If you pay for good health insurance, shouldn’t you be able to afford the medicine you need?

For Kristin Agar, a 63-year-old social worker in Little Rock, Ark., this has not been the case.

In 2008, Agar began experiencing strange symptoms. Her feet swelled, her joints ached, a rash appeared on her face, and every night she would get a fever that would disappear in the morning.

Her doctor diagnosed her with lupus, a disease in which the body’s immune system mistakenly attacks healthy tissue, including the skin, joints, brain, or kidneys. Agar’s doctor prescribed Benlysta, the only treatment on the market specifically for lupus.

But Agar says that, although she works hard and makes decent money, she isn’t able to afford Benlysta. Agar’s insurance policy pays for 80 percent of the drug’s price, or about $2,500 per dose. But Benlysta is so expensive that Agar would still have to pay $450 once or twice a month for the medicine -- on top of a $770 monthly insurance premium, and her other medical costs.

“I make too much money to qualify for assistance, but I don’t make enough to pay the bills,” she says.

Around the U.S., people with serious diseases like Agar’s are falling through the cracks, unable to afford the medication they need even if they have good jobs and good insurance. Patients with HIV, cancer, lupus, leukemia, hepatitis C and other serious conditions are paying huge out-of-pocket sums for necessary medication. These costs are putting heavy mental and financial stress on some of America’s most vulnerable people.

And the trend is getting worse. According to Truveris, a drug pricing research firm, the combined prices for brand, generic and specialty drugs rose 10.9 percent in 2014 compared with the previous year.

These rising prices are forcing some patients to take on huge amounts of debt. Others, like Kristin Agar, are forgoing medications altogether – increasing the risk that they will have more serious health complications down the road.

The reasons for these trends are complex: Drug companies blame insurers, insurers blame drug companies, and researchers blame both, as well as government regulations. But the implications are clear. Patients who can’t get medications will get sicker, and when they do, families, insurance companies and the government will bear the cost.

The Supreme Court ruled on Jun. 25 that the federal subsidies that help people purchase Obamacare health plans are legal, ensuring that the system will survive for now, and that patients with pre-existing conditions can continue to get insurance. However, patient advocates say that much work still needs to be done to make certain that patients can afford the treatment they need.

Americans of all parties now see the cost of drugs as a top concern, even more important than political aspects of Obamacare. In a poll by the Kaiser Family Foundation earlier this year, 76 percent of the public said the top priority for the president and Congress was making sure that those who need high-cost drugs for chronic conditions, such as HIV, hepatitis, mental illness and cancer, can afford them.

There is no quick fix to these problems. Meanwhile, the American population is aging, and many more expensive drugs are coming on the market. The problem is likely to get much worse before it gets better.

“It’s ironic: We’ve had fairly stable health care costs for a number of years, which is a truly historic achievement. We’ve saved billions and billions of dollars,” says John Rother, the president and CEO of the National Coalition on Health Care, which advocates for sustainable drug prices. “And now it looks like this one sector, pharma, is going to drive healthcare costs much more aggressively upward in the future.”

The exorbitant cost of prescription drugs

The number of Americans taking expensive prescription drugs is rising quickly. In 2014, 576,000 Americans took at least $50,000 worth of prescription drugs, up from only 352,000 the year before, according to a recent report by Express Scripts, which manages pharmacy benefits for government agencies, labor unions, and other big employers.

Insurance companies paid the bulk of this cost, of course – more than 97 percent. Most insurance plans cap the amount that patients can pay out of pocket for drugs. After a patient reaches this maximum level – up to $6,600 for plans purchased on the federal exchange – the insurance company will pay 100 percent of drug costs.

But for many patients, the problem is in getting to that spending cap. Many Americans with chronic illnesses don’t have $6,000 or more to spend on prescriptions, especially after paying a monthly insurance premium, doctor visit co-pays, and other medical costs.

For many with serious illnesses, hitting that maximum annual out-of-pocket level has become inevitable. Many patients, Agar included, hit the cap within the first few months of the year. “I don’t have that money lying around to be able to do it,” she says.

“I’m not a stranger to hard work, I’ll work hard six days a week and people who know me will say that,” says Agar. “But there’s a limit to what anybody can do.”

For much of her career, Agar worked with cancer patients, and she saw them go through the struggle of trying to afford their medications first hand. But she never thought she would end up in the same situation.

Without the drug, Agar is vulnerable to a lupus flare that could damage her organs. “I feel like a sitting duck,” she says.

People living with HIV and AIDS describe similar challenges. For lower-income patients who get access to the system, federal funds will cover the cost of medical care and support services. Jaysen Foreman, a case manager who works with HIV positive youth in Charlotte, N.C., says patients making up to $34,000 in Charlotte can receive free HIV medication and care through the government’s Ryan White program.

