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Drugmakers: Can we legally help QHP patients?

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(Bloomberg) — GlaxoSmithKline P.L.C. and Merck & Co. are holding off on helping low-income enrollees in the new “qualified health plans” (QHPs) pay for high-priced drugs.

The drugmakers say they won’t provide the assistance until the government decides whether the QHPs are subject to federal laws banning kickbacks that steer business to private companies.

The U.S. Department of Health and Human Services (HHS) and an HHS agency, the Centers for Medicare & Medicaid Services (CMS), created the confusion last fall.

In an Oct. 30 letter, HHS Secretary Kathleen Sebelius said her department doesn’t consider the QHPs to be federal programs. Presumably, that would make it legal for drugmakers to help with patient co-payments.

In another memo, issued Nov. 4, CMS said of “third-party payments” that it “discourages this practice and encourages issuers to reject such third-party payments.”

Since then, the government has issued no more guidance on the matter.

The Pharmaceutical Research and Manufacturers of America (PhRMA) has advised drugmakers to offer aid programs to QHP enrollees.

“I have a real hard time, just as a conceptual model, thinking the help you give a patient could be viewed as a kickback,” said Mit Spears, PhRMA’s general counsel.

But Spears agreed that there’s confusion about the anti-kickback rules.

Merck and Glaxo have continued to offer assistance programs for uninsured patients and patients with ordinary, non-QHP commercial health coverage.

Merck is the world’s fifth-largest drugmaker by market capitalization, while Glaxo is the seventh-biggest.

Merck wants to offer assistance to QHP enrollees who need help with co-pays, but it won’t, for now, because of “the uncertainty surrounding the rollout of the Affordable Care Act,” said Kelley Dougherty, a Merck spokeswoman. “Merck plans to revisit this decision once more information is available.”

Glaxo also won’t provide assistance to QHP enrollees at this time, Emily Beamer, a company spokeswoman, said in an e-mail.

Some companies — including Novartis AG, Sanofi, Eli Lilly & Co., Gilead Sciences Inc., Johnson & Johnson and Amgen Inc. – said they will offer assistance programs for QHP enrollees.

J&J is offering the financial help because “we believe that decision is supported” by Sebelius’s letter, said Mark Wolfe, a J&J spokesman.

Pfizer Inc., the world’s fourth-largest, and AbbVie Inc. declined to disclose what they’re doing.

The uncertainty, an unintended consequence of the Patient Protection and Affordable Care Act (PPACA), may mean arbitrary hardship for the low-income patients who need help the most, said Nancy Davenport-Ennis, chairwoman of the National Patient Advocate Foundation.

Historically, drugmakers have used coupons and debit cards to encourage the use of high-priced medicines rather than the less expensive older treatments and generics often preferred by insurers.

Insurers often use high co-pays for brand-name drugs to get patients to use the cheaper drugs.

For consumers who get individual or small-group coverage, either on or off the new PPACA public exchange system, PPACA now caps total out-of-pocket costs for in-network, covered medical treatment at $6,350 for an individual and $12,700 for a family.

In the past, federal law imposed no limits on commercial coverage out-of-pocket costs.

In practice, some individual policies set deductibles as high as $10,000 or $20,000 per year, but most group plans and many individual policies held annual out-of-pocket maximums to much lower levels.

PPACA does offer low-income and moderately low-income QHP users help with paying out-of-pocket costs, but only for enrollees with incomes under 250 percent of the federal poverty limit.

High co-pays for costly drugs may be more common for QHP enrollees than for ordinary commercial coverage enrollees.

To keep the cost of premiums low, 90 percent of the QHPs  feature “specialty tiers” that may require patients to pay a percentage of the cost of the most expensive drugs — from 20 percent to 50 percent — instead of a fixed co-pay of $20 or $50, according to Avalere Health L.L.C.

For a middle-income family, spending $12,700 out-of-pocket on drugs and other health care products and services would be a struggle, according to Davenport-Ennis, whose Washington-based nonprofit connects patients with assistance that can help offset the costs of their care.

“If you look at the household incomes people going into the exchange marketplaces have, I can’t imagine they’re going to be able to afford this,” she said.

Personal crisis

For Jeffrey Brandt, 60, paying the cost of his medicines without assistance would push his family into a financial crisis, according to his daughter, Tricia.

Brandt is in many ways the ideal Obamacare beneficiary. The Dallas man bought a “gold” plan on Texas’s insurance marketplace and in January was diagnosed with advanced colon cancer for which he’s now covered.

Yet he also faces $900 in weekly co-pays for the chemotherapy drugs he’ll take for seven months.

He may get financial help from Amgen and Roche Holding AG, makers of two of the more than dozen drugs prescribed to fight his cancer. Roche’s Avastin, for example, can cost from $45,000 to $109,000 for a course of treatment, according to the company.

Under his Blue Cross Blue Shield of Texas “gold” plan — the second-highest coverage level under Obamacare – Brandt must spend $3,250 out of pocket before the plan covers his co- payments, on top of what his daughter says is a $500 monthly premium.

Louis Adams, a spokesman for the insurer, didn’t comment on the issue when reached by e-mail yesterday.

In the past, Brandt made about $50,000 a year, according to Tricia Brandt, who is managing his care. He had to stop work as a construction contractor while being treated for his cancer, and he is using his savings to pay his premiums and the drug co- pays.

“He just started chemo,” Tricia Brandt said. “I’ve had to help pay for all of his prescriptions because he doesn’t have an income right now.”

Brandt’s co-payments are about as much as his daughter’s weekly income from the 70 hours a week she works as an accountant. She said she’ll move into a smaller apartment in two weeks to cut her expenses to help fund his care.

“I started cleaning houses on nights and weekends,” she said. “I don’t know else to do.”

When Tricia Brandt has time between jobs, she fills out assistance applications to drugmakers, hoping that help for her father comes through. Even if they get that help, it could be cut off if the government decides that such co-payment programs are illegal.

Tricia Brandt said she is hopeful for her father. “As long as we can keep his treatment steady, he’ll knock it,” she said. “I told him, ‘You concentrate on getting better, I’ll concentrate on taking care of the cost.’”

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