Expiration Of Healthcare Subsidies Will Have Domino Effect, Leading To Higher Prices And Increased Medical Debt

The Burden of Medical Debt – Section 3: Consequences of Medical Bill  Problems – 8806 | KFFSource: Healthcare Dive, by Heather Korbulic

The COVID-19 pandemic forced the United States to cope with a health insurance crisis it didn’t anticipate. Congress and the Biden administration responded by enacting policies to expand access to subsidized private health plans sold through Affordable Care Act exchanges.

The results were nothing short of spectacular: Fewer than 10% of Americans are uninsured, compared to nearly 22% in 2010. In addition, a record 14.5 million consumers are enrolled in a state health insurance exchange plan.

However, unless Congress takes action, the subsidies will expire at the end of the year, and millions of Americans will experience dramatic price increases, become uninsured and likely accrue medical debt.

The American Rescue Plan (ARP) enabled consumers to enjoy lower premiums and access to premium tax credits regardless of income. This made health insurance more affordable for individuals and families, which led to a record 21% increase in public health exchange enrollment compared to prior coverage years.

State-based exchanges enrolled an additional 600,000 individuals, according to the National Academy for State Health Policy, which also reported the average premium savings ranged from 7% to 47% across the state exchanges. Further, 20% or more of enrollees are paying less than $25 per month for coverage in at least eight states. It is a significant achievement to make health insurance affordable for those who once considered coverage financially out of reach.

Returning consumers can even save, on average, 40% off of their monthly premiums because of enhanced tax credits in the ARP, according to the CMS. These changes are possible because the federal government reduced the salary ceiling for tax credits, recognizing a universe of low and middle-income people who earned too much to qualify for Medicaid but found the prices of most insurance plans out of reach.

In some cases, the credits saved individuals thousands a year. The cost, for instance, of a “silver” health plan is currently $390 a month with subsidies for individuals earning $55,000 annually, down from $560 a month.

Unfortunately, those cost savings may end, leaving individuals with the hard decision of either paying for coverage or paying for basic necessities. More often than not, the latter wins out. Securing insurance through an employer isn’t always a better (or even viable) option, since premiums in employer-sponsored plans increased 3.6% in 2021 and 3.9% in 2020, according to the Urban Institute.

Medicare Could Save Billions Buying Generic Drugs At Mark Cuban’s Prices

Medicare drug prices: The U.S. could save billions on generics buying at Mark  Cuban prices, study findsSource: NBC News, by Berkeley Lovelace Jr.

How can the U.S. government lower the high price of prescription drugs? It may need to look to tech entrepreneur Mark Cuban for answers.

Medicare could have saved nearly $4 billion in 2020 by purchasing generic drugs at the same prices offered by Cost Plus Drug Company, Cuban’s online pharmacy that launched this year, according to a study published Monday in the journal Annals of Internal Medicine.

 

Cost Plus Drug offers certain generic drugs, such as the depression drug fluoxetine or blood pressure medication lisinopril, at discounted prices, by selling medications at a fixed markup of 15% plus a $3 flat fee, according to the company’s website. Cost Plus doesn’t offer brand-name drugs or accept insurance, so patients pay for medications out of pocket.

The study “does show that Medicare is overpaying for some of the generic drugs,” said Dr. Hussain Saleem Lalani, a researcher at Brigham and Women’s Hospital in Boston and the study’s lead author. “And this is a conservative estimate, so the actual savings are likely higher.”

Researchers at Brigham and Women’s Hospital compared the price of 89 generic drugs sold by Cost Plus Drug in 2022 to the price paid by Medicare Part D plans in 2020. Medicare Part D provides coverage for a wide range of prescription drugs, including for self-administered drugs, such as for those to control high blood pressure or diabetes.

After adjusting for changes in drug costs between 2020 and 2022, the researchers found that Medicare paid more on 77 generic drugs: $8.1 billion compared with $4.5 billion if Medicare had purchased the drugs at the same prices as Cost Plus.

Only 12 drugs did not appear to offer any savings.

