[Ip-health] USA: Co-Payments Go Way Up for Drugs With High Prices

[Spring Gombe]

The New York Times
April 14, 2008
Co-Payments Go Way Up for Drugs With High Prices
By GINA KOLATA

Health insurance companies are rapidly adopting a new pricing system
for very expensive drugs, asking patients to pay hundreds and even
thousands of dollars for prescriptions for medications that may save
their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional
arrangement that has patients pay a fixed amount, like $10, $20 or $30
for a prescription, no matter what the drug=92s actual cost. Instead,
they are charging patients a percentage of the cost of certain high-
priced drugs, usually 20 to 33 percent, which can amount to thousands
of dollars a month.

The system means that the burden of expensive health care can now
affect insured people, too.

No one knows how many patients are affected, but hundreds of drugs are
priced this new way. They are used to treat diseases that may be
fairly common, including multiple sclerosis, rheumatoid arthritis,
hemophilia, hepatitis C and some cancers. There are no cheaper
equivalents for these drugs, so patients are forced to pay the price
or do without.

Insurers say the new system keeps everyone=92s premiums down at a time
when some of the most innovative and promising new treatments for
conditions like cancer and rheumatoid arthritis and multiple sclerosis
can cost $100,000 and more a year.

But the result is that patients may have to spend more for a drug than
they pay for their mortgages, more, in some cases, than their monthly
incomes.

The system, often called Tier 4, began in earnest with Medicare drug
plans and spread rapidly. It is now incorporated into 86 percent of
those plans. Some have even higher co-payments for certain drugs, a
Tier 5.

Now Tier 4 is also showing up in insurance that people buy on their
own or acquire through employers, said Dan Mendelson of Avalere
Health, a research organization in Washington. It is the fastest-
growing segment in private insurance, Mr. Mendelson said. Five years
ago it was virtually nonexistent in private plans, he said. Now 10
percent of them have Tier 4 drug categories.

Private insurers began offering Tier 4 plans in response to employers
who were looking for ways to keep costs down, said Karen Ignagni,
president of America=92s Health Insurance Plans, which represents most
of the nation=92s health insurers. When people who need Tier 4 drugs pay
more for them, other subscribers in the plan pay less for their
coverage.

But the new system sticks seriously ill people with huge bills, said
James Robinson, a health economist at the University of California,
Berkeley. =93It is very unfortunate social policy,=94 Dr. Robinson said.
=93The more the sick person pays, the less the healthy person pays.=94

Traditionally, the idea of insurance was to spread the costs of paying
for the sick.

=93This is an erosion of the traditional concept of insurance,=94 Mr.
Mendelson said. =93Those beneficiaries who bear the burden of illness
are also bearing the burden of cost.=94

And often, patients say, they had no idea that they would be faced
with such a situation.

It happened to Robin Steinwand, 53, who has multiple sclerosis.

In January, shortly after Ms. Steinwand renewed her insurance policy
with Kaiser Permanente, she went to refill her prescription for
Copaxone. She had been insured with Kaiser for 17 years through her
husband, a federal employee, and had had no complaints about the
coverage.

She had been taking Copaxone since multiple sclerosis was diagnosed in
2000, buying 30 days=92 worth of the pills at a time. And even though
the drug costs $1,900 a month, Kaiser required only a $20 co-payment.

Not this time. When Ms. Steinwand went to pick up her prescription at
a pharmacy near her home in Silver Spring, Md., the pharmacist handed
her a bill for $325.

There must be a mistake, Ms. Steinwand said. So the pharmacist checked
with her supervisor. The new price was correct. Kaiser=92s policy had
changed. Now Kaiser was charging 25 percent of the cost of the drug up
to a maximum of $325 per prescription. Her annual cost would be $3,900
and unless her insurance changed or the drug dropped in price, it
would go on for the rest of her life.

=93I charged it, then got into my car and burst into tears,=94 Ms.
Steinwand said.

She needed the drug, she said, because it can slow the course of her
disease. And she knew she would just have to pay for it, but it would
not be easy.

=93It=92s a tough economic time for everyone,=94 she said. =93My son will
start college in a year and a half. We are asking ourselves, can we
afford a vacation? Can we continue to save for retirement and college?=94

Although Kaiser advised patients of the new plan in its brochure that
it sent out in the open enrollment period late last year, Ms.
Steinwand did not notice it. And private insurers, Mr. Mendelson said,
can legally change their coverage to one in which some drugs are Tier
4 with no advance notice.

