Legislature(2011 - 2012)BARNES 124
03/16/2012 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB218 | |
| HB259 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 218 | TELECONFERENCED | |
| += | HB 259 | TELECONFERENCED | |
HB 218-PRESCRIPTION DRUG SPECIALTY TIERS
3:21:54 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 218, "An Act prohibiting an insurer from using a
drug formulary system of specialty tiers under certain
circumstances."
3:22:26 PM
JANET OGAN, Staff, House Health and Social Services Committee
(HSS), Representative Wes Keller, Chair, Alaska State
Legislature, on behalf of Representative Wes Keller, Chair, HSS,
stated that specialty medications are used to treat complex
chronic diseases continue to be the fastest growing segments of
overall drug spend. While traditional drug spend slowed to an
increase of only 1.5 percent in 2008 - and she believed that it
is up to 16.3 percent - specially drug spend continued its
steady climb increasing up to 15.4 percent. This bill would
protect patients with critical illnesses from sudden changes in
their drug treatment and therapy protocols which may
unexpectedly deprive the patient from critical therapies due to
the inability to pay for the drug or sufficient time to plan
alternative financial or therapeutic strategies.
MS. OGAN continued. Currently, insurance companies can change
their reimbursement policies with only a 30-day notice, often
forcing the patient to absorb thousands of dollars of unexpected
costs for expensive specialty drug therapy. By extending the
notification period the savings for the patient will be absorbed
by the rest of the policyholders on the plan. This may give the
patient additional time to explore other options which may allow
for a transition to a more affordable plan with similar
therapeutic results.
MS. OGAN continued. Without these specialty drugs quality of
life deteriorates and long-term health care cost may increase.
Additionally, cost savings may be achieved by exploring options
like management through specialty pharmacies that drug
utilization monitoring specifically designed for hard to manage
conditions.
MS. OGAN explained that this bill would extend the insurance
company notification period to within 90 days to inform the
insured that when these drugs go from one tier to another tier.
Specifically, insurance used to pay a flat pay for medication;
however tier 4 drugs became a co-insurance drug, which means the
drug recipient pays a percentage of the drug cost. If the drug
costs $4,000 retail, the recipient will pay at least 30 percent
or $1,200 out of pocket. She related that this bill elevates an
awareness of this change to allow people with chronic illnesses
to plan ahead for these changes in their therapies.
3:26:27 PM
REPRESENTATIVE JOHNSON said he reviewed letters of opposition in
members' packets. He asked for driving forces for those in
support of the bill and those opposing HB 218.
MS. OGAN answered that some individuals are adversely affected
by the tier 4 prescription drug costs. The Multiple Sclerosis
Society is assisting with the bill, since specialty drugs are
typically injectable ones used by patients with chronic diseases
such as multiple sclerosis (MS). The tier 4 drugs are expensive
to manufacture and the costs affect many people with chronic
diseases. The sponsor would like to find a balance. She
recapped that the driving force behind the bill has been
chronically ill patients have found themselves in an awkward
position and do not have the funds or the time to find an
alternative therapy. She listed some people affected by tier 4
drugs are those with chronic illnesses or diseases, including
those with MS, rheumatoid arthritis, cancer, and hemophilia.
3:28:24 PM
REPRESENTATIVE HOLMES asked whether this problem is the result
of a recent change.
MS. OGAN answered that tiering occurred in 2006 by Medicare and
since then other insurers have reflected the Medicare changes.
She pointed out that Medicare has a cap, but private insurers do
not have a cap, although some patients may reach out-of-pocket
deductibles ranging from $5,000 to $10,000.
3:29:11 PM
REPRESENTATIVE HOLMES related her understanding that this issue
has started to emerge in Alaska.
MS. OGAN answered yes.
REPRESENTATIVE HOLMES referred to Section 3 of the bill, to the
language on lines 21-22, which read,"...cost sharing,
deductibles, or copayment obligations are determined by unique
categories or special tiers...." She asked whether the language
will be clear enough to distinguish.
MS. OGAN answered yes. In further response to Representative
Holmes, Ms. Ogan agreed that specialty tiers refer to a term of
art and the term is clearly understood.
3:29:51 PM
CHAIR OLSON asked whether the tier refers not just to the drug
but the dollar value of the prescription.
MS. OGAN agreed it translates to the dollar value of the tier
drugs.
