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Feeling the Pain of Costly Prescription Drugs

Specialty drugs can mean miracles and heartbreak

Sue Trevor sits at a table, expensive specialty drugs

Minesh Bacrania

Sue Trevor, suffering from psoriasis, is finding it more difficult to afford the costly medications prescribed to her.

En español l Sue Trevor remembers nearly everything about the day last May when she learned that the cost of the medication prescribed for her disabling form of psoriasis — "my wonder drug," she calls it — had skyrocketed out of reach.

"The pharmacist called to let me know my Stelara was ready," Trevor recalls. "Then she said, 'I wanted to let you know that you now have a copay.' " It was $1,578 for each injection, prescribed for four times a year.

Before Stelara came along in 2009, "I'd tried and failed every other course of treatment," says Trevor, who is 66 and lives in Albuquerque, N.M. Her condition had forced her to stop working and go on Social Security disability.

Stelara allowed Trevor to go back to work. But when her Medicare Advantage plan stopped paying for Stelara injections in her doctor's office, she had to begin covering about 20 percent of costs as a "speciality tier" drug and learn how to inject it herself. Trevor was able to pay for only one treatment, and that was with financial help from a nonprofit group. Since then, her share of the cost has increased to $2,728 per injection.

"I don't know what I'm going to do," she says. "They're not denying me the drug I need; they're just making it prohibitively expensive."

For most Americans, filling a prescription involves a trip to the neighborhood pharmacy and a small copayment. But for those who need so-called specialty drugs — mostly new drugs developed to treat chronic or complex conditions — it's rarely that simple. True, by giving new hope to patients with cancer, hepatitis C, multiple sclerosis, Parkinson's disease, psoriasis and rheumatoid arthritis, to name just a few, specialty drugs are the Rolls-Royces of the pharmaceutical industry.

But these drugs usually come with costs to match. Take Soliris, for example, which treats two life-threatening blood diseases. It costs $440,000 a year. While Soliris is the most expensive prescription drug in the United States, plenty of others have similarly staggering price tags.

"There are lots of great new medications out there, but the sad fact is that many of them are so expensive that consumers — particularly older ones on fixed incomes — may not be able to afford them," says Leigh Purvis, the director of health services research at the AARP Public Policy Institute.

What's more, as a key factor driving up health care costs, specialty drugs put a growing burden on the entire health system. Nineteen of the 28 drugs approved by the Food and Drug Administration in 2013 were specialty drugs, marking the third year in a row that specialty drugs have accounted for the majority of FDA approvals. According to CVS Caremark, spending on specialty drugs is expected to more than quadruple by 2020, reaching about $400 billion — or roughly 9 percent of the nation's projected total health care expenditures.

The fast-changing landscape alarms many experts, including John Rother, president and CEO of the National Coalition on Health Care, who warns of "a tsunami of expensive medicines that could literally bankrupt the health care system."

The challenges associated with specialty drugs came into sharp focus in 2013 with the introduction of Sovaldi, a medication that's been shown to cure about 90 percent of common cases of hepatitis C, which, if left untreated, can lead to liver damage, cirrhosis, liver cancer and even death. A 12-week supply of Sovaldi (that's the typical treatment regimen) costs $84,000, and an estimated 3.2 million Americans are infected, 75 percent of them boomers.

Joel Roth in San Rafael, expensive specialty drugs

Winni Wintermeyer

Joel Roth relies on the costly drug Sovaldi and ribavirin to treat Hepatitis C.

One is Joel Roth, a 66-year-old IT professional, actor and indie film producer in San Rafael, Calif., who has had the virus since the 1970s. His doctor recommended a double course of Sovaldi and another drug, ribavirin. Roth was looking at $16,000 in copays, a fraction of the $168,000 price for Sovaldi alone, but without much available credit and only a modest balance in his 401(k), he saw it as "an impossible situation."

And, some experts argue, the cost of Sovaldi and other hepatitis C treatments could pose an impossible situation for government insurance programs that cover so many boomers.

Sticker shock

The manner in which insurance plans arrive at prices for prescription medication is hugely complicated. Typically, drugmakers set a sticker price, and insurers can bargain over the price, depending on how much competition the medication faces. Because individual specialty drugs have little competition, insurers often accept the sticker price and increasingly try to cover the cost by sharing it with consumers in their plans.

To determine how much of the cost a consumer pays, a plan organizes covered drugs by tiers. At the bottom, a generic drug might require a flat $10 copayment. But a drug at the fourth or fifth tier — the specialty tier — might require patients to pay a percentage of the cost, as much as 33 percent.

