Tough times: Medicare Patients to choose between medical bill or mortgage installment

Each month, William Piorun has to choose between paying his mortgage or buying medicine that keeps his pituitary-gland tumor in check.
This month and last, the 65-year-old Medicare patient paid the mortgage, and stopped taking a drug that his doctor says he needs to ward off the risk of premature death.
Once, hard choices like these were commonly forced only on those without health insurance. Now more patients who have insurance or Medicare must confront them as drug bills for those with chronic and life-threatening decisions soar.
Earlier this year, Piorun faced out-of-pocket bills of $1,000 a month for medicines. That -- together with $2,000 in monthly mortgage and home-equity payments, other bills and living expenses -- was too much for him.
“The average worker can’t pay these prices,” said the self-employed auto-parts supplier, who makes $45,000 a year. He said he was “appalled” when he discovered his medicines cost $20,000 a month, including the share that Medicare picks up.
“You know your life is going to be shortened if you don’t take your medicines,” he said. “What do you do? Do you cut down on your food, your electricity, or your mortgage?”

Photographer: Robert Langreth /Bloomberg
William Piorun, a 65-year-old self-employed car parts supplier, stands with this wife... Read More

More than 300,000 Americans are now taking combinations of prescription drugs that cost $50,000 or more a year, based on Medicare data and estimates by Milliman Inc., a Seattle-based actuarial firm. Many new cancer treatments cost $10,000 a month or more.

Cost Shifting

Prices like that have prompted one in every six employer-based plans to make patients pay a percentage share, typically about 20 percent, of the bill for high-cost specialty drugs used to treat serious conditions, according to a survey by the Pharmacy Benefit Management Institute. Meanwhile, the specialty drugs have made the cost-sharing provisions in Medicare more expensive for the elderly.
“More and more patients are finding they can’t afford these out-of-pocket costs,” said Daniel Klein, chief executive officer of the Patient Access Network Foundation, a Washington nonprofit that provides financial aid to pay drug bills. “It is a growing issue because of the way insurance companies now are shifting costs.”
“Now you have people who are insured but can’t afford the drug,” said Richard Evans, an analyst at SSR LLC in StamfordConnecticut.
Under the federal Medicare drug plan for the elderly, 85,000 Americans received prescriptions costing more than $50,000 in 2012, the latest year of federal data.

Abnormal Growth

That’s more than triple the number with that cost profile in 2009. About 200,000 people in commercial plans generate annual drug costs of $50,000 and up, and tens of thousands more fit that description in the Medicaid program for the poor or in the Veterans Affairs system, according to Bruce Pyenson, a consulting actuary at Milliman.
Piorun’s tumor-engendered disease, acromegaly, results in excess hormones that cause abnormal growth of bone and other tissues. He needs high doses of two injected drugs to help keep the hormones under control. One, Sandostatin LAR from Novartis AG (NOVN), has cost him and his plan $5,773 per month, according to his Medicare benefit records. The other, Pfizer Inc. (PFE)’s Somavert, costs $13,341 a month. His share of the cost of the two treatments has been $956 monthly.

Aid Exhausted

Pfizer prices drugs based on their value to patients and to the health-care system, Steven Danehy, a spokesman, said in an e-mail. The company offers co-pay assistance directly to many patients, and gave $7.1 million last year to non-profits for patient financial aid. It would like to offer co-pay assistance to Medicare patients, but can’t under federal guidelines, Danehy said.
At Novartis, pricing takes into account patient value, development costs and market conditions, according to Eric Althoff, a spokesman. Only 8 percent of acromegaly patients need two doses a month of Sandostatin LAR, as Piorun does, he said. The company provided $542 million of free product to more than 86,000 patients last year.