3:30:38 PM
BRENDA ROBERTSON reported that her husband has been taking
Copaxone, an injectible drug, for over 10 years to slow the
progression of multiple sclerosis (MS). Last June, her medical
insurer advised them their cost of the daily injection
prescription drug would increase by $1,000 per month.
3:32:05 PM
The committee took a brief at ease due to teleconference
reception difficulties.
MS. ROBERTSON gave a brief history. She recapped that last June
the pharmacy, a specialty pharmacy, wanted to let her husband
know that his copay had gone up from $30 per month to over
$1,000 per month. She offered that his initial reaction was to
tell her he wanted to stop taking his medication. The family
had paid the insurance premiums faithfully, but now found they
were facing unbelievable expenses. She described that the
family has learned to live with MS, the challenges this disease
brings to their lives, and their attempts to do everything
possible to keep her husband healthy. Since his diagnosis, he
has worked to push through the disease and be self-reliant, she
stated. He still works and has never asked for special
treatment, but he also did not expect to be penalized for his
illness. He has no choice; however, others with the same
insurance have affordable choices. He expected parity. The
practice of specialty tiering discriminates among those who are
the sickest and puts their lives in danger. She asked members
to imagine being diagnosed with such a debilitating disease and
the ensuing suffering only to be told the one medication that
could keep them functioning is financially out of reach. She
said, "That is unfair and unconscionable." Raising the amount
that people must pay for a lifesaving medication with no generic
option or alternative by over several thousand percent with no
notice is outrageous. She thinks people should be outraged to
hear their story. This committee represents her husband, her
family, and other thousands of Alaskans who are in danger. She
predicted that insurance companies will tell the committee they
need to save money. She said she is sympathetic to the drug
companies, but realizing their savings on the backs of the most
vulnerable Alaskans cannot be moral or ethical.
3:36:50 PM
MS. ROBERTSON stated that often these patients are the ones who
push through their hardships, working, and contributing to the
state's economy. Several states have banned the practice of
using specialty tiers and many others are addressing this issue
by placing a cap on a patient's annual expenditure. She
predicted that when these Alaskans with chronic illnesses lose
their jobs because they can no longer afford the tier 4
prescription drugs, the insurance companies will save money, but
the state will ultimately have to pick up the costs which will
increase over the long run. She and others testifying hope
members will support the bill, which will require a 90-day
notification period before changing someone from co-pay to
specialty tier coinsurance. She further hoped this would be a
first step to help the chronically ill patients manage their
medical expenses. She pointed out that in 90 days there will
still not be a generic drug, any alternative, or any choice;
however, she also hopes her testimony will shed a light on this
issue and down the road the state can do even more to help
protect the chronically ill from being further victimized. She
encouraged members to research what some other states are doing
to protect their chronically ill citizens.
3:38:33 PM
JIM FREEBURG, Advocacy Director, National Multiple Sclerosis
Society, Greater Northwest Chapter, reiterated the comments made
by Ms. Robertson. He stated that this initiative is of great
concern to National Multiple Sclerosis Society (NMSS). The
organization has been seeing this trend become more prevalent in
the nation. He encouraged the legislature to help the NMSS take
some steps to increase transparency around the use of specialty
tiers and move towards the complete elimination of tier drugs in
the future.
3:40:09 PM
REPRESENTATIVE HOLMES recalled Ms. Robertson mentioning trends.
She explained one approach to address the problem is to require
a noticing period, but some states are going to an outright ban
on specialty tiers, while still others are placing a cap on out-
of-pocket expenditures. She inquired as to whether he had a
sense of how many states were choosing each of these remedies.
MR. FREEBURG said he did not have figures for all of states, but
offered to research this. He explained that New York is the
first state to adopt an outright ban and he offered his belief
that Vermont has a one-year ban on specialty tiers. He related
other states are still considering which approach is the best
one to take. He stated that this issue may be addressed through
the essential health benefits package as part of the federal
PPACA. Each state may have an opportunity to address the issue
through that process.
REPRESENTATIVE HOLMES related her understanding that states are
still in the early stages of deciding the best approach.
MR. FREEBURG answered yes.
3:41:54 PM
CHAIR OLSON asked for clarification on actions taken in
California and Washington.
