Tuesday, August 27, 2013

Specialty Drug Users May Feel Co-pay Pain

The Affordable Care Act might not make care much more affordable for some Californians who need expensive prescription drugs to treat chronic illnesses or just to stay alive.

The health plans to be marketed in the California insurance exchange, established under President Barack Obama's health reform law, will follow the lead of Medicare and a growing number of commercial insurers by charging co-insurance payments ranging from 10 to 30 percent on a number of high-cost "specialty" drugs. These include medications for treating rheumatoid arthritis, multiple sclerosis, hepatitis C, breast cancer, leukemia and other conditions.

Advocates for the sick are unhappy that Covered California has decided to adopt this model, which imposes much higher costs on many patients than more traditional policies that offer the drugs for a flat co-payment.

"It's disappointing that the state is in a way institutionalizing what we believe is a practice that harms those who are in the greatest medical need," says Lisa Nelson, director of state government affairs for the Leukemia and Lymphoma Society.

Whether sick patients would be financially worse off in the exchange depends on their current insurance coverage -- and on which of the four basic exchange plans they choose, since each has different premiums, co-insurance levels and annual caps on patient out-of-pocket spending.




Covered California's spokesman, Dana Howard, said the exchange officials had to balance several important factors, and in the end they believed the decisions they made were "the most feasible way to provide health plans that are affordable both in terms of premiums and cost sharing." He noted that lower-income people, who would be most affected by the high drug costs, are also the ones who will benefit the most from subsidies intended to reduce their premiums and out-of-pocket costs.

Sonja Radovic, a 45-year-old working mother of two who was diagnosed with breast cancer five years ago, would not qualify for any of those subsidies. She said her expense for Feraston, a hormonal drug, could skyrocket by as much as 10 times should she ever need to buy coverage through the exchange -- from the current $860 a year to $8,600 under the plan with the lowest premium.

She is confident that her employer, a small business with 11 employees, will keep its current coverage, though that could conceivably change should the economy sour again. "What part of 'Affordable' are they not understanding?" Radovic asks. "And that's just on one drug. What about other even more expensive specialty drugs?"

Feraston is far from the most expensive medication. The average cost of treating a variety of cancers with one of five specialty drugs is $3,682 per month, or $44,184 a year, according to Express Scripts, the giant St. Louis-based pharmacy benefit-management company. For multiple sclerosis, the average cost is $3,584 per month, and for hepatitis C the monthly price tag is $3,284.

Kalydeco, the only effective therapy for cystic fibrosis, can carry a price tag of up to $180,000 per year, says Suzanne J. Tschida, a vice president at Optum RX, a Minnesota-based pharmacy benefit-management company whose main operations are in Irvine.

In 2012, specialty drugs accounted for 24.5 percent of all U.S. prescription drug spending, even though less than 2 percent of the population is affected by the related illnesses, according to Express Scripts.

Still, if you are one of the unlucky 2 percent and you're paying 20 or 30 percent of even the somewhat-less-stratospherically-priced drugs, it could quickly overwhelm your household budget. For plans in Covered California, the amount patients must pay out of their own pockets each year before their insurers will cover 100 percent of their medical expenses is as high as $6,350 for individual plans and $12,700 for family plans.

"I think it shows that these benefits designs essentially discriminate against people who have these serious illnesses," says Dan Mendelson, CEO of Avalere Health Inc., a Washington, D.C.-based medical data company.

An Avalere study showed that when monthly out-of-pocket payments hit $100, 10 percent of patients stopped filling their prescriptions. At $500 a month, 25 percent stopped. That can lead to sicker patients and an even greater financial burden on the health care system down the line, many observers argue.

Not everybody buying coverage in the exchange will be affected equally. In Covered California's second least-expensive plan, individuals with incomes between $15,856 and $22,980 will face much lower co-insurance payments, reduced or no deductibles and an out-of-pocket maximum of just $2,250. Howard acknowledges that it might still be "a strain" for those people to cope with their medical expenses, but "we think this $2,250 annual limit on their payments will help many avoid bankruptcy."

Mendelson notes that Covered California did not invent this type of health-plan design. It is merely following a trend that started with Medicare's Part D drug benefit and has been adopted in recent years by many commercial insurers. The proportion of private commercial plans that make enrollees pay a percentage of specialty drug costs rather than a flat dollar co-payment rose from 14 percent in 2008 to 34 percent last year, according to Avalere.

"In some ways, the implementation (of such plans) by the exchange makes the affordability of specialty drugs a more visible problem, but it's not introducing a new problem for the people who need these drugs," says Ha Tu, a senior researcher at the Center for Studying Health System Change, a Washington, D.C.-based think tank.

