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California Caps What Patients Pay For Pricey Drugs. Will Other States Follow?

Cost are ‘unsustainable,’ expert says

Expensive specialty medications used to treat cancer and chronic illnesses have forced some very ill Americans to choose between getting proper treatment and paying their rent.

To ease the financial burden, the California agency that governs the state’s Patient Protection and Affordable Care Act (PPACA) marketplace has issued landmark rules that will limit the amount anyone enrolled in one of those plans can be charged each month for high-end medications, according to a report from Kaiser Health News.

The agency said its rules, set to take effect in 2016, “strike a balance between ensuring Covered California consumers can afford the medication they need to treat chronic and life-threatening conditions while keeping premiums affordable for all.”

Last year, more than 500,000 people in the U.S. had medication costs that exceeded $50,000, according to a May 13 report from Express Scripts, a company that manages prescription benefits.

“We’ve heard stories of people who’ve emptied their retirement savings to cover their drug needs,” said Betsy Imholz, special projects director at Consumers Union, an advocacy group. “It’s a really frightening, ‘wild west’ situation for people who need these specialty drugs.”

She and other advocates took their concerns to Covered California, the agency that implements the PPACA in that state. In May, the health exchange became the first in the country to put a cap on how much consumers pay for these drugs.

Starting in 2016, most people will pay a maximum of $150 or $250 per prescription per month. These caps are for Covered California’s so-called silver and platinum plans. Bronze plans will have caps of $500.

This policy will apply only to the 2.2 million people who buy coverage on the individual market. A bill under consideration in the California legislature would extend that protection to many people with employer-based plans, as well.

Several other state legislatures are considering similar specialty drug price caps, some as low as $100.

Gov. Jerry Brown called for a task force earlier this year after realizing that the new hepatitis C drugs alone would cost the state more than $200 million in the next fiscal year.

Insurance companies in California have also been calling for lower drug prices.

“This is unsustainable, and it’s going to have a major impact on the price of health care,” said Nicole Evans of the California Association of Health Plans.

Insurers see a correlation between the cost of a drug and adherence, she said. Patients who can’t afford what they’re prescribed will sometimes split pills or not take them at all.

“If you ultimately have to go back and take a second round, because you didn’t take it right the first time, or you never took it and you develop a more serious health condition, it’s not good for the consumer,” Evans said. “And it costs the health care system more money.”

Insurers say it’s only a matter of time before the costs of specialty drugs will force them to raise monthly premiums for everyone in the health plan.

The pharmaceutical industry adamantly defends its prices.

Sources: Kaiser Health News; June 24, 2015; and Express Scripts; May 13, 2015.

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