Supervisor Wiener: Reclassifying HIV Drugs as “Specialty” is Discriminatory
A hearing held on March 25, 2015 at a San Francisco City and County Budget and Finance Committee called attention to the insurance company practice of reclassifying HIV medications as “specialty” drugs in the highest formulary tier—effectively increasing out-of-pocket drug costs and placing them out of reach for many patients. Advocates for the HIV/AIDS community spoke out in concern over how these discriminatory practices affect patients—and offered suggestions for how insurance companies can improve transparency and drug pricing going forward.
Supervisor Scott Wiener, an advocate for the HIV pre-exposure prophylaxis (PrEP) drug Truvada who last fall publicly revealed his decision to start taking the medication, sponsored the hearing.
He kicked off the hearing by explaining that when insurance companies reclassify medications as “specialty drugs,” patients—instead of having to pay a set monthly copayment of, for instance, $20—must pay a significant percentage of the drug’s cost each time it’s accessed. Oftentimes, this can mean a monthly coinsurance payment of $600 or more for specialty drugs to treat conditions such as HIV, hepatitis C, cancer, or multiple sclerosis.
“I think it’s important to be very clear here—that for many people who have insurance, who need access to lifesaving drugs, requiring them to pay six or eight hundred or a thousand dollars a month is exactly the same as telling them that they cannot have the drug. Period. It’s a denial of access,” he said.
Because a drug can be classified as “specialty” not only because it requires special handling or complex administration, but also because of high cost—more than $600 per month—about half of drugs that received FDA approval last year could be considered specialty medications, said Colleen Chawla, deputy director of health for San Francisco Department of Public Health during the hearing.
The result is that health plans may place all, or most, medications used to treat one health condition—such as HIV or hepatitis C—into the highest specialty tier. This so-called “adverse tiering” is a form of discrimination, explained Chawla and Supervisor Wiener. Not only can this practice effectively discourage individuals that have chronic health conditions from enrolling in certain plans, it may violate Affordable Care Act protections for people with pre-existing conditions.
Chawla presented a graph showing that out of the 11 Covered California health plans, four have more than 70% of their HIV medications in the highest cost tier. And this issue isn’t limited to Covered California plans, said James Loduca, vice president of philanthropy and public affairs at San Francisco AIDS Foundation. Speaking out on behalf of the foundation’s clients, he said that there’s evidence that these discriminatory practices are also being used by some employer plans.
“We at the foundation recently became aware of a formulary change at one of the largest tech company in the Bay Area that moved all HIV drugs to the specialty tier, increasing cost-sharing significantly for HIV-positive employees as well as HIV-negative employees taking Truvada as PrEP,” he explained.
Matthew Sachs, the PrEP navigator at the San Francisco AIDS Foundation sexual health clinic Magnet, gave an example of the stunning impact that a formulary change can have on medication affordability. A recent client of his had been affording PrEP for 14 months with a pharmacy copay of $35 per month. With formulary changes that brought his coinsurance to 40% of cost, the client was faced with $500 per month pharmacy bills—well outside his budget.
“He actually came to us seeking services for PEP—post-exposure prophylaxis—because he’d had a lapse in his access based on this specialty tiering,” he said.
Only one insurance company—Blue Shield of California—responded to Supervisor Wiener’s request to speak at the hearing.
Alison Lum, director of pharmacy networks at Blue Shield of California, acknowledged that there were problems related to affordability of specialty drugs, but said that the increasing costs of drugs set by manufacturers “outpace efforts” of insurance companies to keep prices low.
“The cost of drugs are set by manufacturers upon drug launch to the market. Once drugs are on this market, those prices set the basis for payment by all payers,” she explained. “Manufacturers usually increase the price, at least annually. Price increases for branded and specialty drugs that are already on the market are seen at 11% to 13% annually.”
The solution, she says, will have to come not only from insurance companies, but also from drug manufacturers. “We need to address affordability crisis as an industry,” she said.
California legislation is already in the works to improve the transparency and affordability problems presented by specialty tier reclassifications. Anne Donnelly, director of health care policy at Project Inform, spoke about how California Senate Bill number 1052—passed in 2014—will increase formulary transparency and access by 2017. It will require all plans to have formulary information posted in a standard way—so patients will be able to easily see which medications are covered in addition to the extent of that coverage for medications to treat HIV in addition to rheumatoid arthritis, lupus, hepatitis C, and multiple sclerosis.
“Also—and I think this is a big win—they’re going to have to have a dedicated pharmacy customer service line that advocates and consumers can call with questions about their formulary,” said Donnelly.
She also presented information about Assembly Bill 339, introduced in February 2015 but still pending, which will require any California plan that covers prescription drugs to cover all “medically necessary” drugs, and prevent insurers from placing all drugs for one condition in the highest tier of a formulary.
Another pending bill, AB 463, would help consumers and advocates better understand drug pricing and increase transparency overall—by requiring drug makers to report profits and production expenses for any drug or course of treatment costing $10,000 or more.