To illustrate his point, the President invited Bill Elder, a 27-year-old medical student with a rare form of cystic fibrosis to sit with First Lady Michelle Obama during his speech. Mr. Elder has been using Kalydeco, which, as the president pointed out “has reversed a disease once thought unstoppable” by turning off the genetic mutation causing his disease.
But Kalydeco, is NOT easily available under most health plans. Ask Chloe Jones, a 14-year-old Arkansan with the same type of cystic fibrosis mutation. Arkansas’ Medicaid agency has refused to give her Kalydeco. Instead she has to first fail to respond to older, less-expensive therapies that treat the symptoms but not the underlying cause. (Kalydeco costs about $200,000 a year.) In other words, she has to get sicker and a step closer to death.
Sadly, Chloe is not alone. She and hundreds of thousands of other patients are denied the precision medicines the president celebrates. Instead of ensuring access to precision medicines for the right patient at the right time, pharmacy benefit management companies (PBMs) that put together drug formularies for health plans are only offering drugs from biotech firms that give them biggest cash discount. And then insurers are requiring kids like Chloe to get sicker or pay thousands of dollars before getting targeted treatments.
After the rebates are harvested by PBMs by excluding precision meds, health plans require patients to pay thousands of dollars out of pocket to get the one’s that are left. Managed Care magazine points to a study by Avalere Health that revealed “many insurers require copayments of 10% to 40% for 19 classes of medications for patients with chronic conditions. More than 60% of silver plans put all covered medications for patients with multiple sclerosis, rheumatoid arthritis, Crohn’s disease, and certain cancers in the highest formulary tier.”
While most plans cap out of pocket costs, most consumers can’t afford thousands of dollars upfront. As a result, patients don’t take the medicines that could save their lives. Health insurers and PBMs know it and profit from it.
On top of all that, health plans and PBMs don't pay for the genetic tests that match people to the right medicines. They want randomized clinical trials to demonstrate accuracy know it will take years to set up studies and get results.
The orchestrated outrage over drug prices, led by John Rother and his AHIP funded National Coaltion on Health is nothing but part of cynical plan to extort rebates and limit access to precision medicines. It is noteworthy that AHIP, and the PBMs have contributed nothing to the discussion around the bi-partisan 21st Century Cures Initiative. If they cared about the cost of medicines, they would propose ways to reduce the time and money needed to develop and adopt precision medicine. The same goes for critics who say nothing about the value of medicines and is not an advocate for 21st century cures.
In fact, the pay for play schemes indicate that PBMs and insurers can only profit from precision medicine by rebates. As Eric Topol points out in his new book "The Patient Will See You Now", the health data now controlled by payors and physicians will be generated and controlled by patients themselves. Using smartphones patients will be able to find the right treatment for them based on their genetic and clinical data. Where's the need for middlemen at that point? PBMs are the Blockbuster Video and Tower Record Stores of the healthcare system. NO ONE will miss them when they are gone.
We need to hasten the creative destruction of PBMs. We can start by replacing fail first or step therapy approaches with value-based precision therapy. And we should elimiinate the discriminatory practice to placing precision medicines in the most expensive formlary tiers and the coo-insurance costing thousands. Finally, we need to expand the use of new medicines in the real world.
Ultimately, the rebate and co-pay schemes plump up profits to prop up an outdated business model. PBMs and insurers are skimming off billions of dollars with drug benefit designs that target the most chronically ill and vulnerable patients. No wonder, patient groups have sued health plans for discrimination. Change can't come fast enough.