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Assembly Member Micah Z. Kellner www.micahkellner.com

By 2010 CUNY Graduate School Public Policy Fellow Kimberly Libman

NYS Assembly Member Micah Z. Kellnerwww.micahkellner.com

By 2010 CUNY Graduate Center Public Policy Fellow Kimberly Libman

Section Title

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AS The conSumer coST

oFPhArmAceuTIcAl DrugSconTInueS To rISe

a number commercial health insurance plans haveresponded by creating a new cost sharing mechanismin their drug plans. New and high cost treatmentsare being placed on ‘specialty tiers’ within drug planformularies. These ‘specialty drugs’ treat or slow theprogression of life threatening diseases and chronicconditions such as HIV/AIDS, cancer, and multiplesclerosis. Because many of these drugs are biologictreatments or must be administered or monitoredby a physician, they carry very high costs. Unlikemost pharmaceutical drugs that are dispensed withset dollar amount co-payments, drugs on specialtytiers are assigned coinsurance rates where thepatient pays a percentage of the drug cost. Froma patient perspective the difference between payinga co-payment and paying the coinsurance ratefor a medication could be hundreds of dollars amonth. For example, common medications to treatmultiple sclerosis can cost $3,000 or more a month.Currently a person with health insurance might paya $55 co-payment for this medication. But, if theirdrug plan had specialty tiering and charged a 25%to 33% in coinsurance, the same medication wouldcost between $750 and $990 a month.As a cost sharing strategy, specialty tiersare problematic for a number of reasons. First,they violate the basic principal of insurancewhereby individuals and employers purchase healthinsurance plans so that they are protected from therisk of needing to pay for highly expensive medicaltreatments. Second, specialty tier coinsurance ratescan change unpredictably. This makes it impossiblefor patients to anticipate and budget for health carecosts. It also impedes them from having informeddiscussions with their doctors about containing thecost of their treatment. Third, where the practice of

specialty tiering is allowed, researchers nd that the

out-of-pocket costs for medications are high enoughto prohibit people from complying with the treatmentprotocols prescribed by their doctors. They mayalso force people to choose between paying forbasic living expenses or taking their medications.This is bad for both health outcomes and healthcare costs in general. As patients forgo treatmentbecause of cost concerns their health deteriorates,often necessitating more expensive emergency care.Finally, some proponents of specialty tiering arguethat such cost sharing arrangements keep health carecosts down overall by encouraging users of veryexpensive medications to choose less expensiveor generic drugs. However, there are no genericalternatives available for the biologic treatmentsthat make up the vast majority of drugs placed onspecialty tiers.The drugs that insurance plans commonlycategorize as specialty drugs are used to treatdiseases and conditions that affect almost 4 millionpeople in New York State and their families. Thisreport presents information supporting a bill thatwould prohibit the practice of specialty tiering withinthe state. Enacting this legislation will have no cost

to the state’s nancial plan and impose no new costs

to insurance plans while protecting affordable accessto prescription drugs for millions of New Yorkers. In

this scal climate the state can’t afford to leave the

health, earning, and spending potential of millions of New Yorkers unprotected from soaring drug prices.

rank Ridzi is 60 years old and lives in Albany

with his wife and two of their ve children.He was diagnosed with multiple sclerosis in1998 when he had a symptomatic episode that paralyzed his left side. After a few months, Frank recovered and regained his mobility. He has beentaking Copaxone since 2002 and now feels that hismultiple sclerosis is under control. In 2003, Frank retired from a 35-year career working for Verizon as

an Area Operations Manager and went on to work

part-time as a youth minister at St. Jude Churchin Wynantskill. Today, Frank no longer works but stays active by cycling, running, and volunteering with his church, local Boy Scout troop, and withthe National Multiple Sclerosis society.

s a retiree, Frank has health insurance throughUnited Health Care and with his Acredo prescription drug benets his medication costs $20every three months in co-payments. Although hiswife Linda still works, he is on a xed income. If hisinsurance plan were allowed to move his medicationto a specialty tier, the $800 a month coinsurance payments for his Copaxone would, “mean a lot of tough decisions, especially in this economy wherecosts are increasing and income is not.” Frank saysa choice would have to stop taking his medicationand sacrice his mobility or have his family sacricetheir standard of living. Frank is sure that without hismedication his multiple sclerosis would be not becontrolled and he would lose his ability to functionnormally. He says, “this legislation is important tome because if we go to specialty tiering I would not be able to treat my MS and I have no doubt that I would be more disabled and more crippled without the treatments that are available today.”