MR. FREEBURG answered that a bill is before the Washington
legislature that would prohibit specialty tiers, but the bill
has not moved forward. He said he hoped to address this through
the essential health benefits package. Montana's legislature
meets biennially so this issue has not been brought forth yet,
but he hopes to do so in 2013. He related the growing trend is
to treat more and more illnesses and diseases with prescription
drugs rather than procedures. He said insurers are somewhat
slow to catch up to this and realize their coverage for medical
treatments have been traditionally generous, but not for
pharmacy benefits, in part, because in the last 10 to 20 years
not as many treatments have been available via prescription for
the chronically ill MS patients. He offered his belief that
this trend will continue as pharmaceutical companies improve
drugs to treat difficult conditions such as MS.
3:43:30 PM
REPRESENTATIVE SADDLER referred to members' packets with respect
to tiers 4 and 5 as specialty tiers and asked for further
clarification.
MR. FREEBURG answered that tier 1 is typically a generic drug
with a small $3-5 copay. Tier 2 would be a preferred brand name
drug, and tier non-preferred brand name drug, which is usually
the result of a negotiation between the insurer and the
pharmaceutical companies. These drugs are also increasing in
price; however the specialty tier 4 drugs typically have a
coinsurance percentage amount. Thus tier 3 may be $30 copay but
tier 4 would range from 30 to 50 percent coinsurance payments.
He characterized the cost passed on to the patient as a drastic
increase, which has pushed the responsibility for the drug cost
to the consumer.
REPRESENTATIVE SADDLER related his understanding that the cost
moves from a dollar cost to a percentage basis as the tiers
progress.
MR. FREEBURG agreed. In further response to Representative
Saddler, Mr. Freeburg explained that he thinks the difference
between tier 4 and tier 5 drugs will result in an increasing
percentage, perhaps 30 percent and 50 percent, respectively. He
related his understanding it would likely be based on the cost
of the drug or its relative efficacy compared to other drugs in
within a similar class. He offered his belief that Medicare
defines specialty drugs as those costing more than $600, but an
outright ban would not fully address the problem patients are
experiencing.
3:45:59 PM
REPRESENTATIVE SADDLER asked whether health care plans have
backup insurance guarding against an increase in prescription
drugs, similar to a rider.
MR. FREEBURG answered that he did not know. He said that
frequently prescription drug costs are not capped as it
typically happens with medical benefit caps.
CHAIR OLSON suggested that the high-risk insurance pool includes
prescription drugs, but the pool is primarily used by patients
with pre-existing conditions. He further suggested some delays
are happening in anticipation of the pending U.S. Supreme Court
decision in the Patient Protection and Affordable Care Act
(PPACA).
MR. FREEBURG agreed. He also thought there is a limited
bandwidth to tackle this complicated issue. He identified the
insurers as the middleman. He has viewed increased prices by
pharmaceutical companies. Additionally, some of the drugs are
somewhat new so treatments and best use are still being
identified. He suggested that it is also difficult for diseases
such as MS since the effect varies from person to person. He
was unsure about how this fits in for cancer or arthritis
treatments. In New York the specialty tiers were not in place
prior to the bill being passed so insurers did not have to
change anything. He expressed concern that if nothing is done
more and more specialty tiers will occur and at that point the
cost increases will be too significant to have an impact, so if
the problem can be resolved early on it will be somewhat easier
to deal with.
3:48:51 PM
REPRESENTATIVE SADDLER asked whether the higher tiers of drugs
are more effective or if the price is due to stratification or
bracketing.
MR. FREEBURG answered that it varies from condition to
condition. He stated that no other drugs are available to treat
MS except specialty drugs to treat the underlying disease. He
said he was unsure how that applies to cancer, rheumatoid
arthritis, or hemophilia.
REPRESENTATIVE SADDLER asked whether any tier 2 or 3 drugs could
address MS or if MS must be treated with tier 4 and 5 drugs.
MR. FREEBURG answered that MS drugs could be placed on tier 3,
but insurers choose to place the drugs on tier 4 or 5.
REPRESENTATIVE SADDLER asked whether it is more of a price or
coverage issues.
MR. FREEBURG agreed. He said the insurers may tell you they are
trying to look at the efficacy for differences drugs within the
same class, but that is not the case for MS.
3:50:08 PM
REPRESENTATIVE JOHNSON asked how long New York has prohibited
specialty tiers.
MR. FREEBURG offered his belief the ban went into effect in
2010.
REPRESENTATIVE JOHNSON stated that if the copayment stays low
the additional cost will be a shared cost. He inquired as to
how much of an increase would be spread per individual in an
insured group.
MR. FREEBURG answered that a California study attempted to
answer this question. He referred to a summary in members'
packets prepared by committee staff.
