Co-Payments Climb for Life-Saving Drugs

May 25, 2008 07:00 AM
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.

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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.”

Headline Links: “Co-Payments Go Way Up for Drugs With High Prices”

Reaction: Insurers as ‘killers’

Analysis: Trends in Tier four prescription plans and the donut hole


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