Joan W. Clements, a 70-year-old Costa Mesa resident who was diagnosed with chronic myeloid leukemia nearly 12 years ago, knows that as well as anybody. She has been kept alive for more than a decade by Gleevec, a revolutionary drug that has turned her disease from fatal to manageable. Over the past decade, Clements has seen the total cost of her Gleevec nearly double, from $6,000 to $11,000 a month.

With a 30 percent co-insurance payment under her Medicare drug plan, and a gap in coverage known as the "donut hole," Clements' out-of-pocket payments for the drug would be unaffordable on the modest Social Security income that she and her husband, Jerry, receive each month. Luckily for her, Novartis, which manufactures Gleevec, provides a subsidy to cover the amount that Medicare doesn't. Otherwise, says Clements, "I would be dead."

Nelson, of the Leukemia and Lymphoma Society, says California could have chosen differently. She notes that the insurance exchange in New York limits patient liability on specialty drugs to a flat dollar co-payment that tops out at $70 per prescription.

Tu argues that such a generous benefit will lead to a spike in premiums that will deter the young and the healthy from buying insurance and create an ever-sicker pool of insured people whose medical needs will only reinforce the escalating cost of insurance. In California, that is unlikely to happen, she says, though the high co-insurance payments are "a horrible thing for people who are sick."

Why some drugs cost so much...

By 2019 or 2020, specialty medications are expected to account for half of all drug spending. Managing their fast-rising costs is key to keeping health insurance premiums affordable for all. 

Sources:  Express Scripts; Ha Tu, Center for Studying Health System Change; Avalere Health Inc.

Contact the writer: 714-796-2440 or bwolfson@ocregister.com

Thursday, August 22, 2013

States Scramble to Drive Down Medicaid Drug Costs

A little-known provision of the 2010 health care law has states and their governors scrambling to take advantage of potential savings in how states distribute medication to Medicaid patients.

The Affordable Care Act (ACA) allows states to receive drug rebates even if they move their Medicaid prescription benefit to managed-care organizations. The federal government has also asked states to fix the wide disparities in dispensing costs for drugs distributed through Medicaid.

That has created a rush by states and businesses to capitalize on the changes as evidence shows they are having an effect. For the first time, New York has reduced Medicaid spending. Alabama, which had one of the highest dispensing rates for Medicaid drugs, has created a commission to determine the best way to distribute medication.

"It's clearly been a trend over the last several years," said Andrea Maresca, director of federal policy and strategy at the National Association of Medicaid Directors. "I think there's money to be saved."

The increase in spending for Medicaid, the federal-state health care program for low-income Americans, has bedeviled states for decades. Spending for medication was no different, and states have tried preferred-drug lists that point beneficiaries to cost-effective medications, requiring prior authorizations of drugs, requiring discounts from manufacturers, negotiating additional rebates and entering multi-state joint-buying programs.



Although some approaches have succeeded in reducing costs, they have also created a patchwork in which states such as Alabama pay $11 per prescription to dispense Medicaid drugs but with low ingredient fees, while other states pay $2 in dispensing fees and higher costs for ingredients. Neither approach is transparent.

The battle for change now pits pharmaceutical manufacturers, pharmacy benefit managers and both physical and mail-order pharmacies against one another. They are lobbying state legislators around the country to encourage the use of certain medications, incentives and rebates. At the same time, drug costs have increased, and people are using more medications as they develop chronic diseases such as heart disease or diabetes.

One approach is moving to managed care. Managed-care plans mean the state contracts out its pharmaceutical services to a group that agrees to provide services for a lower cost. Rather than a pharmacy charging a set amount every time a person fills a prescription, a managed-care system gets paid more the more money it saves. 

This can be good for the patient in that there are fewer opportunities for drug duplication. However, there have been concerns that insurers will not pay for medications a doctor prescribes, such as for behavioral health issues, or that quality will be cut along with costs.

Big pharmacy management providers say they can save the states as much as $33 billion over 10 years, according to a 2011 report commissioned by the Pharmaceutical Care Management Association. A new report that assumes Medicaid expansion in all the states because of the Affordable Care Act estimates $90 billion in savings, according to the Lewin Group.

The ACA allowed states to expand their Medicaid programs to cover more people. Some of the nation's most populous states, such as California and New York, have expanded, while others, such as Texas, have not. Expansion can provide a windfall to any drug provider in Medicaid.

"Medicaid expansion puts a premium on this," said Mark Merritt, CEO of the Pharmaceutical Care Management Association.

A PAINLESS SOLUTION?

Merritt called moving to managed care "relatively pain-free," saying that it allows states to reduce costs without reducing benefits. Others in the field, however, say it creates pain for business that will lose their markets to out-of-state corporate management firms.

"For a long time, the evidence has been that the states have been very generous to the pharmacies," said Adam Fein, founder of Pembroke Consulting, a management advisory and business research firm.