REPRESENTATIVE JOHNSON said he would like the information. He
related his understanding that someone will bear the cost so he
is wondering what the cost will be for the average consumer. He
said it may be minimal and the size of the program would likely
mitigate some of those. He thought that the smaller programs
would be more affected than the larger groups.
3:51:59 PM
CHAIR OLSON characterized the pending decision in the U.S.
Supreme Court case as the "900-pound gorilla" and until that
case is settled and everyone knows the operating rules that it
is extremely difficult to get projections from the state.
3:52:17 PM
SHEELA TALLMAN, Manager, Legislative Affairs, Blue Cross Blue
Shield of Alaska [Premera], spoke in opposition to HB 218. She
pointed out that she has provided the committee with a memo that
outlines the concerns Blue Cross Blue Shield [Premera] as well
as some conceptual amendments that might be considered as part
of this discussion. She provided some background information.
She stated that specialty drugs make it possible to treat
diseases for which there are few available therapies. They
provide new options for patient treatments. The specialty drugs
are one of the fastest growing parts of the overall
pharmaceutical benefits. She said less than three percent of
specialty pharmaceuticals, but represents 25-30 percent of the
total payor medical costs. She indicated this is a
significantly growing area impacting costs and employers have
recognized this and want to offer pharmaceuticals it their
employees yet want to make it more affordable. Thus the
employer wants to make the overall coverage and continue to
provide these benefits. The focus really should be on
encouraging pharmaceutical companies to develop generic options
for the specialty drugs to make it more affordable for a larger
number of people. Premera offers a 3-tier or 4-tier benefit
option for members. Some of the plans can offer an optional
backstop such as an out of pocket maximum for prescriptions.
She understood the importance of transparency and providing
consumers accurate information about their benefits and out of
pocket costs. The Premera currently provides detailed
information about benefits upon application and renewal for
individuals and employer groups.
3:55:19 PM
MS. TALLMAN explained this includes information on cost sharing,
deductibles, and copayment terms applicable to pharmacies and
specialty pharmacies tier. This information is provided 30 days
prior to when the terms apply. The Premera provides another
notice when any changes occur to the plan formularies. She
provided an example, such as when a generic drug becomes
available, which would shift an existing brand drug to a
different tier. The Premera sends members a notice 30 days
prior to the change. The Premera notifies members by mail 45
days of any changes that may impact their rate. She expressed
concerns that this bill requires a 90-day notice timeframe,
which would impact the application and renewal cycle since
Premera would need to provide information much further in
advance of the effective date. The notice requirement would be
duplicative to current processes just described and the new
federal health care reform requirement. This would add cost and
could create confusion when members receive several notices
about their benefits. She explained the requirement in the
Patient Protection and Affordable Care Act (PPACA). Beginning
on September 23, 2012, insurers must provide specific
information to members about their coverage and benefits. This
includes a very specific breakdown of the generic drug tier, the
preferred brand drug tier, the non-preferred and specialty tier.
Additionally, for each tier, the Premera must provide the
specific cost sharing requirements. This information must be
provided at initial application, renewal, and upon request by
the individuals. Further, the Premera must also provide a mid-
year notice triggered by any changes to the four tiers to
members at least 60 days prior to the effective date of the
changes. She pointed out that this requirement will apply to
all plans, including the grandfathered, the non-grandfathered
plans, individual groups, and self-funded plans - including the
plan.
MS. TALLMAN answered that 50 days; this will apply to all plans,
grandfathered, non-grandfathered, and [Employee Retirement
Income Security Act of 1974] "ERISA" plan. The Premera opposes
HB 218, since it would require another notification and costs
above the ones for the processes already in place and for the
new requirements under the federal PPACA.
3:58:07 PM
CHAIR OLSON recalled that the problem could be partially solved
by drug companies developing generic drugs for the specialty
conditions. He said he thought generic drugs came about when
the patents expire. Thus the generic drugs are not developed
but are regular drugs after the patent life expires. He
recalled specific drugs may have a molecule or two changed to
make a new drug; however, he did not think specialty drugs are
developed.
MS. TALLMAN said she believed he is correct. She suggested that
it would be to work towards reducing the number of years a
patent remains in force to encourage generic alternatives are
available more quickly.
3:59:35 PM
CHAIR OLSON asked whether she has developed any models and
impacts on Blue Cross.
MS. TALLMAN answered that she has not done a cost impact for the
increased notification requirements from 30 days to 90 days
required under HB 218.