But those who make more than that amount often struggle to afford their medications, too.

“That’s the portion that it’s really squeezing, individuals who are in the gap between what Ryan White will cover, and where people have the income to pay for the medication whatever the co-pays are,” says Jonathan Hammond, a clerk at an immigration law firm in Cincinnati who is HIV positive.

Considerations about insurance and HIV-related debt have changed the course of Hammond’s life.

Hammond was forced to take on a heavy debt load as a result of HIV. When he discovered that he was HIV positive in 2002, he was enrolled in a graduate school program that didn’t offer health insurance. Hammond dropped out of school and spent a decade as a manager at Starbucks, which provides health insurance to part-time employees.

Hammond started studying to become a lawyer in 2013 as a way to finally escape from what he calls “the debt of HIV.” He has around $50,000 in medical-related debt alone, including charges from multiple visits to the emergency room over a decade ago, when he was very sick but didn’t yet realize that the cause was HIV.

Despite Hammond’s efforts to pay that debt down, in most years his total debt grows rather than falls. Last year, Hammond paid close to $9,000 for medical care. This year, his law firm adopted a new insurance policy with a maximum out-of-pocket payment of $6,350. He met that maximum on March 7.

“Beyond the stress of living with HIV and having that, [there’s] knowing that every single year that goes on, your debt is just going to get larger,” he says.

Are insurance companies to blame?

Nine out of 10 of the more than half a million Americans who consumed at least $50,000 in prescription drugs last year were taking what the medical industry calls “specialty medications.” These are drugs that treat complex and chronic conditions such as cancer, HIV and AIDS, rheumatoid arthritis, hepatitis, multiple sclerosis, kidney failure, and hypertension.

The growth is partly due to pharmaceutical innovation that is helping those with serious illnesses live longer and healthier lives. Drug companies are rolling out life-changing treatments for chronic conditions, including cancer and hepatitis C. And patients who are taking these drugs are living longer, meaning the number of people on high-cost drugs is increasing.

But the trend also has a lot to do with how pharmaceutical and insurance companies price their products, and how the government regulates them.

In the debate over who is responsible for high patient drug costs, insurers and pharmaceutical companies are almost totally at odds. The pharmaceutical industry says insurers bear most of the responsibility for passing on too much of the cost of prescription drugs to consumers.

“What we’re seeing in the marketplace is that insurers are requiring patients to pay an ever-growing share of their medicine costs,” says Robert Zirkelbach, a senior VP of communications at PhRMA, a trade group that represents the pharmaceutical industry. “In fact, patients are being asked to pay a far greater percentage of the price of medicine than they’re required to pay for physicians or other medical services that may cost significantly more.”

Some independent researchers agree. Allison Rice, a professor at Duke Law School who teaches a training program for law students who are working with HIV patients, cites a longer-term trend in past decades toward insurers, employers and government-sponsored programs like Medicaid shifting more costs onto patients in order to encourage them to make smarter decisions about health care and reduce health care expenses overall. But while this approach might work with everyday health care, Rice says it doesn’t apply to chronic diseases.

“The notion is that you can reduce health care costs by ‘putting skin in the game,’ which I always find to be kind of hilarious when you’re dealing with people with cancer, multiple sclerosis or HIV. It’s not like they have a whole lot of choice in their meds,” Rice says. For HIV, for example, there are a limited number of drugs on the market, and each may provoke a different response in different patients.

Some researchers have also found evidence that insurers offering health plans through the new federal marketplace are purposefully passing on higher costs to those with chronic illnesses, in order to discourage the sickest, and therefore most expensive, people from joining their plans.

A study published in the New England Journal of Medicine in January by two researchers at Harvard argued that some insurers are discriminating against people with HIV by putting all medicines to treat the condition in the highest cost-sharing tier.

Normally, insurance companies place medicines in different cost tiers in order to guide patients toward lower-cost versions of the drug. That might be a generic, or it a drug for which the insurer has been able to negotiate a lower price. But the Harvard study showed that some plans put all HIV medications in the highest cost tier – a practice they call “adverse tiering.” While Obamacare bars insurers from discriminating against patients with pre-existing conditions, researchers say adverse tiering is designed to discourage HIV patients from joining certain insurance plans.

Doug Jacobs, the lead author of the study, says they were surprised to find that adverse tiering was a widespread practice, going on in 12 of the 48 plans they looked at across the country. “The implications for people with HIV were tremendous. We estimated that if someone with HIV was in an adverse tiering plan, they would be spending more than $3,000 [a year] than if they weren’t.”

