EpiPen Price Story Highlights Growing Impact Of Drug Deductibles
Executive Summary
Nearly half of employer-sponsored insurance plans surveyed require members to meet a deductible before coverage for a prescription drug is approved.
The controversy over Mylan Pharmaceuticals Inc.’s price increases for EpiPen (epinephrine) puts a spotlight on the growing trend in the private insurance market toward requiring members to meet an annual deductible before prescription drug coverage begins.
Mylan executives pointed to the trend in two recent statements responding to intense criticism from politicians and the public over increases in the list price of its emergency treatment for allergic reactions, which has grown by 500% since 2009.
Mylan’s comments about insurance have been viewed as the typical pharma response to drug cost concerns – shifting the blame to payers. But it also reveals how a burgeoning insurance practice is increasing pricing pressure on manufacturers.
In its most recent statement, Mylan announced it would introduce an authorized generic version of EpiPen at half the list price of the brand. (Also see "Mylan's Generic EpiPen: A Good PR Move, But Risks Alienating Payers" - Scrip, 29 Aug, 2016.)
Explaining the decision, CEO Heather Bresch said, “because of the complexity and opaqueness of today’s branded pharmaceutical supply chain and the increased shifting of costs to patients as a result of high deductible health plans, we determined that bypassing the brand system in this case and offering an additional alternative was the best option.”
That followed Mylan’s earlier announcement that it would expand its patient assistance programs for EpiPen. (Also see "EpiPen's Swollen Price May Trigger Patient Assistance Program Probes" - Scrip, 24 Aug, 2016.)
“As the health insurance environment has evolved, driven by the implementation of the Affordable Care Act, patients and families enrolled in high deductible health insurance plans, who are uninsured, or who pay cash at the pharmacy, have faced higher costs for their medicine,” the company said in that Aug. 25 statement.
Mylan’s comments about insurance have been viewed as the typical pharma response to drug cost concerns – shifting the blame to payers. But it also reveals how a burgeoning insurance practice is increasing pricing pressure on manufacturers.
Payers argue that big increases in their drug costs are forcing them to boost deductibles, as well as member copays and coinsurances. By increasing cost sharing, payer hope to avoid raising premiums significantly, because premiums tend to be the expense that members focus on when choosing an insurance plan.
Payers are also forcing more transparency by requiring members who have not met their deductible to pay for their prescriptions at the full list price. Members previously unaware of the list price, because insurance picked up the majority of it, are facing a new reality.
Media reports about reactions to price increases for EpiPen featured stories about parents unable to purchase the emergency treatment for their children in preparation for the school year because of the cost.
About 9% of branded commercial insurance pharmacy claims (approximately 17 million) were filled at full cost in 2014, because members had not yet met their deductible – IMS study
Deductibles for drug costs are growing fast the in the employer-sponsored insurance market. Nearly half of 2016 employer-sponsored plans (49%) require members to meet an annual deductible before coverage is provided for prescription drugs, according to the 2016 PwC Health and Well-Being Touchstone Survey.
The 49% includes plans with combined medical/pharmacy deductibles (36%) and those with a separate pharmacy-only deductible (13%). The total is more than double the 23% of plans that reported combined and separate drug deductibles in 2012.
The PwC survey reflects information on benefits provided by more than 1,100 employers of varying sizes across the country. The analysis focused on plans with the highest enrollment. Results were released in June.
Prescription Drug Deductibles 2016
- Drugs are subject to an annual deductible in 49% of employer-sponsored plans, more than double the 23% reported in 2012.
- Average family deductible is $2,416 in 2016 employer-sponsored plans.
- 13% of employer-sponsored plans use a separate prescription drug deductible, up from 11% in 2015.
- Approximate 60% of silver plans offered in the ACA exchanges in 2016 require members to meet a deductible for branded drugs.
- The average household deductible in silver ACA plans is $2,900 for those who do not qualify for financial subsidies, up about 7.5% from 2015.
PwC found that the average individual deductible for employer-sponsored plans in 2016 is $1,155, representing a 12% increase from 2015. The average family deductible – $2,416 – is more than double the deductible for individuals.
Deductibles for drugs are even more common in the insurance plans offered through state-based exchanges established under the Affordable Care Act.
An analysis by Avalere Health found that approximately 60% of 2016 silver plans require members to meet a deductible before branded drugs are covered. Silver plans are the most popular type of plan offered in the exchanges. The average household deductible in silver plans is $2,900 in 2016, up from about $2,700 in 2015.
Deductibles Driving Use Of Copay Cards
An increase in the use of pharmacy deductibles is linked with greater demand for manufacturer-sponsored copay assistance cards in a recent study by the IMS Institute for Health Informatics.
Copay cards were used for about 8% of all branded prescriptions filled by members of commercial plans in 2014, notes the IMS report, which was released in September 2015.
But in some therapeutic categories, such as pulmonary drug combinations and the DPP-4 and GLP-1 treatments for diabetes, copay cards were used more frequently by members in plans with a pharmacy deductible than those without a drug deductible, IMS found.
The study notes in particular that members in pharmacy deductible plans used coupons for pulmonary drug combinations at nearly double the rate of members in plans without a pharmacy deductible (8% vs. 5%).
About 9% of branded commercial insurance pharmacy claims (approximately 17 million claims) were filled at full cost in 2014, because members had not yet met their deductible, according to the study.
IMS also found that the percentage varied significantly by geography and payer type. For example, large commercial insurers and pharmacy benefit managers had a relatively low incidence of full cost claims (about 8%) but the top commercial regional payers, such as the Blue Cross Blue Shield plans, had an average of 13% branded claims adjudicated at full cost.
Adherence Hurt By Deductibles
The study also found higher prescription drug abandonment rates and lower adherence among members in deductible plans.
The rate at which patients do not pick up a first claim for a branded drug was 60% higher for patients in pharmacy deductible plans than for those in plans without a deductible, according to IMS. In addition, only about 25% of patients in plans with pharmacy deductibles who were starting on a new treatment were likely to maintain their use of the branded drug after six months.