Transformative therapies are advancing like never before, and a new class of medicines are changing the way we treat the world’s most devastating and debilitating diseases. Yet while innovative biopharmaceutical companies are doing their part in developing lifesaving products for patients, discriminatory insurance barriers are often standing in the way.

Insurance Discrimination Is A Growing Problem

Since May, when a breakthrough gene therapy to treat spinal muscular atrophy (SMA) was approved by the Food and Drug Administration (FDA), patients have struggled to obtain the treatment as a result of unfair insurance practices.

“[S]ome patients can’t access SMA treatment … based on age, severity of their disease,” The Wall Street Journal noted.

While the FDA approved the treatment for children with all forms of the disease under the age of two, several insurance companies have decided that “children with less severe forms” may not qualify, The Washington Post added.

A family longing for a medicine to help their son suffering from this devastating disease called the denial of the treatment by their insurer “sad and frustrating and angering,” according to Business Insider.

The truth is, insurers have a history of discriminating against patients – particularly those with diseases like hepatitis C and HIV. For context, BIO’s new whiteboard videos help illustrate how insurance plans increasingly discriminate against patients who need access to expensive medicines, including America’s vulnerable seniors.

ICER’s Influence Continues to Grow

In a piece for the Tennessean, Sue Peschin, president and CEO of the Alliance for Aging Research, points out that insurance providers are increasingly relying on guidance from the Institute for Clinical and Economic Review (ICER). ICER issues reports about what medications “are and are not worthy” of being covered by insurance based on arbitrary and unscientific methodology.

“ICER’s controversial methodology serves as the basis for perverse incentives. Payers are using ICER reports to deny coverage or preferred formulary placement when the reasoning behind those decisions cannot even be replicated,” Peschin explains.

The Alliance to Protect Medical Innovation (APMI) confirms that over the years, ICER’s voice has become more prominent despite warnings about access restrictions from patient advocate groups, physicians, and organizations representing individuals with disabilities.

Middlemen Game the System

It’s also important to consider the role pharmacy benefit managers (PBMs) play in determining which patients have access to which medications – and how much they will pay out of pocket for them. However, as we have learned, their allegiance is to the health insurers who hire (or own them), not patients in need of financial relief at the pharmacy counter.

Ted Okon, executive director of the Community Oncology Alliance, commented on their deceptive business model in a recent op-ed for Morning Consult:

“[PBMs] skim enormous profits from prescriptions through secret rebates, obscure fees and other slimy tactics. In oncology … it is standard business practice for PBMs to slow-walk critically needed patient prescriptions or deny them altogether, tangling up what is supposed to be a simple process into a breathtaking, and possibly fatal, bureaucratic morass.”

This behavior is all too common for PBMs who have been caught gaming the system before. Unfortunately for them, policymakers are taking notice.

As breakthrough medicines continue to enter the market, patients and society stand to benefit greatly – but only if insurers are willing to acknowledge the value they provide and ensure individuals can access the medicines they need, when they need them.

A piece by Peter J. Pitts, a former FDA Associate Commissioner and President of the Center for Medicine in the Public Interest, describes the role of pharmacy benefit managers (PBMs) and tactics they use to shift a growing portion of prescription drug costs to patients and consumers.

“In the United States, nearly $15 of every $100 spent on brand-name drugs goes to PBMs, which claim they lower drug costs. However, the share of annual drug price increases that PBMs pocket – as opposed to pass on to consumers – has soared from 5 percent in 2011 to 62 percent in 2016. Three large PBMs control 78 percent of the market and use this market power to control what medicines people can use, what they pay, and where they get their prescriptions filled.”

As Pitts explains, policies being enforced like “copay accumulators” prevent financial assistance provided by drugmakers from applying to a patient’s out-of-pocket maximum or deductible. This leaves patients on the hook to cover steep costs when the value of patient assistance is exhausted.