The researchers did not account for out-of-pocket costs for Medicare enrollees, meaning it was unclear how much lower their cost at the pharmacy counter would have been had Medicare purchased the drugs at a lower price.

The findings illustrate the need for policy reform, the authors wrote.

Medicare “could save a lot more money if it had stricter policies on how it paid for drugs,” Lalani said. “There’s a lot more reforms that could be done to optimize the generic drug pricing system, and we should really consider doing those things to lower costs for patients,” he said.

Price negotiation a ‘black box’

Lalani said the study had limitations: Researchers could only compare prices for drugs that were sold by Cost Plus Drug, which represent 25% of the approximately $38 billion in Medicare Part D generic drug spending in 2020.

Juliette Cubanski, deputy director of the program on Medicare policy at the Kaiser Family Foundation, said the study certainly raised the question of whether Medicare plans are leaving money on the table, and could be getting better deals on drugs. She was not involved in the research.

Right now, price negotiation is “just a completely black box. There’s not a lot of transparency,” she said.

“We’re kind of putting the burden on the patients to chase down lower prescription drug prices as opposed to kind of finding ways to make them widely accessible,” she said.

However, making changes that could tackle the problems of generic drug pricing has not been the primary focus of policymakers, Cubanski said. That’s because the kinds of medications patients usually struggle to pay for are brand-name drugs.

Democrats, in particular, have pushed for laws that allow Medicare to directly negotiate prices of the most expensive drugs, which is currently prohibited.

“Saving $3.6 billion is certainly worth pursuing if there’s an opportunity to get that amount of savings,” she said. But most of the dollars from Medicare “are going to higher-priced, brand name and specialty drugs.”

Lalani, who led the study, said it underscores the need for a closer look at our prescription drug pricing system, which includes wholesalers, pharmacy benefit managers, pharmacies and insurers.

New Drug Prices Soar To $180,000 A Year On 20% Annual Inflation

New drug prices soar to $180,000 a year on 20% annual inflation |  BenefitsPRO

Source: BenefitsPRO, by Robert Langreth

While gasoline and food prices soar, few products rival the inflation in prices on newly launched prescription drugs, according to a new study.

The median launch price of a new drug in the US soared from $2,115 in 2008 to $180,007 in 2021, a 20% annual inflation rate over the period, researchers at Harvard-affiliated Brigham and Women’s Hospital in Boston found. Even after adjusting for factors such as drugmakers’ focus on expensive disease categories like cancer and estimated discounts that manufacturers give some purchasers, the annual inflation rate in launch prices over the period was still almost 11%.

Drug companies regularly introduce new medicines that aim to improve upon the efficacy or tolerability of existing treatments. While public attention has focused on year-to-year price hikes for existing prescription medicines, the study indicates that soaring launch prices also contribute to rising costs.

Over 47% of new drugs introduced in 2020 and 2021 cost more than $150,000 per year, compared to just 9% of new drugs from 2008 to 2013, the researchers found. The study, published in the JAMA medical journal, is based on an analysis of annual list prices of 548 drugs launched between 2008 and 2021 and uses price data from SSR Health research firm. The analysis of discounted prices was based on a smaller subset of 395 drugs.

“The trend in prices for new drugs outpaces growth in prices for other health care services,” the researchers concluded in the study.

California Wants to Slash Insulin Prices by Becoming a Drugmaker. Can it Succeed?

California aims to slash insulin prices and challenge Big Pharma. Can it  succeed? - Los Angeles Times

Source: California Healthline, by Angela Hart

California is diving into the prescription drug business, attempting to achieve what no other state has done: produce its own brand of generic insulin and sell it at below-market prices to people with diabetes like Sabrina Caudillo.

Caudillo said she feels like a “prisoner” to the three major pharmaceutical companies that control the price of insulin, which ranges from $300 to $400 per vial without insurance. The price Caudillo paid in 2017, when she was diagnosed, is etched into her memory: $274.

