Short Takes On News & Events

PhRMA, Advocates: Specialty Drug Costs For Patients Too High

By Lisa Gillespie

June 12th, 2014, 3:56 PM

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.

Photo by Erin DeMay/For KHN

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.

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.

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.

11 Responses to “PhRMA, Advocates: Specialty Drug Costs For Patients Too High”

  1. april says:

    This article is more evidence that, just like every other industrialized nation on earth, America’s free market healthcare system will soon be history. What good is free market healthcare if every member of the industry cooperates to provide affordable healthcare to consumers and one member always refuses? In my opinion, the drug makers are operating strictly on a profit motive and care very little about being part of a society that puts the health of the consumer as a top priority. In my opinion, the drug industry thrives on perpetuating sickness and views wellness as something that hurts their profit margin. For this reason, and for many other reasons related to the evils of a free market approach to healthcare, other industrialized nations have (long ago) rejected free market healthcare and adopted some form of government run socialized healthcare system. America is mired in a hodge-podge of failed free market healthcare ideas all relating to the insistence of maintaining the profits of private healthcare corporations. It has been proven, over and over, that private corporations have one single-minded motive. Profits! In the private healthcare model, consumers will always hold a lesser priority when compared to making money to reward corporate executives and stockholders.

  2. I am growing tired of the line that says “private corporations have one single-minded motive – profits! Duh!!! What motivates an entrepreneur to want to start a business? To spend years and years developing an idea and then a prototype and then shopping that prototype to people that might be able to help fund its production and then to produce a product – only to give it away for free??? There are some people that are independently wealthy and can come up with the idea, develop the product, fund it themselves and then give it away. But they didn’t become wealthy using that strategy in the first place. Somebody had to make some money first. What is wrong with capitalism? Would you rather decide how hard you want to work to make whatever income you can? Or do you want the government to tell you what you are worth and force you into a career or profession because they need people to fill needs? Why should a government tell you what you are worth? What is wrong with rewarding people for their efforts and letting people who are willing to study longer or work harder to reap the rewards of their efforts? I just don’t get the mindset that says rewarding hard work is wrong or bad or evil; or rewarding risk is wrong! Go live in a socialist country if you think the American Dream is evil! Go live in a communist country if you trust your government to make all life decisions for you and you believe they have your best interests at heart! If you truly believe either of those scenarios, our educational system has failed you!

  3. Rocky says:

    YES HELP!!!! I stopped my order on my live saving HIV meds. My co-pay was $30.00 a bottle 2times a month, ($120.00 monthly at this stage) by surprise they jumped last week for co-pay $150.00 a bottle 2 times a month ($600.00 out of pocket at this stage)! Thanks to the BIG boys at the top! I hope I and all others this sick, stay well and healthy , as they debate this horror story to the death (our deaths ) over the year or next! Greed within the USA even with the sick, old and dying ! Nice job and not by surprise ! Folks dig into what the pill makers make off us sick per month , per year! shameful sins! Other countries adopted care for their people decades ago. Look at Canada , Brazil just for starters! Is their a lawyer in the house?

  4. Killroy71 says:

    Actually, they can’t make it up on volume in the international market, because other countries impose controls on drug costs, unlike the U.S. So, its us that’s making the money for drug companies while other countries get all the benefit with a fraction of the cost. We have a choice: Free market and costly drugs including many duplicates, or free market and cost controls.

    This is a field with an 18-20% PROFIT margin, what’s left over after they pay the overhead. How about for starters we stop letting them advertise? Put those dollars toward subsidizing the cost of the highest-price – and most valuable (not always the same thing) – drugs.

  5. MHG says:

    This trend is horrifying. It is disingenuous to tout mandatory insurance coverage for those with preexisitng conditions as health care reform’s central panacea when those with debilitating or life threateniong illnesses treatable only with prohibitively expensive medications (for example, MS patients who can only be succesfully treated with Tysabri infusions for which alllowables can range up to $90,000 a year) can lawfully be stuck with out-of-pocket exposure running tens of thousands per year. Permitting plans to shift these costs back to the most vulnerble consumers not only undermines the promise of the Affordable Care Act, but allows tiered drug pricing to be used as a thinly veiled mechanism for discouraging enrollment of sicker patients — a practice that under Medicare or Medicaid would be grounds for program expulsion or worse. Either these specialty drug costs need to be realisitcally capped and spread (like the costs of special education or home and community based care), and these disturbing tiering practices barred by regulation, or the (disfunctional) Congress needs exact price concessions from big pharma. What should not happen is perpetuatiing a system where our firends, family and neighbors struggling with debilitating chronic conditions can be denied medcial care except for a price that most Americans cannot even begin to afford.