A better term for misleading “copay accumulator” policies? “PBM bottom line enhancer,” he writes. Here’s why:

“Copay accumulators, a tool to ensure that the value of a copay card or coupon doesn’t count toward a patient’s out-of-pocket maximum expense, allows pharmacy benefit managers to further pad their pockets — but harms both patients and the public health by making lifesaving medicines unaffordable. And to make matters worse, these programs are being sold to patients as a benefit. The health care chutzpah of the PBM industry is astounding.”

It’s also important to point out that despite the billions of dollars in rebates and other discounts that innovative pharmaceutical companies provide key players across the drug cost ecosystem each year, patients are not always seeing financial relief at the pharmacy counter. The expectation is that these savings will reduce costs for patients, but mounting evidence proves that this is all too often not the case.

Sadly, while these middlemen profit, patients are unaware of why they are paying more and more for the medicines they need.

“[A] ConnectiveRx study found the level of copay accumulator awareness at 25 percent. And, if knowledge is power, ignorance is not bliss. A new report from McKesson found that, not only do patients not understand what a copay accumulator program is — what they believe to be true is wrong. … For example, 60 percent believe copay accumulators are a plan benefit, and less than 40 percent know what out-of-pocket means.”

The administration’s latest move to ensure drugmaker rebates are passed along to seniors in Medicare Part D is a step in the right direction towards lowering out-of-pocket costs for consumers. And with policymakers set to examine the role of PBMs, drug cost middlemen should acknowledge the need to engage stakeholders across all health care sectors to promote policies that ensure patients have access to innovative cures and treatments that they need at an affordable out of pocket cost.

Read the full piece here.

While many were watching the drug pricing debate unfold on Capitol Hill, the Kentucky Cabinet for Health and Family Services published a report exposing drug cost middlemen, better known as pharmacy benefit managers (PBMs), for their role in marking up prices for common drugs and pocketing the difference. In this case, that difference was $123.5 million, or 13 percent, of what the Kentucky state Medicaid program paid these middlemen last year.

At issue is a little-known tactic called “spread pricing”, a strategy designed to pad the pockets of PBMs at the expense of Kentucky taxpayers funding the state’s Medicaid program.

“These are taxpayer dollars that we can’t identify what is the service they are being used for,” said Jessin Joseph, director of pharmacy for Kentucky’s Department for Medicaid Services, in a phone interview with Bloomberg News.

This isn’t the first time PBMs have been caught gaming the system. Just last year, an Ohio state-commissioned report found that middlemen billed taxpayers roughly $220 million more for prescription drugs than they reimbursed pharmacies to fill those prescriptions over the course of a year. Furthermore, Bloomberg recently analyzed the data of how much PBMs have charged  Medicaid plans around the country, finding massive markups on many drugs.

But it’s not just PBMs who have taken advantage of hard-earned taxpayer dollars. Recently, a shocking Wall Street Journal investigation revealed how health insurance companies dramatically inflated their cost projections under Medicare Part D for financial gain over a 10-year period. As BIO President and CEO Jim Greenwood wrote::

“Under peculiar language of the statute, insurers are paid by Medicare for drugs in advance of their purchase, based on their own estimated outlays. However, they only have to repay a portion of the overpayments to the Treasury if their estimates come in high. Insurers exploited this loophole for a decade, and American taxpayers coughed up a staggering $9 billion to insurers for drug costs that they never actually incurred.”

Another example, as Avalere points out in a recent white paper, exposes health plans for placing low-cost generics on higher cost-sharing tiers in the Medicare Part D program. Such a move cost seniors $15.7 billion over a three-year span. As POLITICO explained:

“While generics typically are placed on the lowest tier of insurers’ formularies, with the smallest co-pays, a 2017 change from CMS led plans to steadily push cheaper versions to higher tiers, the report stated. … Avalere estimated that plans placed Part D-covered generics on the lowest tier only 14 percent of the time.”

This behavior is all too common. Each year innovative pharmaceutical companies provide key players across the drug cost ecosystem with billions of dollars in rebates. The expectation is that these savings – which totaled more than $150 billion in 2017 – are will reduce costs for patients, but mounting evidence proves that this is all too often not the case.

