Administration Must End Prescription Drug Insurance Scheme

In the current political climate, it is rare to see legislators from both sides of the aisle agree on an issue. However, Congress has been united in the dire need for reforms to address prescription drug middlemen known as pharmacy benefit managers (PBMs). 

Members from both parties have been expressing serious concerns about the role of PBMs, along with the Federal Trade Commission that recently issued a staff report that found PBMs claim to lower prices for patients despite evidence of rising prescription drug costs and patient spending. In the report, PBMs were rightfully called out for their egregious utilization management, questionable transparency, and anticompetitive practices.

However, there is another concerning practice that has not been addressed by Congress or the FTC that deserves both public scrutiny and regulatory action. PBMs and insurers have been exploiting a foundational patient provision of the Affordable Care Act, which has resulted in major access barriers for patients and higher out-of-pocket costs down the line. 

As policymakers explore reforms for exploitative PBM practices, the Biden administration has said it will close an insurance loophole to protect patient access and affordability but still has not done so.

When Congress passed the ACA in 2010, it required health plans to cover a set of 10 categories of essential health benefits, including prescription drugs. The ACA sets an annual maximum amount for out-of-pocket costs for such benefits.

However, insurers and PBMs have found a way to manipulate the essential health benefits provision by working with scrupulous vendors that designate a number of specialty drugs to be “non-essential” — even if they are medically necessary for patients who are managing a chronic disease. When such drugs are deemed “non-essential,” the health insurance company will not count any cost-sharing toward the patient’s deductible and out-of-pocket maximum. 

The essential health benefits loophole allows insurers, PBMs, and their vendors to milk the copay assistance meant for patients for themselves, and they then split these proceeds among themselves.  This leaves patients struggling with a massive financial burden as they are forced to pay for lifesaving drugs and healthcare out of their own pockets since they are not making a dent toward their out-of-pocket maximum.

Unfortunately, over the years, we have witnessed many instances of insurers continuing to discriminate against patients through their benefit design practices, while state and federal regulators are not doing enough to enforce the strong patient protections within the ACA.

Research conducted by the HIV+Hepatitis Policy Institute found that more than 150 employers and insurers, including such companies as Chevron, CitiBank, Target, and United Airlines, state health insurance policies in Connecticut and Delaware, university health plans including Harvard, Yale and NYU, unions including the New York Teamsters and the Screen Actors Fund, along with 25 insurers including several Blue Cross/Blue Shield plans all are using third-party vendors to exploit the essential health benefits loophole. Their employees probably aren’t aware that their employers are pocketing the copay assistance meant for them and splitting it with these outside vendors. It’s discriminatory and detrimental to patient health.

While many states have taken action to protect patients from schemes that affect patient cost-sharing, it is now time for the administration to do what it said it would do and close the deal. The Department of Health and Human Services has already finalized a rule that makes sure that a drug that is covered by a small group or marketplace plan is automatically deemed as part of essential health benefits.

Now, the Labor and Treasury departments must do the same for the large group and self-funded plans. These are the employer plans, where most people in the country receive their health insurance. They have gone on record that they will codify this foundational patient protection by closing the loophole. The clock is ticking, and they must not give in to the pressure of powerful corporate business interests.

If the administration does not act, patients nationwide will continue to be subject to schemes that lead to higher out-of-pocket costs for the medications they need, risking medical debt or facing treatment delays and lack of adherence.

To protect patients, essential health benefits drugs must be rightfully treated with the gravity that their name implies — medications that are “essential” to a healthy life for patients.

Carl Schmid is the executive director of the HIV+Hepatitis Policy Institute. He wrote this for InsideSources.com.

Reprinted with permission from DC Journal – By Carl Schmid

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.