CHAIR OLSON related his understanding the Premera does not
currently know the costs.
MS. TALLMAN responded no, that it is more that multiple notices
will be generated and sent out. She understood Washington and
Oregon would remain at 30 days.
4:00:30 PM
CHAIR OLSON suggested the impact for Premera may be two percent
or 15 percent, but Premera is unsure.
MS. TALLMAN answered yes. She said she did not currently have
information. In response to Chair Olson, she offered to provide
figures to the committee.
4:00:54 PM
REPRESENTATIVE THOMPSON related a scenario in which a couple has
been paying insurance for 20 years, thinking it will cover
medical costs. One of them gets cancer and the insurance
company ends up covering hundreds of thousands of dollars for
treatments and operations. He asked for the effect on insurance
companies. He suggested it is not any different for
prescription coverage than for medical coverage for cancer
patients. He wondered if the rules could just change on copay
for medical coverage. He was unsure why this is being
attempted. He offered his belief it doesn't seem fair to the
people who have bought insurance to have coverage and protect
their savings. He pointed out that all of a sudden their
deductibles are increased to $1,000 or more per month when they
have been paying the insurance premiums. He expressed concern
other unexpected cost increases could potentially occur besides
prescription costs. He said he offers this as a statement.
4:02:20 PM
CHAIR OLSON said he has difficulty understanding the problem of
changing notices from the current 45 day requirement to 90 day
notice for Premera under the bill. The overall effect would be
to increase the notice by 45 days. He questioned the difficulty
and why this would add significant costs for Premera. He asked
Ms. Tallman to provide the committee with a ball park figure for
increased costs.
REPRESENTATIVE SADDLER asked for the form Premera will use to
notice the increased costs. He suggested that in his experience
that more companies have been moving to using Internet noticing,
online accounting, or noticing by e-mail. He asked for a
breakout and the nature of the costs as part of the information
Ms. Tallman will provide to the committee.
MS. TALLMAN said she would try to do so. She suggested that one
way is consider the patient would be paying a differences rate
during the 90 day period than the 30 day period, so a
differences rate structure would occur over a longer period and
would drive up the costs.
4:04:16 PM
CHAIR OLSON suggested the Division of Insurance might be able to
answer that question but Linda Hall is not available today.
REPRESENTATIVE SADDLER asked for an explanation as to whether
Premera bases its costs between tier 4 and tier 5 drugs and if
it is based on efficacy or solely on the costs.
MS. TALLMAN responded that the tier 4 drugs are specialty drugs
typically injected and used to treat complex medical conditions.
These drugs usually require more specific handling and
involvement with the physician so she thought the guideline was
a broad guideline. She added that Premera is looking at
efficacy to provide more value based and its clinical
effectiveness. That would be another way to develop tiers, for
example, if two drugs are in the market but one provides a
better benefit such as extending their life would be placed on a
lower tier versus a less effective drug which would be placed on
a higher tier.
4:06:35 PM
REPRESENTATIVE SADDLER asked if a higher tier implied a more
effective drug.
MS. TALLMAN answered not currently under the standard system.
She pointed out that tier 4 is a way to identify those drugs
that need special handling and storage and are ones used to
treat more complex conditions.
4:07:01 PM
REPRESENTATIVE SADDLER related his understanding that tier
implies some additional benefit that is a cumulative effect. He
questioned whether the tiers should be considered as different
categories of drugs.
MS. TALLMAN answered yes, that the tiers begin with generic, the
non-preferred, followed by a brand drug.
REPRESENTATIVE SADDLER understood typically for tiers that each
tier encompasses the previous attributes plus a little extra.
He asked whether a tier 6 is forthcoming.
MS. TALLMAN answered that tier 6 might be something reviewed,
but it is more about providing a value-based benefit structure
for members in which the drugs fall into the various categories
based on its efficacy and benefits to the member.
4:07:58 PM
REPRESENTATIVE SADDLER asked for further clarification on tiers.
He related his understanding that tiers refer not just to
handling but the value to the consumer.
MS. TALLMAN answered that is what Premera is currently
developing. She explained it is not out in the marketplace but
the Premera is focusing on trying to categorize drugs based on
their quality, value, and effectiveness not necessarily the
standard generic brand or preferred brand. She pointed out that
one tier could encompass brand name or generic drugs but the
focus is on examining the effectiveness.
4:08:48 PM
REPRESENTATIVE SADDLER understood she stated the higher tier
implied not more effective, but now she is stating the higher
tier would be the more effective drugs. He said he was
confused.