“I remember crying my eyes out at CVS and realizing it’s going to be like this for the rest of my life,” said Caudillo, 24, a college student who lives in La Puente, in Southern California. She now has insurance that covers the entire cost of the lifesaving drug but still has trouble affording her insulin supplies and paying the monthly premium for her plan.

“This disease is really expensive, and I’m barely making it every month,” Caudillo said.

Gov. Gavin Newsom’s administration said roughly 4 million Californians have been diagnosed with diabetes, a disease that can destroy organs, steal eyesight, and lead to amputations if it’s not controlled. One in 4 people who have diabetes and rely on insulin cannot afford it, forcing many to ration or forgo the drug, the administration added.

Newsom is asking state lawmakers to pump $100 million into an ambitious initiative to launch California’s generic drug label, CalRx, and begin producing insulin in the next few years, said Alex Stack, a Newsom spokesperson. The state is also working to identify other generic drugs it could bring to market, targeting those that are expensive or in short supply.

To start, the goal is to dramatically slash insulin prices and make it available to “millions of Californians” via pharmacies, retail stores, and mail order, said Dr. Mark Ghaly, secretary of the California Health and Human Services Agency.

But state health officials are still negotiating a contract with a drug manufacturer to make and distribute insulin and have not answered key questions such as how cheaply insulin could be produced and what patients would pay. To be successful, California — and the company it partners with — must navigate a complicated pharmaceutical distribution system that relies not only on drug manufacturers but also middleman companies that work hand in hand with health insurers. Those companies, known as pharmacy benefit managers, negotiate with manufacturers on behalf of insurers for rebates and discounts on drugs — but insurers don’t always pass those savings on to consumers.

“Insulin has long epitomized the market failures that plague the pharmaceutical industry, which have resulted in keeping insulin prices high,” Vishaal Pegany, assistant secretary of the Health and Human Services Agency, told lawmakers in May. He argued that high prices “have directly harmed Californians.”

Newsom said in early May that disrupting monopolistic drug prices requires state intervention and that California can pull it off because the state — with 40 million residents — “has market power.”

But the nonpartisan Legislative Analyst’s Office questioned whether California can produce its own drugs and achieve lower insulin prices. Luke Koushmaro, a senior fiscal and policy analyst with the office, warned at a legislative hearing in May that the effort could be hampered by “considerable uncertainties” — a sentiment echoed by some Democratic lawmakers.

The Newsom administration thinks state-made insulin could cut some insurers’ spending on the drug as much as 70% — savings it hopes would trickle down to consumers. But “there is no guarantee” that the administration’s predictions of dramatic savings or wide distribution of insulin will materialize, state Assembly member Blanca Rubio (D-Baldwin Park) said at the hearing. “Who is going to write the prescriptions for this magic insulin?” she asked. “Hope is not a strategy. I’m not hearing any strategies as to how this is going to become available.”

The price of insulin has soared in recent years. A 2021 U.S. Senate investigation found that the price of a long-acting insulin pen made by Novo Nordisk jumped 52% from 2014 to 2019 and that the price of a rapid-acting pen from Sanofi shot up about 70%. The investigation implicated drug manufacturers and pharmacy benefit managers in the increases, saying they perpetuated artificially high insulin prices.

“Insulin manufacturers lit the fuse on skyrocketing prices by matching each other’s price increases step for step rather than competing to lower them, while PBMs, acting as middlemen for insurers, fanned the flames to take a bigger cut of the secret rebates and hidden fees they negotiate,” U.S. Sen. Ron Wyden (D-Ore.) said when the report was released.

Contacted by KHN for comment, the trade associations that represent brand-name drugmakers, pharmacy benefit managers, and California health insurers blamed one another for the increase in prices.

Under Newsom’s plan, generic forms of insulin — known as “biosimilars” because they are made with living cells and mimic brand-name drugs on the market — would be widely available to insured and uninsured Californians.

If Newsom’s $100 million initiative is approved by lawmakers this summer, the state would use that money to contract with an established drugmaker to begin supplying CalRx insulin while the state constructs its own manufacturing facility, also in partnership with a drugmaker.