In 2013, 23 percent of workers nationwide were in a plan with four or more tiers of cost sharing for prescription drugs, according to the Kaiser Family Foundation, up from 3 percent in 2004.

In Medicare, the figure is much higher. At last count, more than 95 percent of all prescription drug plans (Part D) had at least one drug in a specialty tier, up from 50 percent of them in 2006. What's more, the percentage of drugs that end up on a Part D specialty tier is growing year by year.

Unlike Medicaid and Veterans Affairs, Medicare is forbidden by law from using its strength in numbers to negotiate lower prices. Instead, negotiations are left to private insurance companies (who provide drug coverage under Medicare), which then decide which drugs to offer in plans and with what price and cost-sharing rules. A dizzying array of plans come and go each year, and hundreds more stay in place with revised prices and rules.

Officials of the Centers for Medicare and Medicaid Services (CMS) say that the Part D specialty tier was designed to encourage plans to include expensive drugs. CMS's definition of "expensive" — $600 a month — hasn't changed since 2008.

For their part, drug companies say they have no choice but to charge a lot for specialty drugs. If they can't recoup their research and development costs — an average of $2.6 billion per drug, by one estimate — new treatments won't make it to market, they warn.

"We can afford new medicines for Alzheimer's, hepatitis C and other conditions," says Jenny Bryant, the senior vice president of policy and research at PhRMA (the drug industry's trade association), who points to a 20 percent decline in the cancer death rate over two decades. "Prescription drug spending is expected to grow in line with overall health care costs through 2023."

Drugmakers are also quick to point out how much they spend — about $4 billion a year, by one estimate — on programs that provide patients with specialty drugs at no cost or help them cover their copays. And in truth, manufacturer-sponsored programs have helped millions of patients pay for their medications.

Three pills with info stickers, expensive specialty drugs

Lawmakers are pushing to allow Medicare to negotiate with manufacturers for lower prescription drug prices.

That's not the case, however, with many patients on Medicare. While Part D enrollees can accept drugs provided at no cost by their manufacturers, Medicare bars manufacturers from offering them any kind of copay assistance or other financial help. The ban grows out of the idea that such assistance might constitute an illegal inducement — under a federal anti-kickback statute — for the enrollee to use a particular manufacturer's drug.

That rule left Mary Adragna of Warren, Mich., hanging. Diagnosed with multiple sclerosis in 2011, Adragna began taking the specialty drug Avonex. Under her Blue Cross Blue Shield policy, she had a $320 monthly copayment, which the drug's manufacturer, Biogen Idec, covered.

Things changed when, based on her disability, Adragna moved to Medicare (choosing a Blue Cross Blue Shield Medicare Advantage plan) and her doctor replaced Avonex with Tecfidera, another specialty drug from Biogen Idec. Her copay grew to $620, but she couldn't accept help from the drugmaker.

Call for transparency

Patient assistance programs, whether from drugmakers or charities, aren't enough to help the growing number of people being prescribed specialty drugs. Efforts to change the situation are coming from many directions. The National Coalition on Health Care — made up of more than 80 medical societies, health care providers, insurers and other groups — has launched the Campaign for Sustainable Rx Pricing to spotlight what it brands as "unsustainable and abusive" prices for some specialty drugs.

Some states have moved on the same front. At least six have adopted legislation that in one way or another caps how much consumers can be required to pay for specialty drugs. And a bill in Congress would place new limits on specialty tiers in private health plans.

Perhaps most important for people on Medicare, some Capitol Hill lawmakers are also pushing to allow Medicare to negotiate with manufacturers for lower prescription drug prices.

There are also calls for transparency from drugmakers. Karen Ignagni, the president and CEO of America's Health Insurance Plans, says that drugmakers should have to make public what they spend on R&D and marketing, just as insurers must disclose what they spend on medical care and administrative costs.

"There's no transparency in the cost of producing these drugs," says Purvis of AARP. "At what point is it profiteering? Right now, there's just no way to know."

For now, new specialty drugs keep coming. Joel Roth has his eye on one for his hepatitis C virus. After he found a way out of his "impossible situation" and took Sovaldi, the drug lived up to its promise. "I had six months of no virus," Roth says. "My skin cleared up. Everybody said, 'God, you look good.' "

But soon after he stopped taking Sovaldi, Roth says, "it came back."

Now comes Harvoni, which combines Sovaldi and the drug ledipasvir in one pill. At over $1,150 a pill, a 12-week treatment costs nearly $13,000 more than Sovaldi.

"It's pretty much the holy grail," Roth says. "I'm going to have to take it." Sometime soon, Roth will once again have a huge financial burden to negotiate.