To achieve lower prescription drugs costs, policymakers must take a holistic approach – one that considers the role middleman play in determining what patients pay out-of-pocket for drugs.

Writing for The Hill, BIO’s President and CEO Jim Greenwood shined a spotlight on a shocking Wall Street Journal investigation showing how health insurance companies in the U.S. dramatically inflated their cost projections under Medicare Part D for financial gain over a 10 year period:

“Under peculiar language of the statute, insurers are paid by Medicare for drugs in advance of their purchase, based on their own estimated outlays. However, they only have to repay a portion of the overpayments to the Treasury if their estimates come in high. Insurers exploited this loophole for a decade, and American taxpayers coughed up a staggering $9 billion to insurers for drug costs that they never actually incurred.”

Did you miss this one? Don’t worry, you’re not alone, as newscasts and social media feeds have given this issue little to no attention – all while the health insurance industry has been profiting at the expense of our nation’s most vulnerable population.

As Greenwood points out, even Dr. Peter Bach – who is typically an outspoken critic of the pharmaceutical industry – shared his thoughts on the findings.

“Even expert dart throwers don’t hit the bullseye every time, but their misses are spread around in every direction. If they start missing in one particular direction over and over, they are doing it on purpose.”

The insurance industry is always quick to paint drug manufacturers as the culprit for rising health care costs. Reports like these from the Wall Street Journal, however, tell a very different story:

“Until and unless Congress enacts a statutory fix, the fleecing of Medicare and America’s seniors will continue.”

Read the full piece here.

Once again, Blue Cross Blue Shield is out with a report attempting to stoke fear and confusion about prescription drug costs. And once again (because we’ve chronicled it before) what the major insurance company has to say is contradicted by its own pharmacy benefits manager.

These drug cost middlemen, also known as PBMs, manage prescription drug benefits on behalf of health plans. It just so happens that Blue Cross Blue Shield plans own one of the largest PBMs in the country – Prime Therapeutics. One should expect that the report released by Blue Cross Blue Shield would be reflected in the data put forward by its own PBM. But it’s not.

Here is what Prime Therapeutics has said this year about the trend of prescription drug costs:

• In February, Prime announced “the second consecutive year of outstanding trend results.” What made them so outstanding? Prime’s “numerous management tools” led to a 0.2 percent drop in the drug trend for commercial health plans.
• Prime also noted a drop a -0.8 percent and -5.4 percent drop for Medicare and Medicaid, respectively.
• Prime’s chief clinical officer said they were “thrilled drug expenditures for our clients declined in 2017.”

It’s always important to note that what PBMs report reflects what health plans are actually paying. The same can’t be said for the Blue Cross Blue Shield report. As even they have to admit – in a note buried on page 11 of its report – the prices they point to “do not include the impact of drug rebates.” That’s unfortunate because the impact is significant. Drugmakers negotiate rebates to help lower costs and expand access. In 2017, these rebates totaled more than $150 billion. Is there any wonder why Blue Cross Blue Shield failed to include them?

As Dr. Adam Fein – one of the nation’s top experts on pharmaceutical economics – has noted before:

“Clearly, drug spending is not spinning out of control. Pharmacy benefit costs are growing much more slowly than is growth in other part of the U.S. healthcare system, such as hospital spending and physician salaries.”

That’s the reality reflected in most of the data put out by a wide range of health care stakeholders. Of course, that’s never the reality insurance companies want the public to see. Prime’s President’s and CEO Jim DuCharme noted earlier this year:

“Our close alignment with 22 Blue plan clients – 18 of whom are owners – allows us to see the complete pharmacy and medical drug picture to help us drive total cost of care outcomes.”

Such a close alignment should ensure both Blue Cross Blue Shield and its PBM are singing from the same song sheet when it comes to the facts about prescription drug costs. But apparently not.

A new report by the Office of Inspector General at the U.S. Department of Health and Human Services (HHS) reaffirms concerns with a regulatory decision that undermines the health and well-being of America’s seniors.

