A Serious Look at Expensive Drugs

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A Serious Look at Expensive Drugs

By Barr

Tuesday, April 29, 2008; Page D04

The Office of Personnel Management is undertaking a review of how much federal

employees and retirees pay for certain types of expensive, specialized

prescription drugs that help treat such diseases as cancer, multiple sclerosis

and hepatitis.

Employers and insurance companies determine the share of prescription-drug costs

that are passed along to patients, and those decisions sometimes can create

thousands of dollars in out-of-pocket costs for federal employees and retirees.

" We do not want people who are seriously ill being put in the position of being

subject to extreme costs, " said H. Kichak, an OPM associate director. " It

is our responsibility, and we do work very hard at it, to make sure there is

some limit to what folks have to pay in a serious illness. "

The OPM's review grew out of a complaint from someone enrolled in Kaiser

Permanente's mid-Atlantic plan that her drug costs had soared and from

discussions with Kaiser, Kichak said in an interview.

The health maintenance organization, effective in January, changed the charge

for specialty drugs, known as Tier 4 coverage, from a co-payment, or a flat

rate, to coinsurance, or a percentage of each medication's total cost. The shift

to coinsurance had been cleared by the OPM.

Kaiser picked up " rumblings " from patients and physicians who were concerned

about the benefit change early in the year, according to Gregg, vice

president of communications for Kaiser in the mid-Atlantic region.

Some enrollees in the Kaiser plan did not see or did not pay attention to an

announcement of the benefits change, while doctors were surprised to hear from

patients about the higher drug costs, Gregg said.

On April 1, Kaiser decided to suspend the coinsurance system for the rest of the

year. The company also decided to reimburse enrollees for the difference between

their coinsurance and co-payment rates. By April 9, Gregg said, the company had

engaged the OPM and was preparing material to send to enrollees.

From 700 to 800 Kaiser enrollees have prescriptions for Tier 4 drugs, and some

were taking multiple medications that could have cost $300 for each refill. " We

stopped it before it had a chance to spin out of control, " Gregg said.

Under the co-pay system, enrollees spend from $7 for a generic drug at a Kaiser

pharmacy to $65 for a brand-name medication purchased at a commercial pharmacy,

she said.

The change from the flat rate, first reported by the New York Times, raised

questions of fairness because it appeared some enrollees were being singled out

and required to pay more than others. " It seems to go against the philosophy of

having a group plan with the risks spread out over all of the enrollees, " said

B. Snell, director of retirement benefits at the National Active and

Retired Federal Employees Association.

Kichak said the OPM has had no complaints about Tier 4 pricing from federal

enrollees in other health plans, but " this whole thing has given us a new

viewpoint, and we have started looking at other carriers. "

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