Editor Addresses High-Cost Specialty Drugs

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USA Today on Monday published an opposingviewpoint editorial and opinion piece addressing so-called "tiered"pricing for prescription drugs -- a practice in which insurers charge members apercentage of the cost for high-priced treatments rather than a flat-feecopayment. Summaries appear below.

  • USA Today: The "'tiered' drug pricing system -- now on the rise -- is a disturbing outgrowth of what started as a sensible idea," a USA Today editorial states, adding that insurers in the late 1990s began requiring members to contribute higher copays for brand-name drugs when a generic equivalent was available. "The idea was to encourage patients to use lower-cost, equally effective generics in order to control skyrocketing health care costs. But some insurers have taken that idea too far," USA Today states. According to the editorial, America's Health Insurance Plans argues that higher copays for more costly drugs hold down insurance premiums for everyone. However, USA Today writes, "that comes at a high personal cost for anyone who is sick -- or anyone who might get sick" because there often "are no equivalents on a lower-price tier for these expensive drugs." "Quite simply, tiered systems make those who are sickest pay the most," which is "not how insurance is designed to work," the editorial states (USA Today, 4/21).
  • Karen Ignagni, USA Today: The U.S. "faces two challenges" with "single-source" biotechnology drugs: "their exorbitant price tags that bear little relation to the cost of producing them, and the lack of incentive for manufacturers to make these drugs more affordable," Ignagni, president and CEO of AHIP, writes in a USA Today opinion piece. Some health plans are using specialty tiers in response to "concerns about price and lack of competition in biopharmaceuticals," Ignagni writes, adding that "structuring benefits this way helps employers maintain coverage in the face of drug costs in this category, which have been rising as much as 20% a year recently." According to Ignagni, "To enhance access to these drugs and promote competition, Congress should pass legislation that encourages companies to develop generic alternatives to these very costly biopharmaceuticals." She adds, "Congress also should create a national institution to compare the effectiveness of new and existing therapies, and provide patients and doctors with data about which are safest, work best and are most cost-effective." Such action "would yield better health outcomes for patients and transform the health care system to one that is driven by research and rewards best practice," Ignagni writes (Ignagni, USA Today, 4/21).

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Letters to the Editor

The New York Times on Sunday also published several lettersto the editor responding to an April 14 article about specialty tiers and to a Timeseditorial addressing the issue. Summaries appear below.

  • Hildy Dillon: "By forcing patients to pay a high percentage of the cost of expensive drugs, the new drug-industry pricing system places an undue burden on the most critically ill," Dillon, senior vice president of the Leukemia and Lymphoma Society, writes in a Times letter to the editor. Dillon adds, "It is ironic that as more progress is made in discovering new treatments, this system, supposedly designed to keep insurance costs down across the board, winds up undermining our years of effort to get promising new drugs to those who really need them" (Dillon, New York Times, 4/20).
  • Mitchel Galishoff: "Cost containment by employers may be a major player in pushing this trend" of cost shifting to patients, internist Galishoff writes in a Times letter to the editor. According to Galishoff, the U.S. needs "a federal national catastrophic illness rights bill to protect those among us from such abusive practices" (Galishoff, New York Times, 4/20).
  • Henry Miller: In a Times letter to the editor, Miller, a physician and research fellow at the Hoover Institution, writes that he takes "issue with [the Times'] statement that 'drug companies, especially the biotechnology companies, are at the root of the problem; they often charge exorbitant prices for monopoly drugs that were developed with heavy government assistance.'" Miller writes that federal funding for pharmaceutical drugs "goes primarily to pre-commercial, fundamental research." He says that the Times also did not "consider the critical role of federal regulation in pushing up prices," adding, "It now takes 12 to 15 years and more than $1 billion, in direct and indirect costs, to bring a new biopharmaceutical to market" (Miller, New York Times, 4/20).
  • Jennifer Reck: The Times article "makes it clear that the notion of insurance as a for-profit venture has almost completely eroded the notion of insurance as a social good in this country," Reck, a policy analyst for the not-for-profit Prescription Policy Choices, writes in a Times letter to the editor. Reck says that the U.S. should "bring the notion of insurance as a social good back into the foreground" and "lower the price of prescription drugs for everyone by allowing the federal government to negotiate with pharmaceutical companies for its Medicare purchases" (Reck, New York Times, 4/20).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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