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Happenings in Health Insurance

High Costs Of HIV Drugs On Some Illinois Insurance Plans May Be Discriminatory, Say Advocates

February 27th, 2015 | Comments Off | Posted in Health Insurance today

Two major insurers are charging much more than others for several common HIV and AIDS medications in Illinois, drawing complaints from AIDS advocates that the companies may be trying to discourage high-cost patients from choosing their plans on the federal health insurance marketplace.

Several standard treatments cost more than $1,000 per month on many Coventry Health Care and Humana plans, while some of the same drugs cost as little as $35 on plans other insurers sell on the exchange, according to an AIDS Foundation of Chicago analysis.

“While certainly there are plans on the marketplace that offer good coverage, what we think these companies are doing is putting out a signal that people with HIV are not welcome on these plans,” said John Peller, the foundation’s president and CEO.

The AIDS Foundation warned Coventry, Humana and two other insurers in January letters that the way they are pricing the drugs may violate federal protections against discrimination. The Affordable Care Act forbids insurers from discriminating against people with pre-existing conditions.

Coventry and Humana lowered the costs of some of the drugs in Florida after nonprofits filed a federal complaint there, but prices remain the same in Illinois. Insurers noted that Florida has a state statute that specifically regulates coverage for HIV and AIDS patients, while Illinois does not.

The Illinois insurers said drugs’ rising costs, a changing patient pool and shifting costs of medical services all affect the way they price drugs and design plans.

“Our goals are to help our members be healthy and access the care they need by assisting with the strict patient compliance that these specialty medications require while keeping our health plans affordable,” Coventry spokesman Rohan Hutchings said in an email. All plans on the marketplace include out-of-pocket maximums that limit patients’ annual spending, he added.

Placing drugs for AIDS and HIV, diabetes, cancer and other chronic conditions into higher-cost categories, or tiers, within an insurance plan is sometimes called “adverse tiering” and has been documented by researchers. Patient advocates say the tiering may be a new way for insurers to keep high-cost patients off their plans, a common practice before the Affordable Care Act prohibited it.

A recent Harvard study published in the New England Journal of Medicine found evidence that insurers were adversely tiering HIV and AIDS drugs on 12 of 48 plans sold on the federal exchange in 12 states. People with midrange “silver” plans that were adversely tiered would pay about $3,000 more per year for their drugs than those in other plans, according to the study.

“We can’t say that the intent of these formularies is to discriminate, because we can’t read the minds of the people who made it,” said Dr. Benjamin Sommers, an assistant professor of health policy and economics at the Harvard T.H. Chan School of Public Health and one of the study’s authors. “But the result of these formularies is to discriminate.”

When Washington, D.C.-based Avalere Health looked at drug costs on silver plans in eight states, the consultant found more than a quarter of plans placed five classes of drugs — for HIV and AIDS, cancer and multiple sclerosis — in high-priced specialty tiers.

The AIDS Foundation of Chicago looked at how insurers tiered seven standard treatment regimens recommended by the Department of Health and Human Services. The foundation found that Coventry and Humana place nearly all of the drugs in the treatments in the fifth tier, their highest. Other insurers place some of the same drugs in lower tiers, resulting in lower treatment costs.

Because insurers don’t make public the discounts they negotiate with pharmaceutical companies, the foundation estimated costs based on average wholesale prices, which it says range from about $2,400 per month to about $3,300 for the seven treatments. Patients are required to pay half the cost of tier-five drugs on most Coventry and Humana plans, according to the analysis.

Nancy Daas, a partner at Chicago-based health industry consultant CMC Advisory Group, said the pricing of HIV and AIDS treatments is not the result of discrimination but a reflection of the costs insurers pay for the drugs.

“I’m not saying it’s easy for people (to afford them), but these drugs cost a lot of money,” Daas said.