  6. Mark NYC says:

    The prescription drug industry is one of THE most profitable in the world, even AFTER they pay for their much-vaunted R&D costs (much is which often includes other non-direct costs such as marketing research.) Two possible solutions to the dilemma described in this article: 1) government steps in to rein-in the outrageous costs that greedy manufacturers charge; or 2) government steps in to rein-in the co-pays the greedy insurers charge or the never-ending tiers they create. Whichever action is taken needs to go across ALL markets, not just the new QHPs created under the ACA.

  7. Sara Huff says:

    I agree that our market based system will kill itself , at some point, by simply overcharging. And that goes for both the drug companies & the insurance companies.
    As an example: I am on multiple drugs. All of them of common & have been around a long time. (ie: coumadin, Flovent inhalor, etc. ) I do not take any special drug. But, most of what I take is now in the top tier as designated by the insurance co. Some of these drugs are generic. Some Brand, because I could not be stabilized on the generic . (I tried all.)
    I am about to go into the dough nut hole as of June. 2014. (2013 no drug changes, I went into it at the end of August.)
    What is different? Nothing.
    Of modest means, I will not be able to afford all of my drugs until next year. So I will refuse to fill some. And some, I will spread out. Just so I can afford the ones I have to have: Like Flovent (to breath better) & coumadin , to afford blood clots.)

  8. Randy says:

    Drug costs too high? The answer is simple. If you are sick, go to the hospital emergency room! By law, they can’t refuse you treatment. Until Congress comes up with a better way to do healthcare, the hospital emergency room is your best bet if you are broke and uninsured. If you put on a good show, you’ll get admitted. Fact is, it’s they’re game. It’s they’re rules. All you need to do is play they’re game by they’re rules.

  9. Randy says:

    They’re? Try their! Darn spell checker is broken again!

  10. harry says:

    “What motivates an entrepreneur to want to start a business? To spend years and years developing an idea and then a prototype and then shopping that prototype to people that might be able to help fund its production and then to produce a product – only to give it away for free???”

    Huh? What? That kind of thinking may work when you are selling mousetraps but it’s not such a great idea when it comes to withholding life saving medicines from dying people just because they are poor and they can’t pay. In the 1950′s, I’m wondering if Jonas Salk ever lost sleep worried about giving away his polio vaccine research for free? In my opinion, Salk probably never spent a second thinking that such compassion might hurt profit margins. Haven’t some people evolved out of the Cro-Magnon stage yet? In a civilized society, human beings should never allow fellow human beings to die if they can help it. That includes corporations! I would sooner not see new medicines come on the market if it means picking winners and losers and the losers ultimately die as a result. Only Neanderthals think like that. A century from now, anthropologists will be scratching their heads as they wonder how the culture of the early 21st century put corporate health ahead of human health. If capitalism has failed, it’s because capitalism encourages private companies to have absolutely no compassion and to think “exclusively” about mammon. Sadly, most corporations are without a soul. That includes today’s PhRMA corporations. In my opinion, I doubt very much if Jonas Salk would ever be hired by a 21st century PhRMA company.

  11. Ty says:

    The Citizens United Supreme Court case gave corporations the right to spend unlimited amounts on political groups, campaigns and candidates. So, SCOTUS apparently thinks corporations are people too, right? Now, corporations can finance and influence political campaigns the exact same way as human beings based upon the 1st Amendment, right? How insane is that? Harry is spot on! The thing that separates corporations (non-humans) from flesh and blood persons is that persons have a soul. Corporations have no soul. Their decisions are made by a corporate board and are based exclusively on profits and losses. There is no compassion involved regarding how their decisions affect the social good of a society. In my opinion, PhRMA is cold and hard an lacking in compassion. As we see in this article, corporations have one god. Money!