Insurance now pays most of the price of the costly drug William Addison, 7, Victoria Kuhn’s son, takes for uncontrollable bleeding.
The hemophilia drug that saves 7-year-old William Addison from uncontrolled bleeding costs $100,000 a year. His family’s insurance pays virtually all of it. But his mother, Victoria Kuhn, says she is terrified that the insurance company may start requiring patients to pay as much as a third of the cost of the drug. “I don’t know where we’d find $30,000,” said Ms. Kuhn, who lives in Falmouth, Me.
Spurred by patients and patient advocates like Ms. Kuhn, lawmakers in at least 20 states, from Maine to Hawaii, have introduced bills that would limit out-of-pocket payments by consumers for expensive drugs used to treat diseases like cancer,rheumatoid arthritis, multiple sclerosis and inherited disorders.
Pharmaceutical companies would also benefit from such legislation because high co-payments discourage patients from taking their medicines. The pharmaceutical giant Pfizer has been helping the legislative drive behind the scenes, even drafting some of the bills, according to legislators and patient advocates.
The bills aim to counter efforts by health plans to reduce the amount they pay for expensive medicines by making the patients pay a percentage, typically 20 to 35 percent, of the cost.
While some insurers have said the laws are unnecessary because of the federal health care law, backers say the state bills would supplement the federal law and take effect before 2014, when most of the federal law is to become operative. They say too much uncertainty remains about how the federal law will work and whether it will survive the challenge before the Supreme Court.
New York State passed the first law prohibiting such high patient payments in 2010. Vermont enacted a one-year moratorium that lasts until July 1. Maine’s governor, Paul LePage, signed a bill into law on Monday that would set a yearly cap on patient payments for such expensive drugs. Hearings on similar bills were held last month in Connecticut and Rhode Island. Delaware’s Health Care Commission just finished a study on the matter. And a bill that would cover all states was recently introduced in the House by David McKinley, a West Virginia Republican.
Insurance companies are pushing back, so some bills are dying, as in Washington State, or being watered down, as was the one in Maine. The insurers argue that reducing payments by users of the expensive drugs would raise premiums for everyone else.
“There’s no free dollars in the mix here,” Melvin N. Sorensen, a lobbyist for insurers, said at a hearing in the Washington State Senate in late January.
The controversy centers on so-called specialty drugs, a somewhat imprecise term that generally encompasses products that can cost tens or even hundreds of thousands of dollars a year.
Such drugs account for only 1 percent of total drug use, but 17 percent of drug spending by private insurers, according to IMS Health.
And costs are soaring as more such drugs come to market and as manufacturers raise prices. In 2010, spending on specialty drugs jumped 17.4 percent, compared with only 1.1 percent for other drugs, according to Medco Health Solutions, a pharmacy benefits manager that merged this month with Express Scripts.
Insurers typically encourage patients to use less expensive drugs by classifying products into tiers with successively higher co-payments, like $10, $30 and $50. Generic drugs are usually in the lowest tier, preferred brand-name drugs in the second tier and other brand-name drugs in the third.
But some insurers are now putting specialty drugs into a fourth tier of their own with extra high co-payments, or even co-insurance, in which the patient pays a percentage of the drug cost.
About 14 percent of workers with insurance are in plans that have four or more tiers, up from 7 percent in 2008, according to the Kaiser Family Foundation’s 2011 survey of benefits.
Patient advocates say that for some diseases, like multiple sclerosis, none of the drugs are inexpensive, making it impossible to avoid the high out-of-pocket costs unless people stop taking their medicine and endanger their health.
That discriminates against people with certain diseases, they say, and contravenes the whole idea of insurance, which is to help people pay for costly medical problems.
Mark Merritt, president of the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, said the real problem was the price of the drugs. The legislation, he said, was an effort by the pharmaceutical industry to “turn a pricing problem into a coverage issue.”
Sharon Treat, executive director of the National Legislative Association on Prescription Drug Prices, an organization of state lawmakers, said that was a drawback of the bills. Insulating patients from the cost of their drugs, she said, “gives the drug companies a free ride to charge as much as they want.”
Still, Ms. Treat, a Democratic legislator in Maine, supported the bill in her state. And patient advocates say that while insurance is regulated, there is little they can do about drug prices.
Drug companies often help patients with their co-payments, but patient advocates say those programs do not solve the entire problem.
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