A year’s worth of a common, single-pill regimen called Atripla costs $26,000 to buy wholesale, up from $14,000 a year when the pill was introduced in 2006, Humana spokeswoman Cathryn Donaldson said in an email.

“Humana is committed to working with pharmaceutical manufacturers and organizations representing individuals with HIV/AIDS and similar organizations for people with complex chronic conditions to develop longer-term strategies addressing these underlying concerns of pharmaceutical access and affordability,” Donaldson said.

Daas also noted that drug pricing affects the costs of other plan benefits, and vice versa. By charging more for certain drugs, insurers can lower monthly premiums for all planholders, she said.

The AIDS Foundation also sent letters to Health Alliance, which operates downstate, and to UnitedHealthcare.

Health Alliance places all single-pill regimens, along with a drug commonly combined with others to treat patients, on the fifth tier in a six-tier system, resulting in “mostly unaffordable” drug coverage for people with HIV, the foundation wrote.

Health Alliance spokeswoman Laura Mabry noted that the insurer places several of its HIV drugs in low-cost tiers. “Our goal continues to be providing choices that meet consumers’ needs, including their prescription drug needs,” she said in an emailed statement.

UnitedHealthcare classifies most of the drugs used in the HIV treatments as tier two but also marks them as specialty drugs. Daliah Mehdi, the AIDS Foundation’s chief clinical officer, said the insurer told her the specialty designation made those drugs more expensive than others in tier two. But a UnitedHealthcare spokesman told the Tribune the drugs were not more costly.

In Florida, the AIDS Institute and the National Health Law Program filed a complaint over the cost of four treatments with the Department of Health and Human Services’ civil rights office. The complaint is still under investigation, but Coventry, Humana and two other insurers voluntarily reduced prices after a Florida regulator questioned whether the insurers were violating state law.

Coventry capped the costs of the four treatments at $200 per month, while Humana limited patient payments to 10 percent of what the insurer pays for all HIV and AIDS drugs on its specialty tier.

On Friday, the federal Centers for Medicare & Medicaid Services issued a rule for 2016 that prohibits plan designs that place “most or all drugs that treat a specific condition on the highest cost tiers” and that charge more for single-tablet regimens than for treatments that require patients to take multiple pills.

About 37,000 Illinoisans had been diagnosed with HIV or AIDS as of December, with an average of 1,788 diagnosed each year from 2009 to 2013, according to the most recent Illinois Department of Public Health figures.

Information on how many HIV patients in Illinois have joined Affordable Care Act plans is not publicly available, but about 8,000 people who have received state help paying for their HIV or AIDS medication have signed up for a plan, joined Medicaid or are in the process of getting insurance, a health department spokeswoman said. About 9,300 people received help through the AIDS Drug Assistance Program last year, she said.

The state program now helps pay premiums and drug costs for the low-income recipients who have obtained insurance, along with those who are still uninsured, the spokeswoman said.

Patient advocates said lower drug prices would not only ensure access to treatment for HIV and AIDS patients but also help reduce the virus’ spread, as some of the treatments make transmission less likely.

Will Wilson, a 61-year-old Gurnee man who said he was diagnosed with AIDS 13 years ago, recently obtained insurance through his employer that covers nearly all the cost of his Atripla prescription.

After his diagnosis, Wilson said, he went broke paying for the 16 pills a day he took to keep the syndrome in check. Keeping his income low enough to qualify for state aid ultimately allowed him to afford treatment, he said. Now he works as an insurance navigator for a nonprofit organization, helping people understand their options.

Wilson said he thought the Affordable Care Act would bring a new measure of freedom for people with HIV and AIDS, but paying for treatment is still difficult for many. Even on health plans that pay relatively good rates for HIV and AIDS treatments, interpreting drug formularies and plan benefits to figure out a patient’s costs is extraordinarily complicated, he said.

“The system that was supposed to be easier for us is not easier,” Wilson said. “And once again we’re faced with (the question): We still have to fight for the drugs that keep us alive?”

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