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Some customers face tough choices with prescription pricing plans

POSTED: May 12, 2008 5:00 a.m.

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You’re probably getting "sticker shock" these days every time you go to the grocery store or fill up your gas tank.

But that’s nothing compared to what some customers are experiencing at the pharmacy. Because many insurance plans have changed their pricing policies, some patients are being charged hundreds of dollars for their medicine even though they have prescription drug coverage.

"It kind of defeats the purpose of having insurance, doesn’t it?" said Laird Miller, owner of Medical Park Pharmacy in Gainesville.

Over the past year, a growing number of insurance plans have quietly switched to a new pricing system, often without informing patients. In the past, most plans charged a co-pay, such as $10 per prescription for a generic drug and $30 for a brand name.

But now, patients may be charged a percentage of the total cost of a brand-name drug, typically about one-third. This is especially true for so-called Tier 4 drugs, which tend to be very expensive.

Such pricing is supposed to motivate patients to switch to cheaper generics. But most Tier 4 drugs are for serious illnesses with limited treatment options, and no generic is available.

"You see this with other chronic diseases such as lupus, Crohn’s disease and rheumatoid arthritis," said Debbie Means, case manager at the Multiple Sclerosis Center of Atlanta.

There are no generic drugs for multiple sclerosis because until recently, the neurological illness was untreatable. Now, there are medicines known as interferons that can slow down the progression of nerve damage.

But these drugs cost $1,500 to $1,800 a month. So even if patients only have to pay one-third, their out-of-pocket cost is still $500 or $600.

"In some cases, patients can get into assistance programs. Or we’ll write to the insurance company and try to get a waiver so they can be covered at the formulary rate," said Means. "But quite often, we have to take them off the drug. The consequence is that their disease progresses, and disability ensues."

The pricing change is occurring both with private insurance plans and with Medicare Part D, which covers prescription drugs for seniors.

"We definitely are encountering people who are facing this issue," said Elizabeth Pyron, coordinator of Georgia Cares at Legacy Link, the Area Agency on Aging in Gainesville.

"Most of the people affected are those who are caught in the middle. Medicare offers extra help for low-income people, but these patients have incomes that just barely exceed the threshold for receiving subsidies."

Pyron said when the Medicare open enrollment period starts in November, people who are dissatisfied with their drug costs can try to switch to a plan that still has a traditional co-payment system. But those plans are getting hard to find.

"I don’t know what we would do if we came to a point where none of the plans offered an affordable alternative," Pyron said.

Wayne Gee, a pharmacist at Riverside Pharmacy in Gainesville, said patients are having to make some tough choices.

"Sometimes they have to decide whether they want to continue that drug and pay for it on their own," he said. "Or they might ask their doctor to switch them to a drug that is less expensive, but also less effective."

It’s easy to understand why an insurance company would want to change its pricing structure. If the patient bears more of the cost, the company saves money.

Unfortunately, this trend is happening at the same time that prices for prescription drugs are soaring.

"The new drugs that are coming out on the market are a lot more expensive than they were a few years ago," Gee said.

And while it is true that pharmaceutical companies are among the world’s most profitable industries, Miller said prices aren’t going up simply because drug companies want to increase their value to stockholders.

Rather, he blames the pharmacy benefits managers (PBMs), which health insurance companies contract with to handle their prescription drug plans.

"The drug companies are raising their prices because they have to pay big rebates to these middlemen," Miller said. "The PBMs hold the drug companies hostage. They can say, ‘If you don’t give us a good discount on this drug, we won’t put it in our formulary (list of covered drugs).’ "

Jim Bracewell, executive vice president of the Georgia Pharmacy Association, said there’s sort of a Wild West atmosphere because PBMs are completely unregulated, both on a state and federal level.

"If there were a law in Georgia and you had a problem with a PBM, you could get the state insurance commissioner involved. Right now, you can’t," he said.

During the Georgia General Assembly’s 2008 session earlier this year, pharmacy lobbyists managed to introduce HB 798, which passed unanimously in the state House. It would have placed PBMs under the jurisdiction of state insurance regulators.

The bill never made it to the Senate floor, but Bracewell said he’s not giving up.

"We will try to reintroduce it next year," he said.

Miller said if there’s no law, there’s no limit on how high prices can go. "Nobody really knows anymore what the actual cost of a drug is," he said. "There’s no transparency. The consumer had no way of knowing how much of what they’re paying is pure profit for the PBMs."

Miller said if people are unable to afford their prescription drugs despite having insurance coverage, they should contact their lawmakers.

"I think it’s finally getting to the boiling point with this Tier 4 stuff," he said. "Middle-class people are having to spend on medicine what they would have saved for their retirement. They’re going to get angry about it and demand some sort of action."



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