The administration is currently negotiating with drug companies that can produce a reliable supply of insulin under a no-bid contract, but no partnership has been formalized. The insulin would be branded with images associated with the state, such as the “California Golden Bear.” And, Pegany said, the packaging could boast that the lower-priced insulin was brought to patients by state government.

“There’s a short list of people who would even compete for this,” Ghaly told KHN in May. “We’re going to put together competition and get a partner we think is going to deliver not just the soonest, but something that we think is sustainable.”

On the short list is Civica Rx, a nonprofit drugmaker based in Utah. Civica announced independently in March that it was preparing to produce biosimilar insulin — exactly what California is seeking. The FDA last year approved the first biosimilar, interchangeable insulin product, and Civica plans to make three types of generic insulin to compete with the brand-name versions made by Eli Lilly and Co., Sanofi, and Novo Nordisk.

Allan Coukell, Civica’s senior vice president of public policy, told KHN that the drugmaker has had discussions with the Newsom administration and is in talks with other states.

Civica aims to market insulin for close to the cost of making it, rather than charging markups and making profits, he said. Coukell said the company plans to bring biosimilar insulin to the market for roughly $30 per vial and $55 for a box of five pen cartridges.

Coukell acknowledged that Civica may have to work with pharmacy benefit managers, which also help health insurers determine which drugs they will cover, to distribute the medicine but doesn’t expect that to cause a big price increase. “Our goal is to make these insulins available to any American who needs them,” Coukell said. “Our goal is to have market impact, not market share.”

The state has had discussions with other companies, including celebrity investor Mark Cuban’s for-profit drug company, the Mark Cuban Cost Plus Drug Company. It is building its own manufacturing plant, like Civica, but for now sells drugs online to anyone at wholesale cost plus a 15% markup. Founder Dr. Alex Oshmyansky said that the company’s talks with California fizzled out early on but that he’d be open to future discussions. Cuban is the chief investor in the company, Oshmyansky said.

“America is the wealthiest country in the history of human civilization, so for our citizens to not be able to afford medications, including insulin, due to market manipulations is terrible,” Oshmyansky said.

For people with diabetes like Caudillo, relief can’t come fast enough. She stockpiles insulin in case she can no longer afford health insurance and donates extra to other people in need.

“I know how expensive it is when you aren’t covered, and if you don’t pay that money, you’re going to be in the hospital fighting for your life,” she said. “Your body goes into decay, and your organs slowly shut down. It’s very painful. No diabetic should have to go through that.”

Medicare Surprise: Drug Plan Prices Touted During Open Enrollment Can Rise Within a Month

Medicare Surprise: Drug Plan Prices Touted During Open Enrollment Can Rise  Within a Month | Kaiser Health NewsSource: Kaiser Health News, by Susan Jaffe

Something strange happened between the time Linda Griffith signed up for a new Medicare prescription drug plan during last fall’s enrollment period and when she tried to fill her first prescription in January.

She picked a Humana drug plan for its low prices, with help from her longtime insurance agent and Medicare’s Plan Finder, an online pricing tool for comparing a dizzying array of options. But instead of the $70.09 she expected to pay for her dextroamphetamine, used to treat attention-deficit/hyperactivity disorder, her pharmacist told her she owed $275.90.

“I didn’t pick it up because I thought something was wrong,” said Griffith, 73, a retired construction company accountant who lives in the Northern California town of Weaverville.

“To me, when you purchase a plan, you have an implied contract,” she said. “I say I will pay the premium on time for this plan. And they’re going to make sure I get the drug for a certain amount.”

But it often doesn’t work that way. As early as three weeks after Medicare’s drug plan enrollment period ends on Dec. 7, insurance plans can change what they charge members for drugs — and they can do it repeatedly. Griffith’s prescription out-of-pocket cost has varied each month, and through March, she has already paid $433 more than she expected to.

recent analysis by AARP, which is lobbying Congress to pass legislation to control drug prices, compared drugmakers’ list prices between the end of December 2021 — shortly after the Dec. 7 sign-up deadline — and the end of January 2022, just a month after new Medicare drug plans began. Researchers found that the list prices for the 75 brand-name drugs most frequently prescribed to Medicare beneficiaries had risen as much as 8%.

