On March 1, the deficit-budget mechanism known as sequestration took effect, triggering $85 billion in across-the-board cuts to most federal agencies over the remaining 7 months in fiscal year 2013. The total federal deficit reduction budget under the Budget Control Act of 2011 calls for $1.2 trillion over the next 8 years. And the reverberations of the effects of those cuts across medical care for patients and scientific research were immediately felt.
The National Institutes of Health (NIH), the world’s largest supporter of biomedical research,1 was originally slated to lose $1.55 billion out of its $31 billion budget as a result of sequestration, which translated to a decrease to the National Cancer Institute (NCI) budget of about $219 million. However, on March 26, President Obama signed into law the continuing budget resolution—the Consolidated and Further Continuing Appropriations Act, 2013—which funds the federal government through the end of September 2013, restoring a modest amount to NIH and NCI funding ($7 million and $10 million, respectively).
Reduced Grant Funding
The NIH and the NCI have not yet announced detailed plans for how they will manage the funding loss. However, in a February 1 letter to Senator Barbara Mikulski (D-MD), Secretary of Health and Human Services Kathleen Sebelius wrote that the cuts, “would delay progress on the prevention of debilitating chronic conditions that are also costly to society and on the development of more effective treatments for common and rare diseases affecting millions of Americans… NIH grant funding within states … will likely be reduced due to both reductions to existing grants and fewer new grants.”
Those reductions, according to an analysis of 2012 NIH data by United for Medical Research, a coalition of research institutions, patient advocates, and private industry, will result in a loss of 20,500 jobs in the life sciences sector and $3 billion in economic output.2
“The number of grants funded by the NIH has declined every year since 2004, and a lot of that funding goes to salaries for research staff and investigators. That will have an immediate impact on employment and local economies,” said ASCO President Sandra M. Swain, MD, FACP, Medical Director of the Washington Cancer Institute at MedStar Washington Hospital Center.
“Importantly,” she continued, “the sequester will discourage very young, bright, talented researchers from working in cancer research and making new discoveries. The budget cuts will also cause investigators to limit the scope of their clinical trials, because a lot of the research commitments of the NIH and the NCI go on for several years. It is likely that these agencies will have to delay the launch of new clinical trials, and this will directly impact the time it takes to develop new treatments.”
Consequences for Medicare Patients
Although the full impact of the funding reductions in basic research and clinical studies—and how they may impede future cancer breakthroughs—is still being analyzed, a more immediate concern is their impact on current cancer patients. On April 1, a 2% ($11.08 billion) cut to Medicare went into effect, which directly affects payments to hospitals and physicians and imposes new cuts on reimbursement for chemotherapy drugs. (Medicaid and the Veterans Health Administration are exempt from the reduction.)
Drugs for Medicare patients are usually covered under Medicare Part D, which is not affected by the Budget Control Act. But because chemotherapies must be administered by a physician, they are paid for under Part B and subject to the sequester cut. Moreover, since Medicare adds 6% to the average sales price of a chemotherapy drug to cover operational expenses (such as the cost of storing the agent, inventory, waste, and disposal), the effect of the 2% cut is a relative reduction of 28%, explained Ted Okon, Executive Director of the Community Oncology Alliance (COA).
“While the 2% cut for services seems relatively small, on the drug side it has a profound financial effect. So it is really not surprising that some community oncology practices won’t be able to treat their patients in their offices or clinics. Patients will have to be treated at the hospital instead,” said Mr. Okon.
And that is exactly what appears to be happening. According to a story published in The Washington Post,3 several cancer clinics nationwide have already limited the number of Medicare patients they accept, and others are planning to close satellite clinics in rural areas. In a joint statement released by ASCO, COA, the International Oncology Network/AmerisourceBergen, and the US Oncology Network, the organizations warned that unless the Centers for Medicare & Medicaid Services (CMS) modifies implementation of sequestration to exclude Part B drugs, the cuts “will actually jeopardize patient access to cancer care.”
The additional cuts to Medicare are also threatening the financial solvency of community oncology practices, potentially further limiting access to cancer care if practices have to shut down completely. In a national poll of community oncology physicians conducted by COA, 72% of respondents said that if the sequestration reductions remain in place, they may be forced to stop seeing new Medicare patients, not treat any Medicare patient without secondary insurance, or send Medicare patients elsewhere for treatment. The net effect, said Mr. Okon, is that many physicians will close their doors.
“When you talk to oncologists about the sequester craziness as well as the constant hurdles that are put in front of them by insurance companies and CMS in the treatment of cancer patients, many are saying, ‘I’m gone soon because I can’t continue to spend so much time fighting the system,’” said Mr. Okon.
According to Mr. Okon, rather than having the desired effect of shaving billions off the sky-high deficit, the indiscriminate sequester cuts will actually cost Medicare approximately $2 billion annually due to a shift to more expensive cancer care in the hospital setting. “Sequestration, which was put in place to cut federal spending without any thought of the consequences, makes absolutely no sense from an economic standpoint,” he added.
The Ripple Effect
While each of the 27 NIH institutes and centers face 5.1% in budget reductions, other federal agencies, including the Centers for Disease Control and Prevention (CDC), are slated for even steeper cuts of about 8%. For the CDC, which is still recovering from deep budget reductions in 2011, the funding loss will mean drastically curtailing the number of free HIV tests and immunizations for adults and children conducted by the CDC’s health department grantees, potentially imperiling the health of millions of Americans.
The continuing resolution passed in March restored $74 million to the U.S. Food and Drug Administration (FDA) budget of about $2.38 billion in fiscal year 2013, which was less than the $2.5 billion in government funding in 2012. Nevertheless, the reduction will seriously undermine the agency’s mission to review new cancer treatments while maintaining stringent safety and efficacy standards, according to Dr. Swain (see “How Is Sequestration Affecting Health Care?,” on page 24.)
“In the end, it is the patient with cancer fighting for his or her life who is going to feel the most profound impact from these budget reductions in clinical cancer research, slowdowns in FDA drug reviews, and physician reimbursement,” said Dr. Swain.
Taking Action
To stay current on the steps that ASCO is taking to make Congress and the Obama Administration aware of how sequestration is impacting access to cancer care and limiting progress in medical research, and for information on how ASCO members can get involved in efforts to repeal the 2% cut to Medicare reimbursement and reinstate federal funding to the NIH, visit the ASCO in Action website (ASCOaction.ASCO.org). ■
Disclosure: Dr. Swain and Mr. Okon reported no potential conflicts of interest.
References
1. National Institutes of Health: Impact of NIH research. Available at nih.gov/about/impact.
2. United for Medical Research: Looming sequestration cuts to medical research threaten more than 20,000 jobs. Available at unitedformedicalresearch.com. Posted February 6, 2013.
3. Kliff S: Cancer clinics are turning away thousands of Medicare patients. Blame the sequester. Washington Post. Available at washingtonpost.com. Posted April 3, 2013.
