Comment: Response to an op-ed on insurance co-payments – Maryland Matters

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By Matthew Celentano

The writer is executive director of the League of Life & Health Insurers of Maryland, Inc., the state trade association representing the life and health insurance industry.

Prescription drugs and their astronomical costs have been a frequent topic of debate during the 2024 session of the Maryland General Assembly.

High list prices set by established drug manufacturers without any justification or regulation have an incredible impact on insurance design and insurance premiums. High costs continue to squeeze consumers in ways that make life-saving drugs unaffordable.

About a decade ago, prescription drugs accounted for less than 10% of your insurance premium. Due to unwarranted increases in drug prices by manufacturers, this percentage has skyrocketed to more than a third of current premiums.

That’s why when Senate Bill 595/House 879 was introduced, health insurers were concerned about the negative impact it would have on costs. While at first glance the bill appears to be a no-brainer in allowing rebates provided in coupon form by a manufacturer to count toward a deductible, there is more to the story.

We know that drug manufacturer coupons create additional insurance premium costs while providing windfall profits for the manufacturers. The federal government has labeled the bill’s schemes as kickbacks to manufacturers and has historically not honored them in federal programs. Here are the reasons why insurers were concerned about the bill as it was introduced. Even so, through conversations and the leadership of Del. Steve Johnson (D-Harford), amendments were adopted in the House that mitigated the concerns of insurers and protected consumers.

This week in Maryland Matters, the Immune Deficiency Foundation (IDF) highlighted legislation passed in the District of Columbia that is substantially similar to SB 595/HB 879 as amended. They referenced that 19 other states passed this bill, but they neglected them. mention that more than most of these states reflect the SB 595/HB 879 amendment. The amendments include language that addresses generic alternatives and health savings accounts (HSAs) and health plans with high deductibles. The HSA language is written identically to the Maryland HSA exemption language used throughout the Code at the request of the Maryland Insurance Administration, the state’s primary insurance regulator.

To further empower consumers, the House also added a provision requiring drug makers to communicate with patients about what to expect with a coupon and when the discount will expire. Providing information to consumers should be seen as empowering and transparent, but IDF is confusingly opposed to this provision.

What is also puzzling is that the IDF was present during the first legislative discussions where the carriers suggested the aforementioned amendments and never opposed the proposals. Two weeks passed between that meeting and the bill’s hearing, and the concerns were not raised with the House sponsor at any point.

Stakeholders left the meeting thinking a compromise had been reached. Now, IDF is publicly working against the bill and the benefits it represents for consumers.

While coupons may result in savings for a subset of patients, the real financial benefit goes to drug manufacturers who can continue to supply the patient with their high-cost product. Those dollars never go to the benefit plans or companies they use to manage pharmacy benefits.

The claim that health plans and their pharmacy benefit managers (PBMs) receive funds when coupons are used is simply not true. League operators take issue with the IDF’s repeated narrative that PBMs receive co-pay assistance money. Like any other coupon, these coupons are handled at the point of purchase (the pharmacy), not by the PBM.

The simplest and most effective way to reduce patient costs for health care is for manufacturers to lower the price of drugs. Until then, HB 879 can help increase transparency in drug pricing and reduce the bait-and-switch tactics that plague our healthcare system. It strikes a balance between helping consumers with their out-of-pocket costs while ensuring that manufacturers cannot continue their opaque strategies of marginalizing regulated healthcare entities while driving up costs for all Marylanders.

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