In an abrupt reversal of long-standing policy, the Centers for Medicare & Medicaid Services (CMS) announced that Medicare Advantage health plans can impose “step therapy” requirements on patients who need drugs covered under Medicare Part B.

The new directive — which affects more than one-third of all Medicare beneficiaries — will force some patients to fail first on a medicine preferred by their insurance companies before they can receive the therapy prescribed by their doctors.

More than 230 patient and provider groups have warned the new policy “could put patients’ health at risk” and impose greater administrative burdens on physicians.

But what does this have to do with the HHS Inspector General? Well, in a new report, the independent watchdog reveals that patients are often wrongly denied care by health plans participating in the Medicare Advantage program. According to the report:

• The “central concern” is that health plans may put profits before patients. The report notes “potential incentives” that encourage health plans to “inappropriately deny access to services and payment in an attempt to increase their own profit.”
• Health plans routinely deny coverage, forcing patients to file appeals or forego the medical care they need. In fact, 75 percent of all coverage or payment denials issued by health plans were overturned at the first stage of the appeal process, which strongly suggests the insurance industry is taking a “deny first” approach to caring for America’s seniors.
• Seniors face a “confusing and overwhelming” appeals process, which may explain why only 1 percent of coverage denials are actually appealed.
• The often inaccurate denials of coverage by health plans are particularly worrisome for seniors who rely on Medicare Advantage and “may be especially burdensome for beneficiaries with urgent health conditions.”

These startling facts do not bode well for seniors, particularly as the Trump administration provides these same health plans new tools to restrict seniors’ access to prescription medicines.

And now UnitedHealth—the largest insurance carrier in the Medicare Advantage program—is rushing to impose the flawed fail first approach on millions of seniors starting next year. As the Society for Women’s Health Research cautioned in a recent letter, the current approach is flawed because it “lacks basic beneficiary protections and agency oversight that should be fundamental to any utilization management policy.”

The Trump administration should reverse course and withdraw this harmful policy. At the very least, it should not allow insurance companies to rush forward until basic safeguards are in place that ensure seniors aren’t wrongly denied the medicines they need.

At a time when prescription drug prices and spending are remarkably stable, patients are getting hit harder than ever by flawed policies and poor decisions by some within the health care system.

Surprise Billing

In case you missed it, a Texas high school teacher named Drew Calver suffered from a heart attack back in 2017. Calver’s neighbor rushed him to the nearest hospital where he underwent routine procedures to clear his blocked artery. After spending four days at the facility, Drew was discharged only to learn that the hospital was out-of-network – despite being told the opposite – and that his bill was $164,941.

“They’re going to give me another heart attack stressing over this bill,” Calver said. “I can’t pay this bill on my teacher salary, and I don’t want this to go to a debt collector.”

Another story featured 34-year-old Scott Kohan who ended up in the emergency room after he was violently attacked. This time, the hospital was in-network – but the doctor was not, resulting in a medical bill of $7,924.

“I went to a hospital where I am covered, and did everything I reasonably could do to confirm that I was going to be covered before having surgery,” Kohan wrote in an appeal to his insurance company. “Unfortunately, it didn’t work out the way.”

Fortunately, the stories end well for Calver and Kohan. Kohan’s doctor dropped the entire $7,924 charge after learning of his situation, and after the media ran their story about Calver, the hospital reduced his bill to $782.29. But not everyone is as lucky, and recent data proves that these two incidents are far from isolated.

A new survey out of the University of Chicago shows 57% of American adults have been hit with a medical bill that they expected to be covered by insurance. And when asked who was most accountable for these surprise bills, the overwhelming majority said hospitals and insurers.  Even, Kaiser Health News is out similar poll results showing that when Americans think about health care costs, unexpected medical bills top their list of concerns.

New Regulatory Barriers to Needed Medicines

Medicare Part D and Part B have been a tremendous success for both seniors and taxpayers. However, new policies announced without the opportunity for public review and comment will leave patients with fewer choices, or hefty out-of-pocket costs if they choose to follow their doctors order. These policies, which include indication-based pricing and step therapy, are penny wise and pound foolish at best – and organizations representing both physicians and patients have been raising concerns with these recent proposals.