Medicare drug plans have to notify patients but, Mr. Mendelson said,
=93that doesn=92t mean the person will hear about it.=94 He added, =93You
don=92t read all your mail.=94

Some patients said they had no idea whether their plan changed or
whether it always had a Tier 4. The new system came as a surprise when
they found out that they needed an expensive drug.

That=92s what happened to Robert W. Banning of Arlington, Va., when his
doctor prescribed Sprycel for his chronic myelogenous leukemia. The
drug can block the growth of cancer cells, extending lives. It is a
tablet to be taken twice a day =97 no need for chemotherapy infusions.

Mr. Banning, 81, a retired owner of car dealerships, thought he had
good insurance through AARP. But Sprycel, which he will have to take
for the rest of his life, costs more than $13,500 for a 90-day supply,
and Mr. Banning soon discovered that the AARP plan required him to pay
more than $4,000.

Mr. Banning and his son, Robert Banning Jr., have accepted the
situation. =93We=92re not trying to make anybody the heavy,=94 the father
said.

So far, they have not purchased the drug. But if they do, they know
that the expense would go on and on, his son said. =93Somehow or other,
myself and my family will do whatever it takes. You don=92t put your
parent on a scale.=94

But Ms. Steinwand was not so sanguine. She immediately asked Kaiser
why it had changed its plan.

The answer came in a letter from the federal Office of Personnel
Management, which negotiates with health insurers in the plan her
husband has as a federal employee. Kaiser classifies drugs like
Copaxone as specialty drugs. They, the letter said, =93are high-cost
drugs used to treat relatively few people suffering from complex
conditions like anemia, cancer, hemophilia, multiple sclerosis,
rheumatoid arthritis and human growth hormone deficiency.=94

And Kaiser, the agency added, had made a convincing argument that
charging a percentage of the cost of these drugs =93helped lower the
rates for federal employees.=94

Ms. Steinwand can change plans at the end of the year, choosing one
that allows her to pay $20 for the Copaxone, but she worries about
whether that will help. =93I am a little nervous,=94 she said. =93Will the
next company follow suit next year?=94

But it turns out that she won=92t have to worry, at least for the rest
of this year.

A Kaiser spokeswoman, Sandra R. Gregg, said on Friday that Kaiser had
decided to suspend the change for the program involving federal
employees in the mid-Atlantic region while it reviewed the new policy.
The suspension will last for the rest of the year, she said. Ms.
Steinwand and others who paid the new price for their drugs will be
repaid the difference between the new price and the old co-payment.

Ms. Gregg explained that Kaiser had been discussing the new pricing
plan with the Office of Personnel Management over the previous few
days because patients had been raising questions about it. That led to
the decision to suspend the changed pricing system.

=93Letters will go out next week,=94 Ms. Gregg said.

But some with the new plans say they have no way out.

Julie Bass, who lives near Orlando, Fla., has metastatic breast
cancer, lives on Social Security disability payments, and because she
is disabled, is covered by insurance through a Medicare H.M.O. Ms.
Bass, 52, said she had no alternatives to her H.M.O. She said she
could not afford a regular Medicare plan, which has co-payments of 20
percent for such things as emergency care, outpatient surgery and
scans. That left her with a choice of two Medicare H.M.O=92s that
operate in her region. But of the two H.M.O=92s, her doctors accept only
Wellcare.

Now, she said, one drug her doctor may prescribe to control her cancer
is Tykerb. But her insurer, Wellcare, classifies it as Tier 4, and she
knows she cannot afford it.

Wellcare declined to say what Tykerb might cost, but its list price
according to a standard source, Red Book, is $3,480 for 150 tablets,
which may last a patient 21 days. Wellcare requires patients to pay a
third of the cost of its Tier 4 drugs.

=93For everybody in my position with metastatic breast cancer, there are
times when you are stable and can go off treatment,=94 Ms. Bass said.
=93But if we are progressing, we have to be on treatment, or we will die.=
=94

=93People=92s eyes need to be opened,=94 she said. =93They need to understa=
nd
that these drugs are very costly, and there are a lot of people out
there who are struggling with these costs.=94


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Spring Gombe
spring.gombe@keionline.org