Insurers Use of Specialty Tier Leading to Higher Out-of-Pocket Costs for Patients

Insurers Use of Specialty Tier Leading to Higher Out-of-Pocket Costs for Patients

05.30.12 | By Greg Lopes

The Los Angeles Times recently ran a provoking story on insurance company coverage of specialty medicines and the increasing share of the cost patients are being forced to pay on their own.

This is an issue I've raised in the past and it's encouraging to see coverage of the disturbing insurance company practice of raising patients' out-of-pocket payments for medicines that treat severe conditions like cancer and multiple sclerosis.

The Times story does a good job of explaining the situation. More and more, insurers are placing innovative new medicines, including biologics, on the so-called "specialty tier." This tier placement can significantly increase the amount a patient must pay out-of-pocket, as patients are typically required to pay a percentage of the drug's price rather than a fixed copayment. Increased cost sharing creates a substantial financial burden, particularly for patients who require long-term therapy to treat a chronic illness.

As the Times clearly points out, putting medicines on this tier risks patient access to medicines they need to treat their illnesses.

"Consumer advocates and some benefit consultants argue this trend could backfire as a cost-saving tool if workers stop taking needed medications and require even more costly medical care down the road," the story states.

In many cases, these medicines are often the most innovative treatments on the market. For patients suffering from chronic conditions that were untreatable prior to the development of these medicines, the value of these therapies is immeasurable.

It should be noted that, as part of the health care reform law, an abbreviated approval pathway was created for biosimilar medicines. Biosimilars are expected to increase price competition and ultimately reduce overall costs. Much like generic drugs today, biosimilars also are likely to capture substantial market share upon entry.

Insurers have always had powerful tools to control costs and influence which medicines patients are able to receive. Tiered copayments have a legitimate role in our health care system. However, this approach should be reasonable, not taken so far as to reduce access to needed care for seriously ill patients.

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