Troubled by health plans' high cost-sharing for drugs

Since 2010, John Castellani has served as president and CEO of the Pharmaceutical Research and Manufacturers of America, which represents leading biopharmaceutical researchers and biotechnology companies. Castellani, who began his career as an environmental scientist at General Electric, previously served as CEO of the Business Roundtable and executive vice president of Tenneco. He is a trustee at Sibley Memorial Hospital and a director of the National Health Council. Modern Healthcare reporter Jaimy Lee recently spoke with Castellani about how high-deductible health plans are affecting patients' access to prescription drugs, PhRMA's concerns about the 340B drug discount program and its legislative priorities in Congress this year. This is an edited transcript.

Modern Healthcare: Are there prescription drug-coverage issues that your organization is concerned about?

John Castellani: Our scientists and physicians are taking advantage of unlocking the human genome and providing much more effective, much more personal medicines for patients and meeting a lot of unmet medical needs. At the same time, there continues to be pressure from payers on this very small part of the whole healthcare system. Medicines make up about 10% of total U.S. healthcare spending. What we are seeing, particularly in exchange plans, is a high cost-sharing requirement. A Milliman report showed that silver-tier plans are nearly four times more likely to have a combined deductible for medical and pharmaceutical benefits than an employer plan. This requires patients, particularly lower- and middle-income people, to have tremendous out-of-pocket expenses for the medicines that they need to help avoid much more expensive acute care. We are troubled by that.

MH: Given how drug companies are pricing new drugs, is your organization concerned that insurers will simply stop paying for some of those drugs unless they are considered essential to saving lives?

Castellani: The issue has to be looked at from the patient perspective. Are these medicines that can treat and in some cases cure diseases, and are patients going to have access to them? The discovery process is long, hard and expensive. A recent report from Tufts shows that it costs almost $2.6 billion and takes about 10 to 15 years to develop a single medicine. The Congressional Budget Office has recognized that in the Medicare Part D program, the more that patients have access to medications to manage their diseases, the more Medicare is saving in acute-care costs and long-term-care costs. So the key is to be able to get these innovative medicines to the patients.

MH: Insurers argue that drug companies use coupons and other forms of copay assistance that undermine their pharmacy benefit designs that are meant to encourage people to use lower-cost generics. What is your view of these assistance programs?

Castellani: Manufacturer-sponsored patient-savings programs help patients afford prescription medicines, which play a key role in maintaining health and slowing disease progression. We think they have a positive effect.

MH: Should this type of assistance be targeted only to lower-income patients?

Castellani: We have very robust government programs that address low-income patients. Every one of our member companies has a program that says that if you can't afford your medicines, call us and we will find a way to get the treatments that you need for you if your insurance does not cover it. So it is broad-based. In some cases, a government program can help. But all of our companies have the mission of ensuring that patients have access to the medicines they need.

MH: Do these programs do enough to offset the cost of some drugs that may cost more than $100,000 for a course of treatment?

Castellani: It isn't enough until every patient who needs a medicine has the medicine that they need. That's why we are working with patients constantly to ensure that the insurance structure is such that it allows them to have access to the medicines that they need, and that government programs like Medicaid are working the way they are designed to work.

MH: What are your organization's primary concerns about the 340B drug discount program?

Castellani: We support the 340B program. When it was enacted in 1992, it was to help uninsured and indigent patients gain access to prescription medicines. It required manufacturers to provide discounts to hospitals and clinics that serve as safety net providers. What has happened, unfortunately, is that the program has steadily slipped away from its core mission. While there are some healthcare providers that serve large numbers of needy patients, there are others that don't and they still get the benefit of the 340B program. We want to work with Congress and the administration to ensure that the 340B program is doing what it was originally intended to do—serving the neediest patients who are uninsured or indigent, and allowing them to have access to the medicines that they need. We just think that there are some institutions that are taking advantage of this program in a way that was never intended. This has been growing over the years, as we have seen the proliferation of entities that don't look like they are passing those savings on to the patients who were intended to benefit from this program. We want to ensure that the program's eligibility criteria are clear and that the entities participating in the program are passing on the discounts to the uninsured and needy patients. The uninsured should be a population that is decreasing as coverage expands under the Affordable Care Act.

MH: What issues would you like to see Congress address in 2015?

Castellani: The greatest excitement and promise is around the so-called 21st Century Cures Initiative. It's aimed at enhancing discovery, development and delivery of medicines. We are very much looking forward to working with the House in a bipartisan way, and, hopefully, this will be picked up in the Senate. The science is progressing at such a rapid rate that we have to ensure that the application and regulation of that science progresses at the same rate, so patients can be served. In addition, we want to work with Congress to ensure that the annual Medicare sustainable growth-rate fix is something that doesn't harm patients and doesn't harm innovation. Congress also is going to be using the budget process to perhaps enhance some of the things in the Affordable Care Act. First on our list, we would support bipartisan efforts to eliminate the Medicare Independent Payment Advisory Board. It is ill-conceived, has a potential to be harmful and is something that Democrats and Republicans have recognized as something that should be eliminated.