Rather than paying a fixed copayment, Californians whose medications are placed on specialty tiers are often forced to pay coinsurance — or a percentage of the total cost of the drugs — which can mean hundreds or even thousands of dollars per month in out-of-pocket costs for a single medication.

Patients with chronic conditions often must take multiple medications that are typically newer, produced in lesser quantities than other drugs and not available as less expensive generics. 

When insurers arbitrarily drive up coinsurance costs for the most vulnerable patients, they are undermining the basic premise of health insurance, which is to spread and share health care costs. Specialty tier cost structures pass the financial burden of health care on to the most vulnerable patients, while the healthy and the health insurers pay less. 

There is some evidence that specialty tiers may be inherently illegal according to both California and federal law.

Specialty tiers apply a totally different benefit structure to certain medicines that patients with particular diseases need, and disproportionately affect certain demographic groups, especially low-income families.

By selectively applying high cost-sharing requirements to these drugs, while requiring lower, fixed copayment requirements for other drugs, plans using specialty tiers force certain patients who suffer from certain diseases to pay much more than other patients.

The California Chronic Care Coalition — along with more than 20 patient and provider groups — has called on California Insurance Commissioner Dave Jones to investigate whether health insurance specialty tiers cost structures are illegal under California and federal law. 

The ACA prohibits discrimination against patients based on disease or condition, their expected length of life or their quality of life. The California Unruh Civil Rights Act provides that all persons in California are free and equal, and entitled to full and equal accommodations no matter their disability or medical condition including, but not limited to, chronic or episodic conditions.

Both federal and California law empower the California insurance commissioner to take action to prevent discrimination in health care, particularly within the health insurance marketplaces mandated by the ACA. 

Passing common-sense reforms to protect all Californians from health insurance practices that discriminate against the most vulnerable patients is needed now.

An area of concern surrounds specialty drugs that are often expensive and essential for patients’ survival. Patients suffering from cancer, HIV/AIDS, hepatitis, and multiple sclerosis, to name a few, require many of these specialty drugs for treatment. These drugs can easily cost thousands of dollars for a single treatment, which would be difficult for many Californians to afford.

Fortunately, last year state law capped the annual out-of-pocket limit that patients would pay for covered essential benefits to $6,350 for individuals and $12,700 for a family. However, given the financial burden of these high-cost specialty drugs, 45,000 Californians with serious and chronic conditions will max out their out-of-pocket limit in their first month of coverage. It is fundamentally unfair to ask these Californians to pay over $6,000 in one month, a cost that could easily be triple their monthly take-home pay, for their life-saving medications.

These specialty drugs need to be more readily available by removing cost barriers to those who depend on them. This year, I am authoring AB 1917 to allow patients to annualize prescription drug costs while also capping their monthly out-of-pocket expenses. Spreading out these costs is fair to both consumers and insurers. Insurance companies will still share these drug costs with consumers, and in turn, patients will be better able to budget and plan for the cost of their health care and fulfill their medical needs.

The California Health Benefits Review Program found that on average, people with drug costs higher than the limit set in AB 1917 have approximately 147 claims in a year — that is, 147 doctor visits, lab tests, CT scans, MRIs, emergency room visits and perhaps another prescription or two. This further demonstrates the need to remove financial barriers to these necessary specialty drugs to reduce strains on our health care system.

Too many patients are forced to choose between paying for their life-saving drugs, housing, child care, or food. In turn, many are suffering, and even face death from illnesses that are treatable. Further capping and annualizing the amount patients pay for prescription drugs ensures that Californians with serious illnesses can realistically pay for their health care. Most importantly, this bill would increase patients’ access to their essential life-saving drugs. 

The challenge of paying for these treatments illustrates the worsening problem of paying for progress in fighting this devastating disease.  

In recent years, health insurers have stepped up efforts to push more of the cost burden of MS and other specialty drugs on to their members. Since Medicare drug plans embraced the use of tiered drug benefits as a way of encouraging the use of generic or other less-costly alternatives to brand-name drugs, tiered drug benefits have become increasingly common across all types of health insurance plans. Specialty tiers are now the typical approach insurers take for covering specialty pharmaceuticals, while requiring patients to pay 25% to 50% of the drug’s total cost. 

Choosing a generic that works as well and costs significantly less than the brand-name drug seems a reasonable alternative to most people. But forcing patients to pay 25% or more of a drug that typically costs more than the average American household income even when patients have no other choice seems discriminatory and inconsistent with the concept of shared risk that underpins health insurance. Questioning the discriminatory nature of specialty tiering in drug benefits is critical as transformations in health insurance and care continue. 

