Health insurance companies are rapidly adopting a new pricing
system for very expensive drugs in the United States. They are
asking patients to pay hundreds and even thousands of dollars 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's actual cost.
Instead, they are charging patients a percentage of the cost of
certain high-priced drugs, usually 20 percent to 33 percent, which
can amount to thousands of dollars a month.
The system means that the burden of expensive health care is no
longer a problem only for Americans who have no insurance. Instead,
the new pricing system can mean that even insured people may not be
able to afford the treatments they require.
No one knows how many patients are affected but hundreds of drugs
are priced this new way. They are used to treat diseases that are
not uncommon, including multiple sclerosis, rheumatoid arthritis,
hemophilia, hepatitis C and some cancers. There are no cheaper
equivalents for these drugs, so patients say they are forced to pay
the price or do without. Insurers say the new system keeps overall
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 or 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 drug plans
that supplement Medicare, the government-run health coverage for the
elderly. 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 get through employers, said Dan Mendelson of Avalere
Health, a research organization in Washington. It is the fastest-
growing segment in private insurance, 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's Health Insurance Plans, which
represents most of the country's 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. "It is very unfortunate social policy,"
Robinson said. "The more the sick person pays, the less the healthy
person pays."
Traditionally, the idea of insurance was to spread the costs of
paying for the sick.
"This is an erosion of the traditional concept of insurance,"
Mendelson said. "Those beneficiaries who bear the burden of illness
are also bearing the burden of cost."
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 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 finding out she had multiple
sclerosis in 2000, buying 30 days' 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 Steinwand, went to pick up her prescription
at a pharmacy near her home in Silver Spring, Maryland, the
pharmacist handed her a bill for $325.
There must be a mistake, Steinwand said. So the pharmacist
checked with her supervisor. The new price was correct. Kaiser's
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.
"I charged it, then got into my car and burst into tears,"
Steinwand said.
She needed the drug, she said, because it can slow the course of
her disease. And she knew she would simply have to pay for it. But
it would not be easy.
"It's a tough economic time for everyone," she said. "My 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?"
Although Kaiser advised patients of the new plan in its brochure
that it sent out in the open enrollment period late last year,
Steinwand did not notice it. And private insurers, 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, Mendelson said,
"that doesn't mean the person will hear about it." He added, "You
don't read all your mail."
Some patients said they had no idea whether their plan had
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.
A Kaiser spokeswoman, Sandra Gregg, said Friday that Kaiser had
decided to suspend the change for the program involving federal
employees in the mid-Atlantic region while it reviewed the policy.
The suspension will last for the rest of the year, she said.
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.
Gregg explained that Kaiser had been discussing the new plan with
the U.S. 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.
"Letters will go out next week," Gregg said.
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