MS. TALLMAN answered that she is talking about Premera is
currently developing the value-based categories.
4:09:27 PM
REPRESENTATIVE WES KELLER, Alaska State Legislature, understood
that the tier system was devised by Medicare in response to the
high cost of drugs. The real problem is the high cost of health
care. The tiers were developed by Medicare to manage payments
for drugs and the concept has been picked up by the private
sector.
4:10:33 PM
CINDY LAUBACHER, Senior Director, State Government Affairs,
Medco Health Solutions, stated that Medco is the parent company
to the Accredo Health Group, which is one of the largest and
leading specialty pharmacies in the U.S. The Accredo Health
Group's clients include state employee plans, union trust health
plans, who generally manage their prescription drug costs by
maintaining a member cost share of approximately 20 to 25
percent per tier, which includes the generic tier, tier 1, tier
2 and so on. In 2013, Medco's sponsors are working on having
approximately one percent of their drug spend going to specialty
drugs, which will represent approximately 20 percent of their
plan costs. She expressed concern about the costs of
prescription drugs and in particular specialty drugs. She
highlighted the development of generic drugs or bio-equivalent
drugs. She reported Medco and Accredo are very active at the
federal level lobbying the Congress to reduce the patent time on
these very expensive high-end drugs, specifically to get generic
or bio-equivalent drugs to the market to reduce costs. She
highlighted that patients typically receive benefit notices
prior to the start of the benefit year, and when changes occur
during the benefit year. She related that Medco is very
concerned about causing confusion since plans must provide 90
day, 60-day notices, and potentially another notice. She
reiterated that sending numerous notices could create confusion
in the marketplace and among patients. Therefore Medco and AHG
are opposed to the bill. She offered to answer questions on
tiers and drug costs and how to better address the issues.
4:13:51 PM
REPRESENTATIVE HOLMES said she is a little confused about
multiple notifications. She referred to a letter from Premera,
and acknowledged that the testifier is Medco, but the issue
raised is the same. The Premera expressed concern that if
federal law goes into effect insurers must notice their members
at least 60 days prior to a change. She did not understand the
reason the notices must be multiple notices. She asked whether
the company could send on notice 90 days in advance to suffice
all the noticing.
MS. LAUBACHER answered that typically Medco is drawn into
helping plans manage. She pointed out the various notice
include 90, 60, and 45 day notices. She offered to look at the
federal law, but she thought the plans would still need to send
additional notices such as the 60 day notice required under the
PPACA. In response to a question on the percentage of specialty
drugs, she answered that one percent of Premera' s drugs
dispended under their plan - Premera is one of their clients -
are specialty drugs but provides 20 percent of the prescription
drug cost. She said it would be whoever is paying for plan
costs.
4:17:05 PM
REPRESENTATIVE KELLER asked if some of the concern is worrying
about whether the bill would create a mandate for more coverage
or whether it is just the notice requirement.
MS. LAUBAHER answered that the concern is the notice since the
bill would not address the issue about increased cost for
Copaxone. She reiterated that HB 218 only pertains to the
notice requirements and not the costs. She explained that Medco
is working at the federal level to reduce patent protection to
get generic drugs to the market, which should help keep costs
down.
4:18:42 PM
REPRESENTATIVE KELLER has a hard time seeing that the
notification is a huge deal, but has been concerned about
mandates.
4:19:04 PM
CHAIR OLSON surmised that the Division of Insurance can give 90
days' notice so long as it is prior to renewal.
MS. LAUBACHER related it has been their experience that changes
begin at plan year so prior to the new benefit patients are
provided with information on copay. She said it is uncommon and
rare for changes in copay or insurance to occur during the year.
She checked with Medco and it is rare to see rate increase mid
plan year for an increase from $100 to $1,000 month. She said
most of their plan sponsors will cap the copay. She explained
that a person may pay $10 to $20 per month for tier 1 or 2, but
tier 4 drugs are usually a percentage such as 20-25 percent.
Typically when someone moves from copay to coinsurance, the
person would pay 20 percent with a cap of $200. She emphasized
that the example made earlier really surprised her. She asked
for clarification and confirmation and Medco and ACCREDO said it
is extraordinarily rare for those types of large increases to
happen.
4:22:18 PM
CHAIR OLSON asked if it would be safe to assume the majority of
people are covered by group plans rather than individual
coverage.
