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Insurance Industry, Consumers Join Forces to Fight High Prices of Specialty Drugs

Crisis makes for strange bed fellows – insurance companies, consumer advocates; cost sharing for some with chronic diseases like cancer is over 40 percent in exchange plans, puts pressure on Medicare drug plans

By Lisa Gillespie, Kaiser Health News

June 13, 2014 - Here’s the next salvo in the back and forth between insurers and the drug industry over drug prices: the Pharmaceutical Research and Manufacturers of America are pushing the Department of Health and Human Services to take action to protect consumers who have gained insurance via the health law’s online marketplaces from high, out-of-pocket costs for specialty drugs.

Specialty drugs are most often prescribed for complex, chronic and often costly health conditions like rheumatoid arthritis and hepatitis C that require continuous monitoring by a health care provider.

At a June 11 press event, PhRMA, the drug industry’s trade association, and five patient advocacy groups, ranging from the Colon Cancer Alliance to the Immune Deficiency Foundation, pointed to an analysis by the consulting firm Avalere Health — commissioned by PhRMA — as reason for worry regarding these medicines.

Avalere Study Did Not Include Medicare Part D Drug Plans; May Impact Costs

The analysis by Avalere Health found that the vast majority of plans in the Health Insurance Exchanges require relatively high cost sharing for all medicines in at least one class. The study did not include Medicare Part D plans but did include Medicaid managed care plans - See more at Avalere study.

But, can increase costs in Medicare, says the Campaign for Sustainable Rx Pricing:

“The issue of higher cost drugs, especially “specialty drugs”, is only going to become more critical to deal with in the coming years. One estimate notes that by 2020, spending on specialty drugs will quadruple from $87 billion to more than $400 billion. This continued growth in spending will put significant upward pressure on premiums in the private marketplace as well as in public programs like Medicare.”

The Avalere study examined 123 formularies from silver-level exchange plans — the benchmark plan that will generally pay 70 percent of covered medical expenses, leaving the consumer responsible for 30 percent  – and found that a fifth of them required cost sharing of 40 percent or more for certain classes of specialty drugs used to treat HIV/AIDS, multiple sclerosis, bipolar disorder, cancer and other illnesses.

Avalere also concluded that 60 percent of silver plan formularies placed all medications for multiple sclerosis, Crohn’s disease, cancer and other illnesses in the plan’s highest formulary tier. That means patients who need these medicines would face the highest coinsurance percentage.

PhRMA President John Castellani called on HHS to limit insurers’ ability to structure drug coverage in a way that subjects patients with these types of chronic and severe illnesses from these type of high out-of-pocket costs.

“Placing all medicines in the highest cost-sharing tier makes the best treatments for patient outcomes and overall value the most expensive and undermines the goal of the ACA. Cost to the patient is determined by the insurance market,” Castellani said during the event.

 

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Insurers are currently submitting exchange premium rates for 2015, and Castellani said HHS could take action before those rates are finalized.

Others at the press event, including Carl Schmid, deputy executive director at the AIDS Institute, said HHS could redefine essential health benefits to stipulate that plans not include high cost-sharing for specialty prescription drugs. Silver-level plans mostly have an average of $70 for tier 3 drugs, and $270 for tier 4, according to a presentation to a recent meeting of the International Myeloma Foundation, one of the groups at the event.

“Certain plans are singling out medications — it’s not all plans or the majority — and those plans are fooling patients by putting every single drug in the highest tier,” Schmid said.

The groups, however, did not address issues related to the drugs’ actual price tags — only coverage costs to patients. But America’s Health Insurance Plans, the trade group for insurers, said in a blog post that PhMRA is trying to distract attention from drug pricing.

Meanwhile, these recent comments come amid growing debate on the issue.

The National Coalition on Health Care launched in May the Campaign for Sustainable Rx Pricing, which includes more than 80 organizations that represent employers, disease advocacy groups, providers and consumers.

John Rother, president and CEO of the NCHC, said though the concern about patients paying large coinsurance percentages is a valid one, it’s not the real problem — instead it is the overall cost of specialty drugs.

“Putting a limit on coinsurance probably would require legislative action, whereas reducing price is something companies could do tomorrow,” Rother told Kaiser Health News. “All we’re arguing about here is whether you pay out of one pocket or another. The real problem is the total price they have to pay. It’s not a poor industry — they can make it up on volume particular in the international market.”

AARP, which is a member of NCHC, also said if insurers were to eat the cost of specialty drugs without some amount of cost sharing, premiums would rise.

“Talking about high levels of cost-sharing without talking about the high levels of costs is disingenuous — they wouldn’t be so high if the prices of drugs weren’t so high,” said Leigh Purvis, senior strategic policy advisor at AARP’s Public Policy Institute.

This entry was posted Thursday, June 12th, 2014 at 3:56 pm. on Kaiser Health News. Go to original posting for comments and updates

Some of this information is reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.

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