Imagine that your 6-year-old son is living with severe hemophilia and requires consistent clotting factor treatments to stay alive. Now imagine that your health insurer dramatically increases the cost of your son’s treatments, making it impossible for you to access the only drugs keeping him alive.
That’s what happened to Jane Newman of Virginia Beach, who had two sons with hemophilia. She lost one son while fighting for his treatment, and is now facing a $12,000 monthly co-payment to manage the other’s treatment. Jane’s story is one of many.
Across Virginia, people living with life-threatening and debilitating diseases are struggling to afford their medications, despite paying monthly health insurance premiums. This is because health insurers are increasingly shifting away from the traditional three-tiered cost structure — with co-pay limits for each tier — to a structure that moves medications to “specialty tiers” with no co-pay limits. As a result, for many of the sickest patients, the predictable, affordable co-pay is no more.
Out-of-pocket costs for treatments on a specialty tier can be as much as 40 percent of the total cost of the medication, leading to thousands of dollars per month in additional out-of-pocket costs for even a single prescription. So imagine instead of paying a $10 to $30 co-pay per month, you have to pay $2,500 or more just to stay alive or out of the hospital.
While any drug can be moved to a specialty tier, the practice most often affects the most vulnerable patients — those living with leukemia, lymphoma, HIV, multiple sclerosis, cancer and other serious conditions. People who need treatment to sustain and save their lives.
These Virginians have dutifully paid their insurance premiums under the assumption that they would have access to the coverage they paid for in the event that they needed it. After all, the purpose of health insurance is to pool risk and spread health-care costs across the entire community of both sick and healthy patients, keeping costs lower for everyone.
Specialty-tier cost structures do the exact opposite: They target and discriminate against the sick, including entire patient populations living with certain diseases.
I recently introduced legislation — H.B. 1948 — that would limit the discriminatory nature of specialty tiers by ensuring that the required patient out-of-pocket costs applicable to these drugs does not exceed $100 per month for a 30-day supply.
I have heard four arguments against this proposal from insurers and commentators, including one from a fellow Richmond Times Dispatch columnist.
First, insurers argue that specialty-tier cost structures are a response to the high price of drugs, and the real solution is to cap drug prices. But drug companies are seeking to recover the cost of research and development of the very drugs that are treating and curing these diseases. Without the ability to recover these costs, drug companies could not discover the very cures and treatments keeping people alive.
Moreover, prescription drug prices make up only a small portion of health-care spending, and the cost of medications has remained relatively stable over the past 10 years, even as patient out-of-pocket costs have risen and continue to climb. Indeed, in Maryland, Louisiana and other states that have enacted similar out-of-pocket cost caps, there has been minimal or no financial impact on health plans.
Second, insurers argue that if patients did not pay higher co-pays for specialty-tiered drugs, insurance premiums would increase, and ultimately the consumer pays. But if patients do not take these specialty-tiered drugs, they will need to be hospitalized and receive more expensive treatments. Insurance companies would pay these higher costs and spread them to consumers through even higher premiums. So the question is not whether the consumer will pay, but how much.