MS. LAUBACHER answered that Medco and Accredo are limited to
group and not individual coverage. She explained that Ms.
Robertson and her husband may be under an individual policy.
CHAIR OLSON related that 75 percent of the plans are renewed on
January 1 or July 1.
MS. LAUBACHER answered yes. She confirmed the two dates would
be the beginning of the calendar year or the fiscal year.
4:23:20 PM
REPRESENTATIVE SADDLER asked where the impetus of coinsurance
comes from and if it comes from reinsurance or whether the Medco
is following the Medicare's lead.
MS. LAUBACHER offered to get an answer, but generally speaking;
coinsurance is a tool used as an option to clients and not all
clients use coinsurance. Some choose flat co-pays. It is
simply a tool available to clients to assist them in managing
their prescription drug costs. She offered her belief that it
typically is used for tier 4 and specialty drugs due to the high
cost associated with specialty drugs.
4:25:07 PM
REPRESENTATIVE SADDLER asked whether the company offers
coinsurance for cost savings or if clients demand it.
MS. LAUBACHER answered it may be both. She did not know. She
said that typically the Medco responds to the market. The
clients will come to them and say that their costs are
skyrocketing and Medco would present coinsurance.
CHAIR OLSON offered his belief that coinsurance is used to
ensure everyone has a vested interest in the cost. He said if
something is free it may be over utilized, but if the client is
paying for a portion of it, they have an interest in keeping the
cost down.
4:26:02 PM
REPRESENTATIVE JOHNSON recalled specialty drugs represent one
percent of prescription drugs filled. He asked how many people
that represents.
MS. LAUBACHER said she could get answer on the number of
patients served by specialty drugs. She ventured that it is
typically a small market including patients with hemophilia, MS,
and rheumatoid arthritis. She was uncertain a specific number
is available for patients covered by specialty. She suggested
that it depends on the high cost of the particular drugs. She
suggested that a plan with high incidence of hemophiliacs but a
low number of persons with other types of conditions so it
varies by plan.
4:27:06 PM
REPRESENTATIVE JOHNSON asked how many notices would be sent out.
MS. LAUBACHER answered that the notices must be sent to everyone
and not just the few patients with hemophilia, but rather the
notices are sent to every plan member.
REPRESENTATIVE JOHNSON questioned whether HB 218 requires the
notices must be sent to every member and not just the ones using
specialty drugs.
MS. LAUBACHER agreed.
4:27:46 PM
CHAIR OLSON asked whether the term orphan drugs is what is now
called specialty drugs.
MS. LAUBACHER offered her belief that is correct.
4:28:15 PM
BARBARA JONES stated that her daughter was diagnosed with
juvenile rheumatoid arthritis when she was 12 years old. She
was given a cocktail of drugs and needed to be hospitalized two
to four times per year. She quit participating in sports and
went to high school part time. About two years ago she started
on a specialty drug that costs $400 per week or $1.600 month.
It was a miracle for our family. She said that both she and her
husband have insurance. He has been on his job for 26 years and
has been contributing to health insurance long before their
daughter was born. She has been at her present job for 13
years. Currently, her daughter is doing very well. She
graduated from high school and is in her first year of college
at the University of Alaska Anchorage. She has been accepted
into the honors college. She has declared her major as
chemistry and wants to study medicine. She is on spring break
and will tour a research hospital. She will receive a spirit of
youth award with her work with other children with arthritis at
Arthritis Foundation Camp. This bill promises 90 days' notice.
She assured members she will not be confused by multiple
notices. She said, "We need this bill as a start to help my
daughter and all the others who need these drugs to remain
productive and contributing members of our state and our
community." She thanked members for their work on this bill.
4:30:42 PM
REPRESENTATIVE SADDLER asked how many notices she receives in a
year for prescription medication for her daughter or health
insurance notices in general.
MS. JONES answered that she did not think there would be a
confusing number. She explained that she receives phone calls
from our specialty pharmacy almost every week. They are not
confusing. She did admit that in their family they have a
division of labor and her husband maintains a log. She said she
does hear the telephone messages and sees the mail. She said it
is not confusing to them.
4:31:38 PM
BARRY CHRISTENSEN, Pharmacist, Island Pharmacy, Inc.; Co-Chair,
Legislative Committee, Alaska Pharmacists Association (AkPhA),
answered that the Alaska Pharmacists Association has not taken a
position on HB 218.
CHAIR OLSON asked what impacts he sees as a pharmacist.
