The good news. On Wednesday, November 19, CoOportunity Health, the Iowa-Nebraska health-care-cooperative insurance entity that I have touted in several blog posts, insured its 100,000th person for health-care coverage. As I have said before, its projection for the end of this year, its first year of operation, was 15,000 policyholders.
The bad news. CoOportunity Health announced that next year, 2015, it would not participate in the Iowa Medicaid expansion for individuals whose incomes were between 100 to 133 percent of the federal poverty level (FPL). CoOportunity Health simply could not sustain the financial losses for this group of 11,000 Iowans. From my non-insurance and non-actuarial level of understanding, the major issues were 1) the federal government being unwilling to allow for a separate, more accurate actuarial premium amount for this population of newly insured individuals and instead requiring this population to be part of the entire population’s actuarial projection of CoOportunity Health’s premium holders, and 2) the high cost of drugs for treatment of diseases such as Hepatitis C and HIV. For now, this group of individuals will be part of the Medicaid program instead of utilizing the Exchange and being part of the private insurance system.
In this post I’ll discuss several incidents of how the high cost of medicines has negatively affected my patients and the health-care system. The question is: Can health reform, or for that matter the health-care system, survive the upward trajectory of the price of medications?
Just this week, The New York Times reported, “One-half of generic medicines went up in price between last summer and this summer; about 10 percent more than doubled in cost in that time, with some common medicines rising by more than 500 percent … . These include thyroid replacement hormone, the antibiotic doxycycline, and the heart pill digoxin.” Digoxin, whose initial form was derived from the foxglove plant, has been in the medical literature since 1785. Yet The New York Times reported one generic-drug company had “raised the price of generic digoxin by nearly 1,000 percent.” The company’s chief executive had “boasted at a shareholder meeting that his company has record profits thanks to its opportunistic pricing.”
I have used drugs such as doxycycline and digoxin during the 30 years I have practiced. For years, as a family physician, I have been pushed, cajoled, and potentially punished if I did not use generic medicines as much as possible because of their inexpensive costs compared with brand-name medicines. As Senator Bernie Sanders, (I-Vermont), said in that same New York Times article: “Generics have played an important role in making medications affordable for millions of people. … I worry that we’re seeing the end of that now.”
The drug regimen for the treatment of Hepatitis C (genotype 3), which recently came to market, costs $33,600 for a month of daily pills; the regimen calls for six-month course of this medication. It was recommended that a patient of mine start this regimen. This example also illustrates a corollary concern regarding the price of medicine in the United States, which is that medicine in the United States costs significantly more than in other parts of the world. I have been told that the newer, different treatment regimen for Hepatitis C is $90,000 per regimen, whereas the same regimen in Egypt costs $6,000. CoOportunity Health could have transported its patients to Egypt for treatment of Hepatitis C and saved money. I have been told that Wellmark Blue Cross and Blue Shield in Iowa has seen a rise in its health costs due to the sharp increase in the cost of medicines.
This year, I have had three patients on oral, DNA-directed chemotherapy (tyrosine kinase inhibitors) for cancer, which cost $14,400 per month for one patient, $7,500 per month for the second patient, and $5,200 per month for the third patient. Just this week, I have had a patient who refused a common, appropriate antibiotic because her insurance would not pay the cost and the patient refused the high price.
Over and over again, I have had insured patients being told that previously approved medications were now on a different tier of the insurance carrier’s drug formulary, requiring higher and sometimes unaffordable copays. What is causing the higher cost of medications, especially generic medications that have been around for decades? I don’t know, but I must assume profit plays a very significant role.
What to do about it? I have some thoughts. This summer, my daughter began a radiology residency at the Mayo Clinic in Rochester, Minnesota. While touring her department — my first trip to this stellar institution — I enjoyed seeing a medical relic I found displayed in a hallway. This display, on public view, was the original CAT scanner that was the first ever used in North America; the Mayo Clinic had bought one from Europe, where it was first developed. My enjoyment was in part because its first scan was done in May 1973, the month and year I graduated from high school. This technological advance, an invaluable part of my practice and of medicine in general, is an amazingly recent discovery. Two months after the first CAT scan at the Mayo Clinic, the federal government recognized and accepted the use of dialysis for end-stage renal disease (ESRD), a major health-care financial issue for private insurance companies. On July 1, 1973, the End Stage Renal Disease Program under Medicare began, which allowed nearly universal entitlement to renal dialysis — a technological advance now available for broad use — for U.S. citizens with severe chronic kidney disease (CKD). Just as now, a new way to treat a common condition that proved to be significantly expensive was available in the country; the ESRD program is how the federal government chose to deal with CKD in 1973. As we had in 1973, we still have in 2014 new medical advancements that drive higher costs. Should the federal government consider some coverage for a high-expense treatment for a common illness such as Hepatitis C as it did with the ESRD program in 1973? The question remains unanswered for now.
Regarding generic drugs, recent Senate hearings with Senator John McCain, (R-Arizona) highlighted the problem and offered possible helpful changes, such as importing drugs from other countries, which Maine is now exploring; having generic drug companies that raise prices higher than the cost of inflation give rebates to Medicaid and Medicare; and having the Food and Drug Administration (FDA) loosen the rules to allow more generic-drug companies to be started to increase competition in the market.
Finally, I was on the board of directors and, for a time, chair of the Iowa Prescription Drug Corporation, which acted as a conduit for donated, unused medicines from nursing homes to go to free medical clinics. We also had an affiliation with a Medicare Part D prescription drug company that sold Part D policies in Iowa. What I learned from that experience is that there is tremendous profit in the Part D program for pharmacy benefits managers (PBMs) and pharmaceutical companies in relation to rebates given by pharmaceutical companies to PBMs. If the cost of drugs becomes unsustainable for the health-care system, should the U.S. government — like Canada, the Veterans Administration, and community health clinics under the 340B program — group purchase medicine for Medicare and Medicaid?
My summary feeling is that importing drugs from other countries is neither feasible nor sustainable in the long term. I would much prefer using the power of collective purchasing to obtain better drug pricing within a competitive marketplace.
Without a rational way to deal with the issue of drug costs, I fear for the effort of health reform, as well as our health-care system. The tragedy of having medicine available but not being able to have patients use the medicine because of extreme cost is occurring now and will worsen if significant efforts to change the situation are not taken soon.