Medicare officials acknowledge that manufacturers’ prices and the out-of-pocket costs charged by an insurer can fluctuate. “Your plan may raise the copayment or coinsurance you pay for a particular drug when the manufacturer raises their price, or when a plan starts to offer a generic form of a drug,” the Medicare website warns.

But no matter how high the prices go, most plan members can’t switch to cheaper plans after Jan. 1, said Fred Riccardi, president of the Medicare Rights Center, which helps seniors access Medicare benefits.

Drug manufacturers usually change the list price for drugs in January and occasionally again in July, “but they can increase prices more often,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University and a member of the Medicare Payment Advisory Commission. That’s true for any health insurance policy, not just Medicare drug plans.

Like a car’s sticker price, a drug’s list price is the starting point for negotiating discounts — in this case, between insurers or their pharmacy benefit managers and drug manufacturers. If the list price goes up, the amount the plan member pays may go up, too, she said.

The discounts that insurers or their pharmacy benefit managers receive “don’t typically translate into lower prices at the pharmacy counter,” she said. “Instead, these savings are used to reduce premiums or slow premium growth for all beneficiaries.”

Medicare’s prescription drug benefit, which began in 2006, was supposed to take the surprise out of filling a prescription. But even when seniors have insurance coverage for drugs, advocates said, many still can’t afford them.

“We hear consistently from people who just have absolute sticker shock when they see not only the full cost of the drug, but their cost sharing,” said Riccardi.

The potential for surprises is growing. More insurers have eliminated copayments — a set dollar amount for a prescription — and instead charge members a percentage of the drug price, or coinsurance, Chiquita Brooks-LaSure, the top official at the Centers for Medicare & Medicaid Services, said in a recent interview with KHN. The drug benefit is designed to give insurers the “flexibility” to make such changes. “And that is one of the reasons why we’re asking Congress to give us authority to negotiate drug prices,” she said.

CMS also is looking at ways to make drugs more affordable without waiting for Congress to act. “We are always trying to consider where it makes sense to be able to allow people to change plans,” said Dr. Meena Seshamani, CMS deputy administrator and director of the Center for Medicare, who joined Brooks-LaSure during the interview.

On April 22, CMS unveiled a proposal to streamline access to the Medicare Savings Program, which helps 10 million low-income enrollees pay Medicare premiums and reduce cost sharing. Enrollees also receive drug coverage with reduced premiums and out-of-pocket costs.

The subsidies make a difference. Low-income beneficiaries who have separate drug coverage plans and receive subsidies are nearly twice as likely to take their medications as those without financial assistance, according to a study Dusetzina co-authored for Health Affairs in April.

When CMS approves plans to be sold to beneficiaries, the only part of drug pricing it approves is the cost-sharing amount — or tier — applied to each drug. Some plans have as many as six drug tiers.

In addition to the drug tier, what patients pay can also depend on the pharmacy, their deductible, their copayment or coinsurance — and whether they opt to abandon their insurance and pay cash.

After Linda Griffith left the pharmacy without her medication, she spent a week making phone calls to her drug plan, pharmacy, Social Security, and Medicare but still couldn’t find out why the cost was so high. “I finally just had to give in and pay it because I need the meds — I can’t function without them,” she said.

But she didn’t give up. She appealed to her insurance company for a tier reduction, which was denied. The plan denied two more requests for price adjustments, despite assistance from Pam Smith, program manager for five California counties served by the Health Insurance Counseling and Advocacy Program. They are now appealing directly to CMS.

“It’s important to us to work with our members who have questions about any out-of-pocket costs that are higher than the member would expect,” said Lisa Dimond, a Humana spokesperson. She could not comment about Griffith’s situation because of privacy rules.

