Scrip 100 December 2008

POLICY & REGULATION
I
t is happening in all parts of the US Medicare Part D plans, however, have subset of specialty products. In September
healthcare system – faced with an been at the forefront of using the much 2008 it responded to a report criticising price
ageing population and increased demand more aggressive tiering system and thus trends and stated: “Four recent independent
for all kinds of interventions, government these Medicare formularies do not mimic polls conducted by the Wall Street Journal/
and private insurers are pushing more formularies in private insurance plans. In a Harris Interactive, the Medicare Rx Education
of the ﬁ nancial burden of illness to the way, Medicare D plans have revolutionised Network, AARP, and Medicare Today
patient. But a debate has erupted stemming the shape of the market by placing more demonstrate that a large majority of seniors
from formularies with more tiers than the expensive drugs into additional tiers, says Dan – between 65% and 75% – are saving money
traditional three, and thus higher Mendelson, president of Avalere Health, a US from their Medicare drug coverage, as a
co-payments. consulting and national policy analysis ﬁ rm. higher percentage of seniors reported saving
The costs of speciality drugs – primarily Using its proprietary database, which money in 2007 than in 2006.”
high-cost injectables and biotech products houses information about every Medicare But tier four is a pressing concern for
used to treat fairly common diseases, drug plans’ drug coverage and associated seniors who are not living at poverty but
including multiple sclerosis, rheumatoid beneﬁ ts, Avalere found that, on average, near poverty, Mr Mendelson said. “Let’s say a
arthritis, anaemia, hepatitis C and some Medicare Part D beneﬁ ciaries pay 25-35% person contracts cancer or multiple sclerosis
cancers – have been rising as much as 20% of the total cost of tier four drugs, and that that requires treatment with therapies where
a year recently. One scheme to deal with among Medicare’s top 10 Part D plans, nine most of the drugs are in the fourth tier – that
the escalating costs has been the subject use Tier four formularies. Because there are can be devastating for them, and it’s not like a
of numerous editorials on the pages of no generics for specialty drugs, patients must lot of these folks can go out and get another
US newspapers – it involves a system that either pay or do without, unless they can get job.”
places most of the high-cost drugs in a newly some assistance from charitable groups or As more and more drugs go into tier four,
created fourth tier, in which beneﬁ ciaries patient assistance programmes run by Mr Mendelson believes there will be more of
must pay a percentage of the total drug cost the manufacturer. an outcry. “The Medicare folks are using this
(generally 20-35%) out of their own pocket. Although one insurer, Humana, was the tier four as a way to expose people to the full
For many of these patients, that can mean a ﬁ rst to experiment with tier four, the concept cost of medication so as to generate some
bill of $300 to $600 a month (or even into never entered the mainstream until Medicare revenues, but that position will be challenged
the thousands of dollars) for a drug that they Part D plans were put together. When the by the policy process – and that takes a
may need for many years. Medicare drug beneﬁ t took effect in January while,” he said.
One industry advisor has called it a move 2006, about 30% of plans had a fourth tier, Most likely, the practice will be curtailed,
to tie members’ payments to the true cost positioning it as a way to make the drug Mr Mendelson predicted. The initial focus will
of the drug. The scheme keeps premiums beneﬁ t affordable for most seniors. “About probably be on Medicare, where it is easier
low for the other, healthier members of the 90% of Medicare plans now have four tiers, to legislate changes. “They would not even
insurance pool, but it can be costly for those and sometimes ﬁ ve,” Mr Mendelson told Scrip. need legislation, as they could curtail the
who become chronically ill. Social critics say it “In comparison, the use of more tiers has practice through regulation,” he added. As just
gets to the fundamental question of “What is grown in a few years from negligible to about one example, those in the government who
insurance?”, and they ask: What are the ethical 10% for workers who get their insurance oversee the Medicare standalone drug plans
issues of shifting to sick people the costs of through their jobs. I would expect the use of and approve bids could say, through new
essential interventions? tier four to continue to grow rapidly over the regulations, that a plan cannot charge move
It may surprise many, but seniors are most next few years.” than 20% of the drug through the fourth tier.
likely to be exposed to a fourth tier for “They have a range of things they can do
expensive drugs. This is because the majority
of Medicare “Part D” prescription-drug plans
It’s not like a lot of these folks
to curtail the practice through regulation.”
For private insurers, Mr Mendelson believes
are now requiring seniors to pay what is can go out and get another job the practice might be addressed through an
more appropriately called “co-insurance” action akin to a federal national catastrophic
than simply a bigger co-payment. (US illness rights bill.
insurers administer the drug beneﬁ t, and are The insurers themselves determine which Many argue that four tier plans could be
subsidised by the government, with patients drugs fall into different pricing tiers. Some totally counterproductive and ultimately more
paying small monthly premiums.) will move a product from tier four to a lower costly if they lead to nonadherence, excess
This is a stark contrast to US workers tier if it ﬁ nds that the medication can reduce hospitalisation, etc.
obtaining their drugs through their employers, hospitalisation. Some of the insurers do have In early 2008, The New York Times described
who buy most private health insurance. The an annual out-of-pocket spending limit for what some tier four co-payments entailed.
workers traditionally pay ﬁ xed amounts, or patients faced with high co-insurance from a One patient who had been paying only a
co-pays, when purchasing a prescription drug, tier four product. $20 co-payment for a month’s supply of the
regardless of the actual cost of the drug. Medicare ofﬁ cials have said that most multiple sclerosis drug Copaxone (glatiramer
Pharmacy beneﬁ t managers have set up a patients who did not have other drug acetate) was told that under a tier four
system of tiered co-payments, where a patient coverage before the Part D plans came into payment plan her monthly cost for a 30 days’
might pay $5-10 monthly for a generic (tier existence are saving a substantial amount supply would escalate to $325, or about
one), $20-30 for a preferred brand (tier two), even if their drugs are in the fourth tier. $3,900 a year. Another patient was told that,
and $45-50 for a brand not preferred by the Additionally, the acting administrator of the under the plan that she had selected, the
insurer (tier three). A few of the plans for Centers for Medicare and Medicaid Services targeted anticancer Tykerb (lapatinib) for
workers have become more aggressive and recently stated that millions of elderly advanced breast cancer would be a tier four
have a fourth tier for expensive biologicals Americans are “living better” because of the drug. She believed that she could not afford
or lifestyle drugs, and there are patients who drug beneﬁ t. it, with her share coming in at more than a
face escalating costs for certain high-priced PhRMA, the US trade group, also chooses thousand dollars per month.
brands, even without a fourth tier. to view the larger picture when addressing An editorial in the same paper, entitled
The insurers that put together standalone concerns about high prices for the very small “When Drug Costs Soar Beyond Reach”,
www.scripnews.com/supplements Scrip 100
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