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Co-Payments Climb for Life-Saving Drugs
by
findingDulcinea Staff
A number of insurance companies are abandoning fixed co-pay prices for a system requiring patients to pay a percentage of the cost of some expensive medications.
30-Second Summary
According to The New York Times, this new system, often called Tier four, usually charges patients between 20 to 33 percent of the cost of certain high-priced drugs. For some, this can “amount to thousands of dollars a month.”
Although the Times reports that the number of patients affected is unknown, hundreds of drugs used to treat diseases such as multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers are now being priced under the Tier four system.
For example, a drug that stops the growth of cancer cells costs $13,500 for a three-month supply. But to take it, the Times reports that Arington, Va., resident Robert Banning has to pay more than $4,000 because his health insurance company requires him to pay a percentage of the medication’s cost.
People with insurance used to pay flat co-payments for prescriptions. Several years ago, in an effort to encourage people to use lower cost generics, insurers started charging different co-pay rates for medications. That two-tier system evolved into a three-tier co-pay system, now Tier four has been added to some Medicare and private insurance plans.
In 2005, people paid an average of $74 for Tier four drugs, up from $48 in 2004, according to a study conducted by the Kaiser Family Foundation.
Patients and health policy analysts are worried that people won’t be able to afford co-payments for these sometimes life-saving medications, while insurance company advocates say this system helps keep insurance premiums low for everyone.
However, The Crone Speaks blog questions how such a system will keep everyone’s premiums down if the cost of co-pays are rising at a faster rate than inflation and wages.
In addition, for seniors who take many medications, or have expensive prescriptions, Medicare’s prescription drug benefit has a drawback: after Medicare has bought approximately $2,400 in prescriptions, the patient must pay the entire cost of medications until he or she has spent $3,000. That gap is known as “the donut hole.”
Although the Times reports that the number of patients affected is unknown, hundreds of drugs used to treat diseases such as multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers are now being priced under the Tier four system.
For example, a drug that stops the growth of cancer cells costs $13,500 for a three-month supply. But to take it, the Times reports that Arington, Va., resident Robert Banning has to pay more than $4,000 because his health insurance company requires him to pay a percentage of the medication’s cost.
People with insurance used to pay flat co-payments for prescriptions. Several years ago, in an effort to encourage people to use lower cost generics, insurers started charging different co-pay rates for medications. That two-tier system evolved into a three-tier co-pay system, now Tier four has been added to some Medicare and private insurance plans.
In 2005, people paid an average of $74 for Tier four drugs, up from $48 in 2004, according to a study conducted by the Kaiser Family Foundation.
Patients and health policy analysts are worried that people won’t be able to afford co-payments for these sometimes life-saving medications, while insurance company advocates say this system helps keep insurance premiums low for everyone.
However, The Crone Speaks blog questions how such a system will keep everyone’s premiums down if the cost of co-pays are rising at a faster rate than inflation and wages.
In addition, for seniors who take many medications, or have expensive prescriptions, Medicare’s prescription drug benefit has a drawback: after Medicare has bought approximately $2,400 in prescriptions, the patient must pay the entire cost of medications until he or she has spent $3,000. That gap is known as “the donut hole.”
Headline Links: “Co-Payments Go Way Up for Drugs With High Prices”
Robin Steinwand has multiple sclerosis and has paid $20 a month for a medication that costs $1,900 a month for the last eight years. But recently, her co-pay rose to $325 because her insurance company changed the policy and now charges a 25 percent co-pay. “I charged it, then got into my car and burst into tears,” Steinwand told The New York Times.
Source: New York Times
Medicare, the nation’s health insurance program for older adults, started using the Tier four a couple of years ago, according to a 2006 USA Today article. Fourth-tier drugs in Medicare require a co-payment of anywhere from a quarter to a third of the drug’s actual cost.
Source: USA Today
Reaction: Insurers as ‘killers’
On the blog The Crone Speaks, a blogger known as Archcrone, who describes herself as a breast cancer survivor, gives her take on Tier four drugs: “The reality of this move to charge people a percentage of Tier 4 and Tier 5 drugs rather than a fixed co-pay, is that the insurers are committing murder. Guaranteed, not a single insurer will be charged for murder.”
Source: Crone Speaks
Analysis: Trends in Tier four prescription plans and the donut hole
Tier four prescription drug plans did not start appearing until 2004, according to a study by the Kaiser Family Foundation called “Trends and Indicators in the Changing Health Marketplace.” In 2004, three percent of firms surveyed used the four-tier system, and by 2005, four percent of companies surveyed had adopted it.
Source: Kaiser Family Foundation
In 2007, someone with Medicare paid a $265 deductible for their prescription drugs. After the deductible was spent, the person paid $533 of the next $2,135 in prescription drugs that Medicare bought. After that, the person entered what is known as the “donut hole,” where he or she had to spend, out-of-pocket, about $3,100 for prescription drugs. Once that person purchased $3,100 in medications, Medicare stepped in and covered 95 percent of the prescription drugs’ cost for the rest of the year.
Source: Medicare Advocacy
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