Anna Sutton was shocked when she received a letter from her husband’s job-based health plan stating that Humira, an expensive drug used to treat her daughter’s childhood arthritis, was now on a long list of medications considered as “non-essential benefits”.
The July 2021 letter said the family could either participate in a new effort overseen by a company called SaveOnSP and get the drug for free, or be saddled with a monthly copayment that could exceed $1,000.
“It really didn’t give us a choice,” said Sutton, of Woodinville, Washington. She added that “every FDA-approved drug for juvenile arthritis” was on the list of nonessential benefits.
Sutton had unwittingly become part of a strategy employers use to deal with the high cost of prescription drugs to treat conditions such as arthritis, psoriasis, cancer and hemophilia.
These employers are tapping into money provided through programs they have previously criticized: patient financial assistance initiatives set up by drugmakers, which some benefit managers have complained about, encourage patients to continue to take expensive brand name drugs when less expensive options may be available.
Today, however, employers, or the suppliers and insurers they hire specifically to oversee these efforts, are looking for this money to offset their own costs. Drugmakers oppose it, saying the money was primarily for patients. But some benefits brokers and companies like SaveOnSP say they can help reduce employers’ insurance costs — which they say could be the difference between an employer offering workers coverage or not.
It’s the latest twist in a long-running dispute between the pharmaceutical industry and insurers over which group is most responsible for rising patient costs. And patients are, again, caught in the middle.
Patient advocates say the term ‘non-essential’ stresses out patients even though it doesn’t mean the drugs – often called ‘specialty’ drugs because of their high price or the way they’re made – aren’t needed .
Some advocates worry the new strategies are “a way to weed out those with expensive health care needs,” said Rachel Klein, deputy executive director of the AIDS Institute, a nonprofit advocacy group. . Drug-dependent workers may feel pressured to change insurers or jobs, Klein said.
Two versions of the new strategy are in play. Both are primarily used by self-insured employers who hire providers, like SaveOnSP, who then work with employers’ pharmacy benefit managers, like Express Scripts/Cigna, to implement implement the strategy. There are also smaller providers, like SHARx and Payer Matrix, some of which work directly with employers.
In one approach, insurers or employers continue to cover drugs but designate them as “non-essential,” allowing health plans to circumvent annual limits set by the Affordable Care Act on the amount patients can pay for drug costs. . The employer or hired vendor then increases the worker’s co-payment, often sharply, but offers to significantly reduce or eliminate that co-payment if the patient participates in the new effort. Workers who agree to enroll in drugmaker financial assistance programs meant to cover drug copays, and the provider monitoring effort aims to capture the maximum amount the drugmaker provides each year, according to a lawsuit filed in May by drugmaker Johnson & Johnson against SaveOnSP, which is based in Elma, New York.
The employer still has to cover part of the cost of the drug, but the amount is reduced by the amount of the co-payment that is accessible. This assistance can vary considerably and reach up to $20,000 per year for certain medications.
In the other approach, employers do not bother to name non-essential drugs; they simply drop coverage for specific drugs or drug classes. Then, the outside provider helps patients provide the financial and other information needed to apply for free drugs from drug manufacturers through charitable programs for uninsured patients.
“We’re seeing it in every state at this point,” said Becky Burns, chief operating officer and chief financial officer of the Bleeding and Clotting Disorders Institute in Peoria, Ill., a federally funded hemophilia treatment center.
The strategies are primarily used in self-insured employer health plans, which are governed by federal laws that give employers great flexibility in designing health benefits.
Still, some patient advocates say these programs can lead to delays for patients accessing drugs while claims are being processed — and sometimes unexpected bills for consumers.
“We have patients who are billed after they’ve maxed out their support,” said Kollet Koulianos, vice president of payer relations at the National Hemophilia Foundation. Once she gets involved, sellers often claim invoices were sent in error, she said.
Even though only about 2% of the workforce needs the drugs, which can cost thousands of dollars a dose, they can pose a heavy financial liability for self-insured employers, said Drew Mann, benefits consultant social services in Knoxville, Tennessee, whose clientele includes employers who use variations of these programs.
Before employer health plans took advantage of this assistance, patients often signed up for these programs themselves, receiving coupons that covered their share of the cost of the drug. Under these circumstances, drugmakers often paid less than they did under the new employer-sponsored plans because a patient’s out-of-pocket costs were capped at lower amounts.
Brokers and CEOs of companies offering the new programs say that in most cases patients continue to get their drugs, often with little or no out-of-pocket.
If workers aren’t eligible for the charity because their income is too high or for some other reason, the employer can make an exception and pay the claim or seek an alternative solution, Mann said. Patient groups have noted that some specialty drugs may not have an alternative.
How this practice will play out in the long term remains unclear. Drugmakers offer both co-pay assistance and charity care, in part because they know that many patients, even those with insurance, cannot afford their products. The programs are also good public relations and a tax deduction. But the new emphasis by some employers on maximizing how much they or their insurers can collect from the programs could cause some drugmakers to challenge the new strategies or even reconsider their programs.
“Even though our client, like most manufacturers, offers billions in rebates and rebates to health insurers as part of their negotiations, insurers also want this additional pool of funds, intended to help people who cannot respect the copay,” said Harry Sandick, an attorney representing J&J.
J&J’s lawsuit, filed in U.S. District Court in New Jersey, alleges patients are ‘coerced’ into participating in co-pay assistance programs after their medications are deemed ‘non-essential’ and therefore not “no longer subject to the ACA’s annual maximum.”
Once patients are enrolled, the drugmaker’s money goes to the insurer or employer plan, with SaveOnSP retaining 25%, according to the lawsuit. He claims that J&J lost $100 million because of these efforts.
None of this money counts toward patient deductibles or out-of-pocket maximums for the year.
In addition to the lawsuit over the co-pay assistance program’s efforts, there have been other reactions to new employer strategies. In a letter to physicians in October, the Johnson & Johnson Patient Assistance Foundation, a separate entity, said it would no longer offer free drugs to insured patients beginning in January, citing the rise of these “funding programs alternatives”.
Still, J&J spokesman LD Platt said the drugmaker plans, also in January, to roll out further assistance to patients who may be “underinsured” so they are not affected by the decision of the foundation.
In a statement, SaveOnSP said employers object to pharmaceutical companies “using their employees’ continued need for these drugs as an excuse to continue to raise drug prices” and that the company is “simply advising these employers on how to combat rising prices while providing employees with the drugs they need at no cost to employees.”
In a court filing, SaveOnSP said drugmakers have another option if they don’t like insurers’ and employers’ efforts to maximize what they can get from programs: reduce the amount of assistance available. . That’s exactly what J&J, according to the filing, recently reduced from $20,000 to $6,000 per participant per year in the amount of co-payment assistance for the psoriasis drugs Stelara and Tremfya. The filing indicated that SaveOnSP participants would still not have a co-payment for these drugs.
For Sutton’s part, her family participated in the program offered by her husband’s work-based insurance plan, agreeing to SaveOnSP monitoring their enrollment and payments from the drugmaker.
So far, her 15-year-old daughter has continued to receive Humira and has not been charged a copayment.
Even so, “the whole process feels a bit slimy to me,” she said. “Patients are caught between the pharmaceutical industry and the insurance industry, each trying to get as much money as possible from the other.”
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