March 26 (Bloomberg) -- Abandoning a long-held industry tradition, GlaxoSmithKline Plc and Merck & Co. won’t help low-income Obamacare patients pay for their high-priced drugs.
The drugmakers say they won’t provide the assistance until the government decides whether programs overseen by the U.S. health-care act are subject to federal laws banning kickbacks that steer business to companies. So far, U.S. agencies have sent mixed messages on the issue, industry officials said.
Historically, drugmakers use coupons and debit cards to encourage the use of high-priced medicines rather than less expensive older treatments and generics pushed by insurers using high co-pays as a cudgel. In the case of Amgen Inc.’s Neulasta for chemotherapy patients, the company pays as much as $10,000 a year to help patients get the medicine. Amgen is among a group of companies continuing their aid programs.
“This can be a significant issue for a middle-income family,” said Mit Spears, general counsel at Pharmaceutical Research and Manufacturers of America, or PhRMA, the Washington-based lobbying group for the industry. “I have a real hard time, just as a conceptual model, thinking the help you give a patient could be viewed as a kickback.”
Merck, based in Whitehouse Station, New Jersey, is the world’s fifth-largest drugmaker by market capitalization, while Glaxo, based in London, is the seventh-biggest. New York-based Pfizer Inc., the world’s fourth-largest, and AbbVie Inc., based in North Chicago, Illinois, declined to disclose what they’re doing.
Amgen, meanwhile, is joined by Novartis AG, Sanofi, Eli Lilly & Co., Gilead Sciences Inc. and Johnson & Johnson as companies that said in interviews they’ll continue the practice. The uncertainty, an unintended consequence of Obamacare, may mean arbitrary hardship for low-income patients who need help the most, said Nancy Davenport-Ennis, chairwoman of the National Patient Advocate Foundation.
The Patient Protection and Affordable Care Act, also known as Obamacare, caps out-of-pocket costs for medical treatment as $6,350 for an individual and $12,700 for a family. However, that’s a significant amount that many families on a budget would struggle to pay, said 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.
Even though PhRMA believes the assistance is allowed, Spears agreed there’s confusion. “"There’s a natural kind of head scratching,” he said. The dispute centers on dueling statements that came five days apart from U.S. Health and Human Services Secretary Kathleen Sebelius and the Centers for Medicare and Medicaid Services, or CMS, an agency within HHS that oversees the Obamacare insurance marketplaces.
In an Oct. 30 letter, Sebelius said her department doesn’t consider the private health insurers who provide coverage under Obamacare to be federal programs, which would presumably make it legal for drugmakers to help with patient co-payments. While CMS wrote in a guidance memo on Nov. 4 that it “discourages this practice and encourages issuers to reject such third-party payments.”
Since then, the government has failed to make a definitive ruling on the practice, issuing no more guidance on the matter. Merck and Glaxo have kept assistance programs for non-Obamacare patients.
High co-pays for costly drugs are increasingly a feature of many insurance plans, even those with the most coverage. To keep the cost of premiums low, 9 of 10 plans offered through Obamacare feature specialty tiers that often force 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 a study by Washington-based health consulting firm Avalere Health LLC.
While Merck wants to offer assistance to patients who need help with the co-pays, it won’t because of “the uncertainty surrounding the roll out 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 Obamacare patients “at this time,” Emily Beamer, a company spokeswoman, said in an e-mail.
On the other side is New Brunswick, New Jersey-based J&J, the world’s biggest maker of health-care products. The company is offering the financial help because “we believe that decision is supported” by Sebelius’s letter, said Mark Wolfe, a J&J spokesman.
The Affordable Care Act is President Barack Obama’s signature domestic policy achievement. The 2010 law is designed to bring health insurance coverage to 25 million more people by 2017. The system, though, may be unfair if it continues to mean some patients can get help while others can’t, depending purely on the medicine they’re prescribed, Davenport-Ennis said.
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 -- he 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.
The help can be the difference between being covered and financially secure, and covered yet unable to afford care, said Davenport-Ennis.
“It’s a system that’s fraught with opportunities for the very people who need that assistance the most to be left on the sidelines without the benefits for which they were enrolling,” she said.
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 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. I don’t know else to do,” she said.
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.’”
To contact the reporter on this story: Drew Armstrong in New York at email@example.com
To contact the editors responsible for this story: Reg Gale at firstname.lastname@example.org Andrew Pollack