ACA: Pennywise and Pound Foolish?

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  • 12/05/2014
From the pages of the Deseret News:

ACA should allow prescription drugs

President Barack Obama is fully vested in the claim that his Affordable Care Act is a success.

During a recent news conference, he pointed to the supposedly salutary effect the ACA has had on mitigating rising health care costs. "Health care inflation has gone down every single year since the law passed, so that we now have the lowest increase in health care costs in 50 years," Obama said.

Obama is right that health care inflation has slowed. The Centers for Medicare and Medicaid Services have reported exactly that for the past several years. But his praise is misplaced. Thanks is not due to the ACA but rather to increased access to prescription drugs, which help folks manage illnesses and stay out of the hospital. The ACA actually threatens to increase health care spending by keeping these vital prescription drugs out of reach for many Americans.

If policymakers are serious about slowing runaway health care costs, they need to ensure that sick people have good access to prescription medicines that will make them better.

Consider the example of Medicare Part D. In 2006, Medicare Part D expanded access and reduced the costs of prescription drugs for millions of Americans. The following year, prescriptions filled by Medicare beneficiaries jumped by 14 percent, and, as a result, the annual growth in spending per beneficiary dropped by almost half.

A new National Bureau of Economic Research study credited Part D coverage with an 8 percent drop in hospital admissions for seniors and around $1.5 billion in reduced hospital spending.

The Congressional Budget Office reached a similar conclusion in 2012, finding that spending on medical services dropped by 0.2 percent for every 1 percent increase in prescriptions filled.

In fact, failure to regularly take prescribed medications puts considerable strain on the health care system. A study from the Annals of Internal Medicine estimates that non-adherence already costs the health care system $100 billion to $289 billion a year. That includes avoidable hospitalizations, nursing home admissions and premature deaths.

Given the power of prescription drugs, the Obama administration should be pushing to increase their accessibility. Instead, the administration is actively working against them.

Since Medicare Part D began, the government has required insurers to cover drugs in six treatment areas. The Obama administration, however, proposed early this year to limit coverage of immunosuppressants, antidepressants and antipsychotic medicines for diseases like schizophrenia. The proposal caused an outcry from patients, health care providers and members of both political parties, and the administration scrapped the plan.

But now the Obama administration is doing damage elsewhere — by limiting prescription drugs through the health care exchanges created by the ACA.

Plans available through the exchanges often charge patients significant out-of-pocket fees to access needed prescription drugs. For moderate to low-income patients, these high costs may force them to miss prescriptions.

Insurance companies decide how to share costs with patients by using a tiered system. A patient who needs a drug in the lowest tier might have to pay only a $15 copay. But for those drugs in the highest tier, patients can pay as much as 40 percent of the actual cost of the drug, which can run up to tens of thousands of dollars.

Too many key medications on too many plans are now listed in the highest tier. A recent study from Avalere Health found that more than a fifth of all "Silver" Plans — the most popular coverage — require patients to pay 40 percent of the costs associated with seven classes of drugs. And 60 percent of Silver Plans placed all drugs for multiple sclerosis and rheumatoid arthritis on the highest cost-sharing level.

Just as expanded access to drugs reduces overall health care spending, restricting access drives up costs. Patients who can't readily afford to spend thousands of dollars on, say, their AIDS medication, will probably end up skipping doses. This non-adherence will increase hospitalization rates and overall health care spending.

If the Obama administration wants to put a brake on health care spending, it must preserve robust access to prescription drugs. The White House's attempts to limit prescription drug access in Medicare Part D are incredibly shortsighted. Instead, the administration should be doing all it can to ensure that more Americans have access to these vital drugs.

Peter J. Pitts, a former Food and Drug Administration associate commissioner, is president of the Center for Medicine in the Public Interest.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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