Robin
Steinwand had been paying $20 a month for her multiple sclerosis drug, which she keeps in the refrigerator. When she went
to pick up her prescription in January, it cost $325.
By GINA KOLATA
Published: April 14, 2008
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’s 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’s 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’s Health Insurance Plans, which represents
most of the nation’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,” Dr. 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,” Mr. 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 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 a 30 days’ supply 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’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,” 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.
“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, 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, “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 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’s
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 — 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. “We’re not trying to make anybody the heavy,”
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. “Somehow or
other, myself and my family will do whatever it takes. You don’t put your parent on a scale.”
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, “are 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.”
And Kaiser,
the agency added, had made a convincing argument that charging a percentage of the cost of these drugs “helped lower
the rates for federal employees.”
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. “I am a little nervous,” she said. “Will the next company follow suit next year?”
But it turns
out that she won’t 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.
“Letters
will go out next week,” 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’s that operate in her region. But of
the two H.M.O’s, 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.
“For
everybody in my position with metastatic breast cancer, there are times when you are stable and can go off treatment,”
Ms. Bass said. “But if we are progressing, we have to be on treatment, or we will die.”
“People’s
eyes need to be opened,” she said. “They need to understand that these drugs are very costly, and there are a
lot of people out there who are struggling with these costs.”
