A few months ago, we posted an issue brief on the Robert Wood Johnson Foundation’s State Health Reform Assistance Network web site about the challenges regulators face when presented with pharmacy benefit designs that appear to discriminate against people with chronic diseases or other conditions requiring expensive drug therapies. In the brief, we described legislation introduced or passed by a handful of states to discourage or prohibit benefit designs that impede accessibility to drug treatments. We noted that assigning specialty drugs that treat chronic illnesses, like multiple sclerosis or HIV/AIDS, to tiers that require greater cost sharing reduces accessibility and adherence to treatments for those who rely most on specialty drugs to keep them healthy and alive. Since completing the brief, there has been some progress on a few fronts in addressing the regulatory challenges we wrote about.
The issue brief, as well as a June 3, 2014 CHIRblog post, discussed a complaint filed jointly last May by the AIDS Institute and the National Health Law Program with the U.S. Department of Health and Human Services’ Office of Civil Rights (OCR). The complaint alleged that four Florida insurers discriminated against HIV/AIDS patients by placing all the covered retroviral drugs on their highest and most expensive cost-sharing tiers. Last November, two of the four insurers, CIGNA and Coventry (with its parent company Aetna), agreed to consent orders issued by the Florida Office of Insurance Regulation (FLOIR). A third insurer, Humana, followed with a letter of agreement in December.
Under the terms of the consent orders, both CIGNA and Coventry agreed to reclassify generic drugs currently classified in the specialty tiers (requiring 40-50% coinsurance) to appropriate generic tiers. They also agreed to cap cost-sharing for the most widely-prescribed HIV/AIDS drugs at $200 for 2015 Marketplace plans, and to allow more than a 30-day supply when prescribed by a physician. In a December 15, 2014 letter to Commissioner Kevin McCarty memorializing its agreed upon changes Humana agreed to cap HIV/AIDS drugs classified on specialty tiers at cost (manufacturer’s wholesale acquisition cost plus dispensing fee). All three insurers agreed to drop prior authorization and step therapy requirements for HIV/AIDS drugs and to meet with the organizations that filed the complaint within 30 days of executing the agreements to discuss access and affordability issues as well as prescription drug assistance programs.
In a January letter to the OCR, the organizations that filed the Florida complaint asked the Office to rule on the complaint even though three of the four insurers have settled. Their request is based on a number of premises. Primarily, the consent orders do not address the specific legal claims made in the OCR complaint and the insurers do not admit any wrongdoing. Additionally, the letter points out that the agreements apply only to the insurers who are party to them and only to their 2015 plans issued in the state of Florida. The groups advise that similar plans are being filed by other insurers in multiple states.
In another development, Monica Lindeen, Montana Commissioner of Securities and Insurance, used her policy form approval authority to change the way some of the State’s largest health insurers structure their prescription drug benefits. After receiving a complaint from the National Multiple Sclerosis Society, state regulators found some of the 2015 pharmacy benefit plans employed tiering structures that violated a Montana law prohibiting discrimination and unfair competition. The offending plans required significantly more and differently structured cost sharing for drugs in specialty tiers than for those in lower tiers. For example, some insurers proposed charging pre-deductible, flat dollar copayments for the three lower tiers, but required post-deductible coinsurance as high as 90% for the fourth tier where specialty drugs are assigned.
To address the problem, Montana regulators determined that because some – but not all – insurers submitted plans that treated specialty tiers so differently, those plans that included widely disparate treatment among tiers were discriminatory and represented unfair competition.
As a result of regulatory authority asserted during the form approval process, Montana insurers now offer at least one health plan with pharmacy benefits that are fixed dollar copayments for all tiers, and with no deductibles for pharmacy benefits offered at the silver level and above. Other health plans may offer all coinsurance in all tier levels, as long as the coinsurance amounts are graduated proportionally.
Two significant facts about the Montana approach are 1) The regulatory action applies to all specialty tier drugs and is not limited to drugs treating any one disease group; and 2) The action applies to filings going forward, not just to 2015 plans. Montana is the first state to take this approach and, as a result, has attracted the attention of other states as they seek ways to address specialty tiering challenges.
The regulatory actions taken by both states resulted from actions by disease groups. These groups advocate for individuals and families dealing with chronic diseases like HIV/AIDS, multiple sclerosis, hemophilia, or cancer. They employ both paid and volunteer staff whose first priority is to assist their members in accessing resources to help them deal with their disease. Of course a high priority for disease group personnel is to assist their members in securing quality health insurance coverage. For that reason, they have the motivation, time, and focus to do the research necessary to identify discriminatory benefit plans that might be missed in a routine regulatory review conducted by busy regulators reviewing hundreds of plans each year. These organizations can be valuable resources for state regulators seeking to prohibit discriminatory pharmacy benefit designs in their states.