The American Medical Association noted: “Rather than benefiting patients, the CMS proposal actually introduces unfair complexity to Medicare patients and further cements the role that insurance companies play in deciding treatment plans. This is not a recipe for good health.”

The Arthritis Foundation stated: “[The] guidance from CMS to permit indication-based drug coverage in Medicare Part D represents a step backward from the program’s promise to these beneficiaries. … Allowing plans to limit formulary coverage of a drug only for the specific indication for which it is most effective will further restrict the already narrow treatment options available to patients with inflammatory forms of arthritis.”

The Community Oncology Alliance added: “Step therapy requirements are driven by financial interests to save money and not by what is in the best medical interest of patients. They leave patients at the whim of middlemen who are more concerned with their bottom lines than patient outcomes, side effects, and well-being.”

‘Cost-Effectiveness’ Measures Not What They Seem

The future of biomedical innovation is bright. Cutting-edge technologies like CRISPR have arrived, and new medicines to fight cancer and other debilitating diseases are on the horizon, but to be effective, patients must be able to access them. That’s why properly assessing the value of these innovative medicines, and the benefit they offer patients, the health care system and society more broadly is so vitally important.

Assessing the value of medicines is nothing new, but one approach that has garnered greater attention in recent years—an approach developed by the Institute for Clinical and Economic Review (ICER) — lacks transparency and sufficient input from the full spectrum of health care stakeholders. It’s also worth noting ICER’s past ties to the insurance industry, which makes us question who will ultimately benefit from their work that helps influence patient access to needed care.

Recently, CVS Caremark announced that it would adopt ICER’s arbitrary approach to measuring value directly into their coverage decisions. Such a move would provide a pathway for plan sponsors to incorporate the groups flawed process in determining when patients would have access to certain medicines.  Former Rep. Tony Coelho (D-Calif.), who authored the Americans with Disabilities Act and now leads the Partnership to Improve Patient Care (PIPC) recently raised the red flag, arguing that this “type of cost effectiveness analysis discriminates against people with disabilities and other vulnerable groups like the elderly because it assigns higher value to people in ‘perfect health’ than people in less-than-perfect health.”

For a better approach, BIO joins PIPC and other health care stakeholders in supporting the Innovation and Value Initiative (IVI), which recently introduced its Open-Source Value Project. This transparent and holistic approach allows for a broad range of perspectives, incorporates the latest available evidence, and considers the full value of cures and treatments when estimating the value of medical technologies.

To make health care accessible and affordable for individuals across the nation, we must adopt market-based policies that put patients first. Individuals should not have to choose between sending their children to college or paying a hospital bill that their insurance company decided not to cover.

IQVIA — a nonpartisan health care research firm — is out with troubling new data showing a direct correlation between high out-of-pocket costs and patients forgoing the medicines they need. In 2017, 69% of patients covered in the commercial market did not fill a new prescription when their insurance company required them to pay out of pocket costs exceeding $250.

In recent years, patients have been subjected to spending more on deductibles and coinsurance. To offset this financial burden not covered by their insurers, many pharmaceutical companies have begun to offer various forms of patient assistance, and according to IQVIA, this assistance is making a difference for patients.

Yet in recent months, health plans have implemented “co-pay accumulator” programs – an effort to prevent funds provided by these assistance programs from applying to a patient’s out of pocket maximum or deductible. As a result, patients are left with steep costs and are less likely to fill the prescriptions they need.

It’s time for the insurance industry to step up and do its part to help ensure patients have access to the medicines they need at costs they can affordable.

See the full IQVIA report here.

A featured story by PBS NewsHour reaffirms that insurance companies and drug cost middlemen determine what patients pay out of pocket for prescription drugs, and it often has little to do with the actual cost of the drug itself. That’s what Gretchen Liu came to realize, when she discovered she was paying $285 in health insurance copays for a blood pressure medication that really costs about $40.

