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Published On October 2, 2015

POLICY

Defined: Oral Parity

Advocates rally around a new standard for cancer drug pricing. But will it have the desired effect?

Oral Parity [?ôr?l ?per?d?] n. The idea that insurance plans should equally reimburse oral and IV treatments for cancer.

Good cancer treatment therapy should not be so expensive that some patients are forced to let their prescriptions lapse. That’s the noble idea behind a recent flurry of so-called oral parity laws passed in 39 state legislatures in the U.S. The laws require health insurance companies to pay as much for the pricey pills that patients take at home as they do for intravenous drugs provided in a clinical setting.

Over the past decade, the average monthly cost for a specialty cancer drug has doubled; the price is now around $10,000 a month. Many of the newest treatments are oral therapies, which may cause fewer complications and have fewer side effects than intravenous drugs. But insurance companies cover oral therapies at only a fraction of the reimbursement rates that apply to IV drugs. Cancer patients may be hit with monthly bills of $2,500 or more for a pill, versus a $20 to $50 co-pay for a medical office visit for an IV infusion.  

And yet oral parity laws may not offer the most effective solution. In an editorial in JAMA Internal Medicine, published in September 2014, two physicians and one pharmacologist involved in the study of drug laws and ethics argued that the laws were shortsighted, as they merely “shift the responsibility” of the cost burden to insurers, sidestepping larger debates about the pricing and use of these expensive therapeutics. The laws that require parity between the treatments also mean that insurers could fulfill the letter of the law by charging more for intravenous drugs—a solution that the law’s advocates never intended.

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