Changing the system can allow states to cut the overly high payments to pharmacies, Fein said. States haven't saved as much money as anticipated from using generic medications, because of the way they reimburse pharmacies.

Now, however, the law lets states create maximum allowable costs for drugs based on the cost of the drugs to the pharmacy. The upper limit under the law is 175% of the manufacturing average costs, but the final federal rule has not been issued. When it is, Fein said, the federal reimbursement rate for states and pharmacies will be cut.

That means pharmacies will then tell the government how much they paid for the medications, and the government will pay that amount plus a dispensing fee to the pharmacy, Fein said. That makes for a more-transparent process and eliminates under-the-table negotiations. Alabama, Colorado, Idaho, Iowa, Louisiana and Oregon use this system already.

"Managed care could be better or worse," Fein said. Medicare uses managed care, and there are proven methods to save costs, such as systems that steer patients to less-expensive medications, preferred pharmacies and mailed-medication programs. "Some are working better than others, but it's buyer-beware, just like anything else."

OTHER OPTIONS

Managed care isn't the only option, Maresca said. "Some states just don't have the market," she said. "Rural states may not see it as feasible."

But, because there are federal funds for coordinated care, it may become feasible at a local level, she said, such as within a hospital or for a specific population of patients.

"There's a recognition that the states need to be a bit more sophisticated to deliver managed care," she said.

THE NEW YORK EXPERIENCE

New York changed to a managed pharmacy program for Medicaid in October because the state had a 13% annual growth rate for Medicaid, which was eating 40% of the state budget. Jason Halgerson, the state's Medicaid director, said the results have been dramatic. "We're seeing $400 million in savings in a year," Halgerson said. "We had hoped for $200 million. We reduced drug spending by about one-quarter."

States had worried they would lose federal rebates for medications and would be unable to negotiate for lower prices if they moved to managed care.

"There are legitimate concerns," Halgerson said. "In behavioral health, it can be difficult to get medications approved, and we worried that it would be challenging for providers to get medications approved."

Pharmacies have been receptive, Halgerson said, because they have experience with managed care and were worried more about "downward reimbursement payments and mail order pharmacy."

"We're all under fiscal pressure," he said.

Alabama just created a commission to look ways to save in the Medicaid pharmacy program.

"We're nothing close to that," Don Williamson, Alabama's state health officer, said of New York's $400 million in savings. "Our program is only $600 million total."

But Alabama still needs to save money, Williamson said, because "our Medicaid demand exceeds our resources."

Alabama faces different problems from New York because much of the state is rural, and the national pharmacy chains don't have the same reach as they do in cities. So, Alabama is trying to work with local pharmacies and providers, rather than an outside corporation, to create regional managed drug benefit programs, Williamson said.

"For us, it's going to be an interesting balancing act," he said.

He cited Colorado and Oregon as states that have moved in that direction. His commission will present its findings Dec. 1.


by Kelly Kennedy, USA TODAY
Follow @KellySKennedy on Twitter.

Tuesday, August 13, 2013

Without action, a one-way ticket to rising drug costs

If you are of a certain age, you recall that at the turn of this century, working families and seniors took bus trips to Canada in pursuit of lower-cost prescriptions unavailable here at home. Passengers lined up with empty shopping bags and suitcases and returned with several months’ worth of prescriptions. Unless we take action soon, many Americans may again find themselves booking bumpy bus rides up north.


Our healthcare system is on the brink of returning to sky-high prescription drug costs for consumers, large employers, and Medicare and Medicaid. This time, the culprit is the rapidly rising cost of specialty biologic drugs, which can easily cost hundreds of thousands of dollars per year, even for those with Medicare or good private insurance.

Specialty biologic drugs are sophisticated prescriptions that are transforming lives for millions of Americans with inflammatory conditions, multiple sclerosis, cancer, HIV, or hepatitis C. These breakthrough drugs help people return to work, spend quality time with loved ones, and enjoy many of the things we all too often take for granted. However, when a year’s supply of a medication starts to rival the cost of a home, we have a big problem.

Consider these troubling trends: In 2012, the unit-cost increase for specialty biologic drugs was 18.7 percent for commercial payers, 16.7 percent for Medicaid, and 26.8 percent for Medicare. And that’s despite the fact that specialty prescriptions actually declined.

Because specialty drugs comprise a small percentage of the overall number of prescriptions — at least for now — these double-digit price increases are generally hidden. By 2016, we project that seven of the 10 top-selling prescriptions will be specialty drugs. Between now and the end of 2015, we estimate that spending on specialty prescriptions will increase 67 percent.

video

It turns out that the best way to bend that cost curve downward has a lot to do with the reason the Canadian prescription-drug express is running less frequently. 