The ACA provides significant relief by establishing an annual out-of-pocket (OOP) limit on nearly all commercial health insurance policies’ coverage of “essential health benefits,” including prescription drugs. Though exceptions exist, the annual OOP limits are $6,350 for individual and $12,700 for family plans in 2014, with insurers paying 100% of costs above those amounts. While this safeguard helps prevent catastrophic debt and/or bankruptcy, it still leaves people with MS in enormous financial stress until those OOP limits are reached — often within the first few months of the year. 

Advocates for Californians with MS and others relying on specialty drugs urge state lawmakers to support a bill — AB 1917, by Assembly member Rich Gordon (D-Menlo Park) — that would allow health plan enrollees with extraordinary medical needs to spread their out-of-pocket costs out across the year. It builds on the ACA by limiting enrollee cost sharing for qualified prescriptions to more reasonable monthly expenses. It won’t cost insurers any more than what they have to cover anyway and will help prevent Californians from dropping off their medications, skipping doses or getting into serious medical debt.  

This common-sense measure would not address the legal question of whether specialty tiers in prescription drug benefits constitute discriminatory practices by health insurers. Nonetheless, it would provide great benefit to patients’ physical and financial health and well-being. California could be the first state to adopt this proposal, maintaining its role as a national leader in progressive consumer protection.

Specialty drugs — those used to treat certain chronic or complex conditions — are excessively expensive. Case in point is Sovaldi, a hepatitis C medication that costs $84,000 for one round of treatment — $1,000 per pill. If everyone in the U.S. currently infected with hepatitis C was treated with Sovaldi, the nation’s total spending on prescription drugs would double from $300 billion annually to $600 billion annually.

Concerns about paying these costs are significant, particularly for publicly funded programs like Medi-Cal. Nearly one-third of those infected with hepatitis C are covered through Medicaid so this is a budget-buster. Current Medi-Cal payment rates do not adequately account for these expensive drugs. The cost for Sovaldi is devouring health plans’ pharmacy budgets.

Given the prevalence of hepatitis C, Medi-Cal managed care plans want to work with the state on strategies that ensure costs of specialty drugs are covered sufficiently so that individuals can access necessary medications.

Sovaldi is just one example of pricey prescriptions weighing down our health care system. Specialty drugs account for fewer than 1% of all prescriptions in the U.S., but consume a hefty 28% of prescription spending.

Medi-Cal managed care plans need immediate relief and a long-term strategy that broadly addresses the rising use — and cost– of specialty drugs. If drug manufacturers won’t moderate their prices, the state may have to negotiate with them on behalf of everyone.

As more people move onto Medi-Cal managed care plans, we are essentially growing a two-tier system of health care. Medi-Cal is California’s Medicaid program. Those who can afford private insurance plans have doctors who may have more time to work through the existing processes to attain a higher tier drug for their patients. However, those in vulnerable low-income situations are seeing their doctors most likely in clinics, where doctors are short on time and do not have the resources — i.e. staff, time, etc. — to follow-up on pre-authorization appeals. The Prescriber Prevails Act levels the playing field for access to needed drugs for low-income patients by shortening the pre-authorization process for Medi-Cal doctors.

Prescriber Prevails strengthens the doctor and patient relationship by legislating that a doctor’s professional and reasonable judgment prevails in prior authorization requests for specific and protected therapeutic drug classes within the Medi-Cal program.

Formularies and step-therapy programs are not always sufficient to treat certain vulnerable populations. The federal government enacted Medicare Part D, which included six protected classes of therapeutic drugs. The use of these drugs under Medicare regulations must comply with two criteria:

• Where restrictions on that class would have major or life threatening consequences and/or must be taken for life;
•  Where there is a significant need for disease or disorder to be treated by multiple drugs within a specified class.

AB 1814 creates a similar, protected class structure for drugs prescribed by a Medi-Cal beneficiary’s treating physician that would be covered under the Medi-Cal program. These drug classes include anti-retrovirals for Aids/HIV, anti-psychotics, immune suppressants for anti-rejection and epilepsy/anti-convulsants. These conditions are life-threatening and unique; the initial treatment is typically the best chance to get the disease under control.

New pharmaceuticals and treatments are emerging rapidly, while insurance formularies lack the capacity to keep pace with the evolving environment. In the meantime, patient care is suffering and individuals are losing access to receive the best pharmaceuticals that may control their condition sooner rather than later. Prescriber Prevails Act would avoid drug resistance, spread of disease transmission and ensure that patients have greater opportunity to receive care.

Current formulary restrictions have multiple appeals processes that patients have to go through. Step therapy correspondingly delays the patient from obtaining the most suitable drug combinations for their case.

Prescriber Prevails has been a precedent in other states and continues to allow managed care plans to create their own formularies and “carve out” certain drug classes. AB 1814 requires Medi-Cal managed care plans to implement, “prescriber prevails” for medically necessary prescription drugs within these protected classes. These life-threatening illnesses can be controlled for low-income individuals under Medi-Cal, which would save overall costs by controlling these illnesses from the start.