Those working with HIV positive people say they have seen this phenomenon in action. Rice of Duke University says that it has been one of the barriers to people with HIV enrolling in the federal exchange plans in North Carolina. “People who realized up front that they were going to face 25-50 percent coinsurance for HIV drugs didn’t even bother to sign up,” she says.

Another study by Avalere Health, a healthcare system advisory company, showed evidence of insurance companies engaging in similar practices for the high-cost medicines that treat cancer, diabetes, rheumatoid arthritis, multiple sclerosis, asthma, schizophrenia and bipolar disorder.

“After the Affordable Care Act, people kind of assumed that discrimination on the basis of pre-existing conditions was completely gone,” says Jacobs. “I think it has the potential to be gone in the future, but doing so would require some vigilant oversight.”

Another issue for many patients is pricing transparency. For the most expensive specialty drugs, many insurers have switched to charging patients coinsurance (a certain percentage of the drug’s total price, for example 20 percent) rather than a copay (a flat dollar fee, like $20). A study by Milliman Inc showed 41 percent of silver level plans on the federal exchange charged coinsurance greater than 30 percent for specialty medications in 2015, up from 27 percent of plans the year before.

This practice not only passes along more of the cost to patients, it also prevents them from knowing how much their medications will cost before they enroll in a plan. Insurance companies don’t disclose the total price of drugs to people who are shopping on Healthcare.gov. So patients may know that they have to pay 30 percent of the price of a drug, but they won’t know what that price is until they get to the pharmacy.

What’s the true cost of a miracle drug?

Insurance companies claim that they are not using adverse tiering to discriminate against the sickest patients. Clare Krusing, the communications director for America’s Health Insurance Plans, an advocacy group that represents insurers, says that insurance companies are doing everything they can to provide affordable coverage. The real issue is exorbitant prices of prescription drugs, which drive up insurance premiums and increase cost sharing, says Krusing.

Insurers are on the hook for much more of the rising cost of prescription drugs than patients are, Krusing points out. For example, the report from Express Scripts shows that insured patients who used more than $100,000 worth of prescription medications in 2014 paid 1.7 percent of the total cost out of pocket, on average. Insurance companies picked up the rest, including 100 percent of the cost of drugs after patients hit their out-of-pocket maximums.

No matter how insurers try to ease the burden, some of those hefty drug costs have to be passed on to consumers through premiums and co-pays, says Krusing. “What patients are paying out of pocket is a direct reflection of that increase in cost.”

The pharmaceutical industry claims these high costs are necessary to recoup their investments, including in the many drugs that never make it out of the laboratory, and fund the high cost of getting prescription drugs approved by the FDA. But critics say high prices are more likely a product of lengthy patents and market consolidation that gives pharmaceutical companies monopolies over certain drugs.

Introducing more competition into the pharmaceutical market, both for brand name products and generic drugs, is the easiest way to slow the growth in drug prices. According to Truveris, while prices for brand-name drugs rose 14.8 percent and specialty drugs increased 9.7 percent last year, generics rose only 4.9 percent.

As an example of blatant profiteering by the pharmaceutical industry, many in the health care industry point to the case of Sovaldi, the breakthrough drug that, for the first time ever, cures rather than treats hepatitis C. Gilead acquired the drug by buying its maker, Pharmasset, for $11 billion in 2012. Gilead then rolled out the miracle drug at $84,000 for the full 12 weeks of therapy – more than twice as much as Pharmasset had forecast that the treatment would cost in a 2011 filing to the SEC.

Gilead took advantage of its position as the only provider of the drug at the time to charge extremely high prices, critics say -- and the market and its shareholders have richly rewarded the company for doing so. Gilead recouped the cost it paid to buy Pharmasset in just the first year of Sovaldi sales, and its stock price has doubled in the last two years.

Patents are necessary to encourage companies to innovate, but they also slow the progress of cheaper generic versions of drugs to market, and allow drug companies to charge much more in the interim than they could if they had more competition. Drug makers are also accused of “evergreening” patents, making slight tweaks to an old formula to win a new patent on a drug without substantively improving the product.

Rother of NCHC and others say the public needs more transparency into the opaque system of how drug companies price their products – whether prices are based on clinical studies, the value of the drug, or merely what drug makers think the market can bear.

Another major issue is that private insurance companies don’t have the clout to negotiate down these high drug prices, and the government has refused to play that role, says Rother.

Rother says Medicare is large enough to force drug makers to lower their prices, but the government once again decided not to negotiate for lower drug prices while crafting Obamacare – a decision Rother calls “the price of pharma’s acquiescence in the Affordable Care Act politically.” The U.S. is the only wealthy country that does not negotiate with the pharmaceutical industry over drug prices.