One of the great healthcare success stories of the past decade has been the dramatic decline in the growth rate of prescription drug spending for traditional pills. In 1999, the annual growth rate was galloping along at 18.2 percent. Confronted with this unsustainable growth that threatened to overwhelm budgets, employers turned to pharmacy benefit managers (PBMs) to help control runaway costs.

Working on behalf of consumers and payers, PBMs created competition by compelling discounts from drug manufacturers who wanted placement for their medications on employers’ and health plans’ drug lists. Similarly, PBMs negotiated discounts with tens of thousands of chain drugstores and independent pharmacies to help ensure lower prescription drug costs. PBMs expanded the availability of lower-cost generic drugs and introduced new lower-cost pharmacy options, including a 90-day medication supply delivered to a patient’s doorstep. This strategy works. By 2011, the annual rate of growth in prescription drug costs was down to just 3 percent.

But today, these gains are at risk. Our specialty drug system currently lacks the same market-based tools that we used in the past to bring down the costs of traditional medications. The good news is there are at least two common-sense steps policymakers should take in the coming months to address the high cost of specialty drugs.

First, we must more rapidly bring to market generic versions of high-cost specialty drugs — called biosimilars. Despite being safely used in at least 27 healthcare systems including Japan, Germany, the United Kingdom, France and Canada, biosimilars remain unavailable in the United States. The Affordable Care Act directed the U.S. Food and Drug Administration to create a clear pathway for bringing biosimilars to market, but the follow-up has been lacking.

Second, policymakers should reject legislation that brand-name drugmakers are pushing in every state to significantly undermine the ability of employers and Medicaid to encourage the use of biosimilars — if and when they ever come to market. Yes, even before lower-cost biosimilars have come to market anywhere in our nation, these big biotech firms are advocating legislation that would make it almost impossible for physicians and patients to take advantage of them.

The growth of specialty drugs presents our system with great opportunities and challenges. In the years ahead, we have the experience and know-how to expand access to specialty drugs while driving down costs for consumers and payers. Stakeholders have done so before and can do so again, if given the chance.

Without the political will to do something now, the cost of specialty drugs — as well as the popularity of bus rides to Canada — will grow exponentially.

By Steve Miller, M.D. 07/11/13 01:00 PM ET
Miller is chief medical officer of Express Scripts, a pharmacy benefit manager with headquarters in St. Louis.

Thursday, August 1, 2013

MCOs' Shifting Control Over Office-Administered Products from Medical to Pharmacy Benefit, Particularly Affecting Rheumatoid Arthritis Therapies

This Trend is Part of Overall Effort by Payers to Control Access to and Costs for Rheumatoid Arthritis, Multiple Sclerosis and Oncology Therapies, According to a New Report from Decision Resources


/PRNewswire/ -- Decision Resources, one of the world's leading research and advisory firms for pharmaceutical and healthcare issues, finds that 68 percent of surveyed managed care organization (MCO) pharmacy directors either currently or plan to transition specialty product coverage from the medical benefit to the pharmacy benefit for office-administered products, particularly affecting therapies in rheumatoid arthritis. This transition, which is slated to be completed in 2015 or later after many of the policies in the Affordable Care Act begin to take effect, comes as MCOs deal with a cost trend for specialty drugs that far exceeds those for small molecule therapies. As a result, MCOs are implementing strategies to control access to specialty therapies in rheumatoid arthritis, multiple sclerosis and oncology.
The Physician & Payer Forum 2013 report entitled Market Access for High-Cost Biologics in Multiple Sclerosis, Oncology, and Rheumatoid Arthritis also finds that 85 percent of surveyed plans have some utilization restrictions in place for specialty drugs, particularly prior authorization for therapies covered under the pharmacy or medical benefit. However, other restrictions are slated to increase in use. In the next 12 months, 63 percent of surveyed payers expect to have site of care restrictions in place, while 66 percent will have preferred and non-preferred specialty tiers. Furthermore, some MCOs plan to eliminate grandfathered coverage for specialty therapies while 52 percent anticipate restricting use of copay coupons for non-preferred specialty agents.
In addition, surveyed neurologists, rheumatologists and payers report notable restrictions around specialty therapies treating MS and RA, reflecting the launch of newer premium-priced therapies. Of note, however, MCOs' traditional laxer restrictions around oncology may be giving way to greater management by payers, particularly through the use of clinical pathways and companion diagnostics.
"Increased complexity in benefit design is impacting all pharmaceuticals, and plan members continue to have increases in financial responsibility. This is especially true for higher cost specialty drugs which are covered more often in a co-insurance tier," said Senior Director Brenda Cole. "In addition, competition in the form of both new brands and generic introductions are allowing MCOs increased leverage with manufacturers, especially in the MS and RA markets, but also in some oncology markets. Payers have been talking about increasing restrictions and using differential co-pays to lower costs with specialty drugs and this report shows how they are taking action and what trends are likely to continue and evolve."
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