DR. CHRISTENSEN related the bill is a notification bill. He
acknowledged that sometimes the pharmacists are caught when
patient comes in and cannot afford their medications. He
related that many specialty drugs are distributed through
specialty pharmacies. He expressed concern for the patients but
the AkPhA has not taken a stand.
4:33:16 PM
CHAIR OLSON asked for clarification on specialty pharmacies.
DR. CHRISTENSEN answered that Alaska does not have a regional
specialty pharmacy but many of the drugs require refrigeration,
which is somewhat problematic for some areas of Alaska. He
acknowledged that numerous specialty pharmacies exist across the
U.S.
4:34:12 PM
CHAIR OLSON asked whether the pharmacies break down the drugs by
condition or by drug.
DR. CHRISTENSEN answered that most specialty pharmacies handle a
variety of specialty drugs and contact the manufacturer for
certain drugs. He acknowledged there could be one or two
pharmacies that handle one or two drugs. He related his
understanding that the majority of them would handle a number of
specialty drugs.
4:34:42 PM
CHAIR OLSON asked for clarification on who would regulate the
specialty pharmacies.
DR. CHRISTENSEN answered that specialty pharmacies would be
regulated by both state and federal regulations. He explained
that the FDA primarily handles the regulation of the
manufacturing of the drugs.
4:35:39 PM
ANTONIA FIFLIS-FOWLER, ED, Director, Alaska Multiple Sclerosis
Center (AlaskaMS), in conjunction with the National Multiple
Sclerosis Society Greater Northwest Chapter, offered her support
for HB 218. This bill proposes only a simple change from 30
days to 90 days noticing, but could result in a major benefit of
decreased stress. The bill would increase the time to pursue
alternatives and other options for continuing therapy when
patients find themselves unable to afford the increase out of
pocket copay or coinsurance imposed upon them unexpectedly.
Unfortunately, the stress created by unpredictable circumstances
and increased financial obligation - sometimes as much as $1,000
per month - often translates into worsening conditions for
people with MS, which can contribute in then not being able to
continue to work. She referred to a recent survey of Alaskans
with MS, which revealed that due to high cost and copays 41
percent have suffered financial strain, changed their treatment
plan, skipped medication, modified their dosage or stopped
treatment altogether due to their inability to pay. She
emphasized that this is exactly what should be avoided. The
AlaskaMS wants people to have access to these medications at a
reasonable rate. There are not any genetic alternatives and
when people lose access to these life-altering drugs the U.S.
will be regressing 30 years.
MS. FIFLIS-FOWLSER said when she was first diagnosed with MS
drugs were not available to treat MS. Young people were told to
go home and wait for the inevitable to happen. They were unable
to work, were considered totally disabled, and were put on
Medicare. She reiterated that people with MS were a burden to
society. She acknowledged that there still is not any cure for
MS, but medications developed over the past 20 years have slowed
the progress of the disease. She pointed out that specialty
drugs are used to treat other diseases and conditions besides
MS. She said that medications slow the progress of the disease.
She estimated about 1,000 Alaskans have MS. Without HB 218 and
stronger legislation governing specialty tiering the most
chronically ill Alaskans will continue to shoulder an
inequitable burden of costs for their medication drugs than the
non-preferred brand name drugs. She asked members to consider
following in New York's footsteps and ban specialty tiers on the
grounds that they discriminate against people with chronically
ill. She urged members to vote for HB 218, which sends the
message that an increase in copay or coinsurance by 25-30
percent of the cost of the drug without significant notification
- which she did not find confusing - is unfair and detrimental
to individuals. She concluded by stating that MS is life
altering enough as are all these diseases. She asked members
not to take away tools that help people with chronic illnesses
to live more fully every day.
4:40:14 PM
CHAIR OLSON pointed out that the U.S. Supreme Court will make
decisions on the federal PPACA and legislatures will be on hold
until the new rules are adopted.
4:40:59 PM
REPRESENTATIVE KELLER thanked members. He said that
pharmaceuticals are getting better and better. He said that a
recent University of Alaska Anchorage, Institute of Social and
Economic Research (ISER) study showed total spending for health
care in Alaska is $7.5 billion. He said that equals half of the
earnings of Alaskans. He predicted the rate of increase will
double in nine years. He could not fathom the potential
increases.
REPRESENTATIVE JOHNSON acknowledged the crisis.
[HB 218 was held over.]
4:42:37 PM
The committee took an at-ease from 4:42 p.m. to 4:45 p.m.