Rother says the lack of negotiation has left the insurance industry with only very crude tools to try to counter aggressive drug pricing. One is what he calls “step therapy,” or insurers’ requirements that patients try less expensive drugs first before they move on to more expensive drugs. The other is high out-of-pocket costs. “These are not happy tradeoffs,” he says. “These are not something that anyone designing an ideal system wants to see.”

In turn, the pharmaceutical industry has countered insurers’ high out-of-pocket costs with their own initiatives, called co-pay assistance. These programs help patients pay the co-insurance or co-pay costs on their prescriptions that their insurance plans require.

Foreman, the case manager who works with HIV patients in North Carolina, calls co-pay assistance “a saving grace” for patients with HIV. “The pharma companies have stepped up and noticed there is a huge gap between these plans than someone can afford.” He says that, as out-of-pocket costs have increased for patients, he’s also seen co-pay assistance soar in the last few years, from roughly $3,500 to $6,500 per patient.

Glen Stettin, M.D. and the senior vice president of clinical research and new solutions at Express Scripts, says that these co-pay programs perversely allow for higher health care costs. These programs help to shield many patients from the higher cost of drugs, meaning that only the insurance companies have to pay the full cost of the prescriptions. And that in turn forces insurers to raise premiums and coinsurance for people in their plans.

Allie Gutshall, a 24-year-old grad student who lives in Houston, gets the medicine she needs through one of these assistance programs. Gutshall has lupus and takes Benlysta, the same expensive drug that Kristin Agar has been prescribed but can’t afford. Gutshall says Benlysta has been a miracle drug for her, allowing her to work and live a normal life. A few years ago, her joints were so swollen she couldn’t even walk to the bathroom with help.

Allie says her family initially struggled to pay for Benlysta. After Allie resigned from her teaching job due to health complications, she was put on her mother’s insurance, which chose not to cover the drug. Allie’s dad had to put the $2,500 charge for a single dose of the drug on his credit card. Now, after extensive appeals to the drug maker, Allie is on their assistance program.

“I’m very lucky it’s worked out this way. If my insurance company had said they would cover it, I would be paying a 20 percent co-pay of $7,500,” she says. “Even if I had got covered, it would be very difficult to come by that money every month.”

But while she’s grateful for the assistance, Gutshall also recognizes the deep unfairness of these assistance programs. “My mom nearly had to take on a second-time job of being my advocate… Unfortunately, not everybody has a strong support system like that. They don’t have parents who are able to help out -- they might be parents themselves. It shouldn’t be that difficult to get the medications you need to be healthy and live a normal life.”

What can be done?

Some new regulations and legislation are in the works to help slow the growth of drug prices. Even as the Supreme Court decided to uphold subsidies for Obamacare, its regulations continue to evolve. The Department of Health and Human Services is expected to issue new regulations in the next few months on discrimination in the Affordable Care Act. Those new rules could force insurance companies to stop adverse tiering, or potentially allow private parties to sue insurers for discrimination against those with preexisting conditions.

The bipartisan 21st Century Cures initiative will seek to address the supply side, speeding up the FDA’s approval process for new drugs. The FDA also recently approved the sale of the first-ever biosimilars, “generic” versions of biological medicines that have been marketed in other countries for years. Another bipartisan bill introduced in the house, Patients’ Access to Treatments Act, is seeking to limit cost-sharing for medications in specialty drug tiers. And many new regulations are being put in place at the state level, with Maine, Vermont, Delaware, Maryland, Louisiana and others setting limits on out-of-pocket spending.

Consumer pressure is also a powerful force for change: In the past year, campaigns by patients and advocacy groups have pushed insurance companies to reexamine their plans and eliminate adverse tiering for HIV patients. A similar outcry by patients and advocates has pushed drug companies to expand co-pay assistance programs. Yet for both insurers and drug makers, the profit motive encourages them to raise prices and limit access to expensive drugs.

Overall, the problem of unaffordable prescription drug costs for people with illnesses seems likely to get worse before it gets better.

As Baby Boomers age, America’s population of people living with various chronic illnesses, including cancer, diabetes, high blood pressure and high cholesterol, will grow.

Many more expensive prescription drugs are slated to hit the market in the next few years, and some are approved to treat conditions with larger patient populations, such as high blood pressure. According to Express Scripts, 27 of the 51 new medications the FDA approved in 2014 were specialty drugs.

“Ultimately there are going to be more medications that come out that are incredibly innovative,” says Krusing of AHIP. “But if people can’t afford them, what good will they do?”

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