However, Griffith said she received a call from a Humana executive who said the company had received an inquiry from the media. After they discussed the problem, Griffith said, the woman told her, “The [Medicare] Plan Finder is an outside source and therefore not reliable information,” but assured Griffith that she would find out where the Plan Finder information had come from.

She won’t have to look far: CMS requires insurers to update their prices every two weeks.

“I want my money back, and I want to be charged the amount I agreed to pay for the drug,” said Griffith. “I think this needs to be fixed because other people are going to be cheated.”

Hospital Prices For Health Plans Vary Widely Across The U.S., Study Finds

U.S. Health Care Prices Are All Over the Map, New Study Finds

Source: Modern Healthcare, by Mari Devereaux

Study: Premiums drive consumer selections in ACA marketplaces

Consumers purchasing coverage from Affordable Care Act health insurance marketplaces are gravitating toward the cheapest plans, and healthy consumers in particular are shopping for the lowest prices, while those selecting higher-cost plans that tend to allow more provider choice have been sicker than anticipated. A federal analysis shows two-thirds of American consumers bought the lowest- or second-lowest-cost coverage in each tier in 2014, and about 50% purchased the cheapest plans last year.

The New York Times (free-article access for SmartBrief readers) (8/12)

Health Plans to Provide Access to Health Care Prices

The Health Care Cost Institute (HCCI) is working with three of the nation’s largest health insurance companies, Aetna, Humana and UnitedHealthcare, to provide consumers free access to the most comprehensive information about the price and quality of health care services. Consumers will have access to information about the relative prices of care, treatments, and procedures. HCCI will administer this information portal, which is expected to be available in early 2015. HCCI expects additional carriers to participate in the near future and be part of the initial release in early 2015. Participating insurers will continue to offer their own cost transparency tools. For more information, visitwww.healthcostinstitute.org.

Bill Would Establish Collection of Health Cost Data

Assembly member Roger Hernández (D – West Covina) announced the introduction of AB 1558. This bill would ensure public access to comprehensive and uniform information on healthcare costs and prices via a website while protecting patient confidentiality and respecting providers of care. All-payer claims databases have been established in several states including Maine, Colorado, Massachusetts, Connecticut and Kansas.

Does The Medicare Drug Discount Program Drive up Prices?

The Patient Protection and Affordable Care Act established the Discount Program to help Medicare Part D beneficiaries with their prescription drug costs while in the coverage gap. Until the Discount Program began in 2011, beneficiaries in the coverage gap paid 100% of drug costs. The Discount Program required manufacturers to provide a 50% discount on the price of brand-name drugs for beneficiaries in the gap.

The General Accountability Office (GAO) interviewed pharmacy benefit managers (PBMs) to get their take on the effects of the program. Most sponsors and PBMs told GAO that the Discount Program may be contributing to rising prices of some brand-name drugs by some manufacturers. However, most manufacturers say they don’t think that the Discount Program affected the drug prices that they had negotiated with sponsors and PBMs.

The PBMs said that some manufacturers decreased rebates for their brand-name drugs because of the Discount Program. In comparison, most of the plan sponsors did not observe manufacturers decreasing rebate amounts and most manufacturers said the Discount Program had no effects on their rebate negotiations. Most sponsors and PBMs told GAO that the Discount Program did not affect Part D plan formularies, plan benefit designs, or utilization management practices.

Prices for high-expenditure brand-name drugs increased at a similar rate before and after the Discount Program was implemented in January 2011. Specifically, from January 2007 to December 2010, before the Discount Program began, the median price for the basket of 77 brand-name drugs (weighted by the utilization of each drug) used by beneficiaries in the coverage gap increased 36.2%. During the same period, the median price for the basket of 78 brand-name drugs used by beneficiaries who did not reach the coverage gap increased 35.2%. From December 2010 through December 2011, the first year with the Discount Program, the median price for the two baskets increased equally by about 13%, the greatest increase in median price for both baskets compared to earlier individual years.

For more information, contact http://www.gao.gov/products/GAO-12-914

Last Updated 06/29/2022

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