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Insurance chief: Covered California's proposed specialty drug cap is too high

Brand-name prescription drugs tend to be basically identical to their generic counterparts – but are often much more expensive.
arbyreed/Flickr Creative Commons
Brand-name prescription drugs tend to be basically identical to their generic counterparts – but are often much more expensive.

Covered California on Thursday is set to vote on a proposal to cap out-of-pocket costs for expensive specialty drugs at up to $500 a month. On Wednesday, state Insurance Commissioner Dave Jones said that amount would be too high, and urged the state's health insurance marketplace to set an across-the-board monthly cap of $200. 

The proposal Covered California's board of directors will consider Thursday includes monthly caps of $200 for some Silver plans, $300 for some Platinum plans, and $500 for Bronze plans and some Silver and Gold plans.

The agency arrived at the proposed caps by spreading different plans' yearly out-of-pocket maximums over 12 months, said spokesman James Scullary.

Jones argued that Covered California's proposal would violate the spirit of the Affordable Care Act by denying affordable health care and medications to low-income patients, and would be discriminatory, especially for those with chronic and life-threatening conditions who rely on expensive drugs.

"Covered California’s plan to allow health insurers to collect up to $500 per prescription per month for specialty drugs puts life saving prescription drugs out of the reach of many consumers...leading to increased adverse health outcomes," argued Jones.

In a letter to Diana Dooley, head of the state Health and Human Services Agency, Jones said his proposal for a $200 monthly cap is in line with that of other states, including Maryland, Florida, Delaware, Louisiana and Montana, which have capped specialty drug prices at between $100 and $250 per month.

Scullary said Covered California welcomes Jones' input, adding, "it's a complicated issue that can impact the short-term and long-term costs of all of our consumers."

Currently, it can cost between $250 and $900 monthly for an HIV drug, and between $2,250 and $6,750 for Hepatitis C treatment, according to Anne Donnelly, director of health care policy for Project Inform. She pointed out that someone taking Hepatitis C medication could reach the annual out-of-pocket maximum set by the Affordable Care Act - $6,250 - in just one month.

Donnelly noted that most people with HIV or Hepatitis C are taking more than one drug a month, adding that an estimated 30 percent of people with HIV are also infected with Hepatitis C.

She expressed concern that when drug prices go over $200 per prescription, people struggle to adhere to their drug regimens. 

The California Association of Health Plans has not taken a position on Covered California's proposed caps, because most of the plans bought through the exchange are subsidized by the government, said spokeswoman Nicole Evans.

The Association does oppose AB 339, a bill in the state legislature that would cap out-of-pocket costs for specialty drugs at $275 a month for all insurance plans.

CEO Charles Bocchi said such a move would result in higher monthly premiums for consumers.

Insurance Commissioner Jones and Covered California both disagree with Bocchi, saying that their separate analyses found that setting a cap would lead to negligible premium hikes.