For patients living with chronic diseases, the Affordable Care Act’s (ACA) health insurance exchanges offer great promise – access to high-quality, affordable health care, including much-needed medicines and therapies. Yet there is mounting evidence that many patients with exchange coverage are struggling to obtain the lifesaving medicines they need due to high out-of-pocket costs and restrictions in prescription drug coverage. Additional federal and state oversight and guidance could go a long way towards ensuring the ACA meets its promise and provides patients with access to the medicines that will help them lead longer and healthier lives.
Many patients enrolled in Silver plans, the most popular coverage option in the exchanges, will pay more than twice as much out of pocket for prescription medicines overall than they would under a typical employer plan, according to a report by the actuarial firm Milliman, Inc. By comparison, Milliman found that out-of-pocket costs for other services are about 20 percent higher in exchange Silver plans compared to employer coverage. This disproportionate increase in out-of-pocket costs for medicines is due in large part to the fact that Silver plans are four times more likely to have a single deductible for both medical and pharmacy spending, thus requiring patients to pay $2,000 or more out of pocket before anyprescription drug coverage takes effect.
Even more concerning is a report released last week from Avalere Health which found that even after patients meet any deductible they may still be on the hook for thousands of dollars in additional out-of-pocket expenses to access treatments for some of the most debilitating chronic diseases. Health plans place covered medicines on formulary tiers – typically 4 or 5 tiers – which determines a patient’s out-of-pocket costs for their prescriptions. Patient cost-sharing in the lowest tiers typically comes in the form of a copay, which is a fixed-dollar amount ($15 for example), with the highest tiers usually requiring a coinsurance, calculated as a percentage of the total cost of the drug.
The Avalere analysis found that health plans are placing all medicines, including any available generics, to treat some diseases – such as HIV/AIDS, autoimmune disease, bipolar disorder, and certain cancers – in the highest tiers with coinsurance amounts of 30 or 40 percent. This type of formulary design leaves patients with no option to switch to a medicine on a formulary tier with lower cost-sharing.
These benefit designs are potentially hitting patients twice: first, with thousands of dollars in deductible costs, and then, with restrictive formulary designs that are forcing many patients to pay an additional 30 to 40 percent of the cost of their medicines.
When faced with thousands of dollars in out-of-pocket costs, many patients may be forced to go without their medicines altogether. As Virginia Ladd, President and Executive Director of the American Autoimmune Related Diseases Association recently noted, “This approach not only results in poorer outcomes, but eventually causes a significantly higher price tag for medical costs due to preventable disability and the loss of quality of life for the patients.”
While the ACA does include cost-sharing subsidies that are designed to provide additional financial relief for the neediest patients, a previous Avalere analysis found that those subsidies are often not being used to lower cost-sharing for specialist office visits or prescription medicines, leaving many low-income patients with very high upfront costs for their care.
This data should be a wakeup call to policymakers, regulators, and other health care stakeholders. Providing patients with health insurance coverage does not ensure they have access to essential health care treatments and services. Requiring patients that need care the most to pay high out-of-pocket costs to access lifesaving medicines is at odds with the basic concept of insurance and undermines the goals of the ACA.
The good news is that regulators have tools to fix this. The federal government can release guidance prohibiting insurers from placing all medicines in a class on the highest cost sharing tier. States can also play a role by strengthening their oversight of plan submissions to carefully review formularies and tier placement. These changes would go a long way to ensuring patients have access to the medicines they need to manage their conditions and live fuller, more productive lives.
The biopharmaceutical industry’s top priority is to provide patients with access to innovative, life-saving medicines, and as discussions around the exchanges continue, we remain committed to working with the Administration, insurance companies, and other stakeholders to achieve this shared goal.