According to a report written by researchers with the University of Southern California’s Leonard D. Schaeffer Center for Health Policy & Economics, the story of Liu is not uncommon. In fact, the study found that 25 percent of the time insurance copays are higher than the cost of the drug.

“You have insurance because your belief is, you’re paying premiums, so when you need care, a large fraction of that cost is going to be borne by your insurance company,” said Geoffrey Joyce, a USC economist who co-authored the study. “The whole notion that you are paying more for the drug with insurance is just mind boggling, to think that they’re doing this and getting away with it.”

As we explain in our “Follow the Pill” video, the drug cost ecosystem is more complex than most people think. Drug manufactures provide pharmacy benefits managers — or PBMs — with steep discounts for drugs to promote greater access for patients and consumers. Insurance providers and PBMs then ultimately determine what an individual will pay at the pharmacy counter for the medicines they need, whether in the form of copays, deductibles or coinsurance requirements. As Joyce explains:

“[I]nsurers outsource the management of prescription drug benefits to [PBMs], which determine what drugs will be covered by a health insurance plan, and what the copay will be.”

But what if insurance copays are higher than the cost of the drug? Who keeps the difference? PBMs have been scrutinized over a controversial practice called “clawbacks,” which happens when a pharmacy collects a copay that’s higher than the cost of the drug and the PBM takes a large cut of the difference. As Karen Van Nuys, one of the co-authors of the study notes:

“Whenever the copay is higher than the cash price, and the difference isn’t reimbursed to the patient, someone else must be pocketing the difference.”

Read the full story here, and be sure to check out our “Follow the Pill” video for a better understanding of how prescription drug costs are really determined and where the pharmaceutical dollar actually goes.

It seems every week the insurance industry is busy pointing the finger at biopharmaceutical innovators for the rising cost of health care. Of course, this public relations campaign relies on twisting some facts and completely ignoring others. For example, the insurance lobby rarely mentions that:

• • National spending on prescription drugs grew less than 1 percent last year and just 1.3 percent for retail drugs the year before;

• • The average net price for brand-name drugs increased less than 2 percent in 2017, and that’s in part due to billions of dollars in rebates and discounts drugmakers provide every year;

• • Major pharmacy benefits managers — who work on behalf of insurance companies — are reporting remarkable stability in both drug spending and drug prices for many commercial health plans;

• • Prescription medicines can help reduce the need for more costly medical care, helping to save money for insurers, patients and the broader health care system; and

• • Many health plans are shifting greater costs on to patients through higher deductibles and coinsurance requirements, forcing many individuals and families to pay more for less coverage.

These are just some of the facts the insurance industry would prefer the public not know about. But there’s more. A new report provides fresh data on where our nation’s health care dollars are going, and the results are both encouraging and troubling for patients.

According to the nonprofit health research organization Altarum, total national health spending grew by 4.8 percent during the first quarter of 2018 and spending on prescription drugs grew less than 4 percent during that same time. The data indicates that growth in drug spending, while modest, is being driven by greater use of drugs and not drug prices.

That’s the encouraging the news. Now the troubling news: administration and the net cost of insurance grew by roughly 9 percent — or nearly twice as fast as medical inflation — making overhead at insurance companies the fastest growing category of health care spending.

It’s hard to understand how costly bureaucracies within the health insurance industry are good for patients, especially at a time when insurers continue to impose greater out-of-pocket costs on many Americans and restrict access to the care patients need. For example:

• • Health plans are increasingly adopting so-called accumulator programs that are designed to expose individuals to greater costs for prescription drugs;

• • One insurance company has warned patients that visits to the emergency room may not be covered if the ER visit is later deemed “unwarranted” by the insurer, drawing scrutiny by some lawmakers on Capitol Hill; and

• • Insurers have a history of discriminating against those facing diseases that are more costly to treat, including patients with hepatitis C and HIV.

People pay for insurance expecting that they will be covered when help is needed, yet it seems that’s increasingly not the case. Perhaps insurers should look for ways to reduce some unnecessary paperwork, limit their overhead, and provide some of the savings back to patients. This would not only help lower health care costs, but just as importantly, it would be the right thing to do.