recognition that new drug treatments will drive patients, and probably insurance companies, to the brink of bankruptcy or over it. Although cancer drugs are prominent among therapies that cost more than anyone can really afford, there are other medications that break the bank as well. Medicines that cure hepatitis C have been criticized for their pricing. 60 Minutes even did an expose on costly cancer drugs.

Some Orphan Drugs That May Not Have a $2,000 Drug Cap:

We started this article about high drug prices by describing the $2,000 drug cap on out-of-pocket medication costs for Part D Medicare participants. Many patients are not old enough to qualify for Medicare.

According to www.Drugs.com, the cost of the stem cell gene therapy Lenmeldy for metachromatic leukodystrophy is over $4 million for a single treatment. Granted, children with this potentially fatal metabolic condition only need one treatment. But very few parents will be able to come up with that kind of money out of pocket even to save their child’s life or preserve their ability to walk.

Another one-time gene therapy is Zynteglo for the blood disorder beta-thalassemia. Without this $2.8 million infusion, patients need red blood cell infusions every month, or sometimes more often.

The article in www.Drugs.com describes Danyelza, used to treat neuroblastoma in the bone or bone marrow. It is usually aggressive and affects babies and young children most frequently. Oncologists give three infusions in one week every month, at a cost that exceeds $1 million per year.

Speaking of cancer, one of the latest and most impressive therapies for many cancers is CAR-T (chimeric antigen receptor T-cell therapy). A full course of treatment could run between $500,000 and $1 million for hospitalized patients, with average costs topping $400,000 for outpatients (Transplantation and Cellular Therapy, Feb. 2024).

Even people who have decent health insurance may find that their copayments for drugs like these break the bank. And sometimes insurance companies deny access to pricey treatments.

Remember how outraged Americans were at the cost of AZT for AIDS? A price tag of $10,000 annually seemed to many like highway robbery. Today, no one appears to be protesting the cost of cancer treatments of $500,000 or more.

Why Should You Care?

Many people think that if they don’t need expensive drugs for cancer, HIV, hepatitis, Alzheimer’s disease or rare conditions such as Gaucher disease or Duchenne muscular dystrophy (a single IV infusion can top $3 million), this is not their problem.

Au contraire! We all end up paying for costly cancer drugs and other “orphan” medicines. That’s because our premiums for Medicare and private health insurance will keep climbing and climbing. The costs will eventually be spread out to everyone.

A $2,000 Drug Cap Is a First Step:

The $2,000 drug cap will make a huge difference for many people. The American Society for Clinical Oncology estimates that it will save the average prostate cancer patient around $8,000 annually. In addition, the legislation allows Medicare to negotiate prices for certain medications.

Up until now, drug companies have set their own prices in the US. They had to negotiate prices with the healthcare agencies of most other countries. As a result, Americans have been paying far more for their treatments than people elsewhere in the world.

Even if there is a $2,000 drug cap for people with Part D Medicare coverage, that does not mean the price of expensive medications will be controlled. The drug companies are not reducing the price on their medicines. That means that everyone will eventually be picking up the tab for expensive drugs.

Negotiated Prices Can Make A Difference:

The Inflation Reduction Act (IRA) was signed into law on Aug. 16, 2022. Part of that legislation included price negotiations with pharmaceutical companies. The first 10 drugs that experienced price reductions included Januvia, Eliquis, Jardiance, Xarelto, Farxiga, Entresto, Enbrel, Imbruvica and Stelara. You can read about how much money will be saved on these medications at this link.

Do you think it’s time to allow the federal government to negotiate more prices with big drug companies? That is how most other countries control the prices of costly cancer drugs and other new medicines.

Congress takes a lot of money from the pharmaceutical industry, though. We doubt that there will be any changes unless we convince our representatives in Congress and the Senate to make some changes in how we manage prices going forward.

What Is Your Experience?

Have you been treated with a very expensive medication? Or have you had to forego treatment because you could not afford it? Tell us your story below in the comments.

You may wish to read our article titled:

“Will High Drug Prices Soon Destroy Healthcare?”

We ask the question: What will we do if a drug company actually develops a really effective medicine against Alzheimer’s disease? We’re talking about something that would keep people out of nursing homes and allow them to resume a normal life! Given the current trends, the cost could exceed $600 billion annually, given all the people with Alzheimer’s disease. That is not sustainable!

Asking a Favor:

If you think this article is worth sharing, please send it to friends or family members. That’s super easy! Just scroll to the top of the page and click on one of the icons for email, Facebook, X or Bluesky (the butterfly logo). For reasons that you might imagine, Google has made it almost impossible to find our articles unless you search for www.PeoplesPharmacy.com specifically. That means our information has become virtually invisible on the web, except for you who are aware or our work. One way to counteract that would be to encourage your contacts to sign up for our free newsletter. Here is a link. Thank you for supporting our independent voice.