Kaiser Removes HIV Meds from 'Specialty' Tier; CA Bills Seek Drug Cost Curbs

Kaiser Permanente has stopped charging people more for HIV drugs and is offering refunds for the exorbitant copays some of its patients faced.

The decision comes as two state lawmakers have introduced bills meant to address high drug prices, including those for HIV medications.

Kaiser was criticized after it came to light that it was charging people about 20 percent of the cost of their medications, rather than a flat copay. Larry Hickey, chief financial officer of Berkeley's Steamworks bathhouse, said earlier this month that an employee came to him after being "hit with a $900 bill for one month's supply" of HIV drugs.

As the Bay Area Reporter first reported on its website Friday, February 20, gay San Francisco Supervisor Scott Wiener said Kaiser officials informed him at a February 19 meeting that they were moving all the HIV drugs off the specialty tier effective last Friday and issuing refunds to people.

Wiener offered strong praise for Kaiser's move.

"Kaiser is a good actor in our community," he said. "Kaiser is an institution that's always been a core part of public health efforts in San Francisco and the Bay Area," and the corporation "cares about community health. I think they took a step back and realized this was the right thing to do."

Wiener noted "the broader issue" remains of Kaiser and other health insurance companies having a more expensive classification for any drugs.

"The whole issue of a specialty tier of drugs is a growing problem, that drugs that people need to be healthy are turning out to be exorbitantly expensive for people who can't afford a $600 or $800 copay," said Wiener. Kaiser's move last week is "an important step forward, but a broader step remains."

He said he still plans to have a board committee hearing on specialty tiers within the next month.

It's unclear whether Kaiser would have made the decision to take HIV medications out of the special category without the criticism generated by a B.A.R. story on the issue.

Wiener suggested giving the company the benefit of the doubt.

"This just started last month," he said. "It's not like this has been going on for years and years and it was somehow secret. It became public immediately."

Kaiser "took a step back and realized this is not the way to go," Wiener said. The health care provider "made the right decision here, and we should acknowledge that."

Kaiser spokesman John Nelson said that the specialty tier was a new part of Kaiser's coverage this year.

"We did not previously have a specialty drug tier in our commercials plans (we only had generic and brand tiers)," Nelson said in an email. "So in designing this benefit, we decided to adopt the model used by most Medicare plans (ours included) to determine which drugs would be placed in the specialty tier."

Unfortunately, he explained, "the change resulted in the vast majority of drugs used to treat HIV being included in the specialty tier, meaning patients would be exposed to new cost-sharing requirements."

"We will be moving quickly in the next several days to move the HIV drugs that we currently have on the specialty tier to the brand tier, effective immediately," Nelson said. "This means these drugs will no longer require a coinsurance payment with each prescription, but rather will return to the fixed copayment already included in each members' plan for brand tier drugs. Further, we will also develop a process to send refunds to those patients who received these drugs since January 1 and paid the higher, coinsurance amount, instead of the brand tier copayment amount. It may take us a few weeks to research, arrange, and deliver the refunds to each affected member. We will contact members to let them know of this change."

Praise for Decision

Officials at HIV/AIDS service organizations who have been advocating for drugs to be removed from the specialty tier praised Kaiser's decision.

"Kaiser's move is an important step forward," Anne Donnelly, health care policy director at the San Francisco-based Project Inform, said in an email. "We strongly urge them to extend this decision to all of their plans nationally."

Referring to the state's health care exchange program, Donnelly added, "we applaud Kaiser's participation in Covered California's specialty drug work group, which aims to assure that contracted health plan formularies meet consumer needs with regards to their approach, transparency, access, and cost sharing. We are hopeful this process will result in recommendations and regulations for future plan years and will serve as an example nationwide."

Neil Giuliano, CEO of the San Francisco AIDS Foundation, said in a news release, "Historically, Kaiser has been a great partner to the HIV community and has been a leader in California in the prevention and care of HIV. This move signifies their ongoing commitment to working collaboratively to better the health of this community."

Assembly Bills Introduced

High drug costs have also caught the attention of two state legislators from the Bay Area.

Assemblyman David Chiu (D-San Francisco) announced Monday, February 23 that he's introduced Assembly Bill 463, which would require drug companies "to reveal operational costs in order to better understand pricing for ultra-high-priced drugs," his office said in a news release.

"In recent years we have seen drug costs climb to new heights with little transparency for these astronomical prices," Chiu stated. "With this bill, we will lift the veil on drug prices and offer the public greater insight so that we can identify meaningful strategies to ensure prices do not threaten access to life-saving treatments."

Among other things, Chiu's proposal "would require pharmaceutical manufacturers to provide the Office of Statewide Health Planning and Development with annual cost reporting on the most expensive drugs," his office said. The state agency "would compile the data into an annual report submitted to the Legislature and publicly posted online."

The bill specifically would require the maker of any drug or treatment course that costs more than $10,000 a year to report production costs for the drug, including manufacturing costs, marketing and advertising expenses, and other items.

Gay Assemblyman Rich Gordon (D-Menlo Park) announced Thursday that he's introducing AB 339, which his office said would "define and limit the specialty prescription drugs that are subject to such high cost-sharing."

A news release said the bill was prompted by health plans and insurers imposing "high copays and coinsurance" on drugs for HIV/AIDS, hepatitis, cancer, and other conditions.

Gordon stated that the Affordable Care Act national health care reform law "prohibits discrimination on the basis of health status. However, many patient groups see their medications which treat their specific condition on the highest-cost tier. These discriminatory benefit designs cannot remain. This bill ensures that such plan designs do not discriminate against or discourage enrollment of individuals with serious and chronic conditions. Our goal with AB 339 is to promote access to essential lifesaving medications for Californians who need them, cost should not be an obstacle."

Among other provisions, the bill would require health plans and insurers to cover medically necessary prescription drugs and "require coverage of single tablet regimens such as the HIV/AIDS drug cocktail" if they are clinically at least as effective "than requiring someone to take multiple drugs - and say the cost sharing to the patient is the same," according to Gordon's office.