As California goes, so goes the country in capping consumer costs for medicines? That's what patient advocacy groups and and some pharmaceutical companies may be hoping.
Covered California has become the first state health insurance exchange to require health plans to cap out-of-pocket costs for speciality drugs. The exchange's board voted to adopt a limit of $150 to $500 per month for speciality medications that treat arthritis, cancer, HIV/AIDS, diabetes, hepatitis C and other complex conditions.
All individual health plans sold on and off the state exchange will be subject to the mandate, per a state law standardizing benefits in the subsidized and unsubsidized market, so an estimated 2.2 million Californians will be impacted by the decision. A state bill being considered would extend a similar cap to small group plans.
"This is the first time an exchange has ensured that all of its consumers have access to the medications they need," said Covered California executive director Peter Lee. "These new policies strike a balance between ensuring Covered California consumers can afford the medication they need to treat chronic and life-threatening conditions while keeping premiums affordable for all."
Starting next year, individually-insured Californians with silver and platinum health plans will pay no more than $150 to $250 per month for specialty drugs, while costs in bronze plans will be capped at $500 per month, an increase from a proposed cap of $300.
Among Covered California's other drug benefit changes that will take effect next year, certain drugs are categorized in one of four tiers with concurrent cost sharing levels and health plan formularies must include at least one Food and Drug Administration-approved drug in tiers one, two and three.
Covered California and individual market health plans must let consumers opt out of mail order pharmacy, offer estimates of out-of-pocket costs for specific drugs, and include information on the availability of drugs not listed on the formulary. They also must include an exception process in their formularies and have a dedicated pharmacy customer service line for prospective customers to ask about drug coverage.
The California Association of Health Plans did not take a position on Covered California's new copay cap, which comes with an reassessment provision, although the trade group is opposing a state bill that would require a monthly out-of-pocket cap of as low as $124 per month in all small group plans.
CAHP and other insurers also argue that the copay cap may end up leading to higher premiums, if drug prices themselves from pharmaceutical companies cannot be reformed or reigned in--an issue Covered California's Lee partly conceded.
"While Covered California is doing its part to protect consumers against these rising costs, a broader solution is needed to curtail the explosion in specialty drug costs so that consumers get the care they need without driving up insurance costs so much that consumers can no longer afford coverage," Lee said.
Amid rising speciality drug spending, the decision by Covered California may spur a national push for out-of-pocket limits for drugs and buoy the work of groups like Cap The Copay, which is building momentum for legislation in Illinois. The group is a coalition of patient advocacy groups, including the Leukemia & Lymphoma Society and the AIDS Foundation of Chicago, and is supported with a grant from Pfizer.
A number of states already have monthly or annual out-of-pocket cost limits for drugs, including Delaware, Louisiana, Maine, Montana and Vermont. Maine caps annual out-of-pocket prescription drug costs at $3,500 for an individual and $7,500 for families. New York also prohibits the use of speciality drug tiers.
With some health plans offering annual caps of $1,800, Californians who need speciality medications will have the option of some of the lowest copay caps in the country. There will also be an annual cap for bronze plans that isn't much lower than the federal limit.
Patient advocates are hoping that other states pursue similar limits. Legislation for prescription drug out-of-pocket cap is also being proposed in Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Michigan, Mississippi, Nevada, New Jersey, Ohio, Oregon, Pennsylvania and Virginia.