2008-04-25 / Top Stories

State Dems Vote To Ban 'Tier Four' Drugs

Senate Democratic Leader Malcolm A. Smith, who represents Rockaway and is a member of the Senate Democratic Conference, has announced they he and his colleagues will introduce legislation preventing health insurers from implementing a prescription drug pricing system in New York that has dramatically increased consumer co-payments in other states.

"Health insurance companies are proposing new pricing methods for high-priced prescription drugs, asking patients to shell out hundreds and even thousands of dollars of their earnings for medications they need to survive," said Smith, the St. Albans Democrat. "This new structure means the obligation of health care and prescription costs will be shifted from health insurers and thrown onto the backs of struggling low-and middleincome families that may need specialty medications in order to survive. The whole point of health insurance is to share the costs of paying to keep people healthy and well."

In New York State, most Health Maintenance Organizations (HMOs) and Pharmacy Benefit Managers (PBMs) currently operate under a standard three-tier system ($5 generic, $10 or more for preferred-brand, and $25 or more for non-preferred brand) common to most people who use private insurance.

But, increasingly families and individuals in other states struggling with diagnoses of anemia, cancer, multiple sclerosis and hepatitis C, who depend on cutting-edge medications for functioning or daily survival have been hit hard by pricing increases that can amount to 33 percent of the total costs of each prescription. Instead of the standard co-pay, patients are seeing fees dramatically increase to hundreds or even thousands of dollars per prescription.

One New York City woman suffering from multiple sclerosis said that the proposed Tier 4 pricing system would make her medication completely unaffordable by dramatically increasing her $25 monthly co-payment to as high as $735.

Another MS sufferer in Orange County said that if Tier 4 where implemented his $35 monthly co-payments could reach $805.

"Tier 4 drug pricing is a terrible concept," said Senator Neil D. Breslin (D-Albany), ranking Democrat on the Standing Committee on Insurance. "Insurance is designed to spread risk among a group of people. Singling out our sickest and most vulnerable to pay more money for their health care is unforgivable in any context, let alone in a climate where HMOs are recording excessive profits and a HMO like HIP is allowed to double the compensation of its top ten executives."

Senator John L. Sampson, the ranking Democrat on the Health Committee said that an extensive review needs to be conducted of "this unfair proposal."

"We must block the possibility that New Yorkers will be subject to this unnecessary and unfair burden of unaffordable price increases for their medication," said Senator Sampson (D-Brooklyn). "Not only will the negative effects be felt by the patient, but in these times of hardship, families will be left choosing between essential health care and life's basic necessities like food and shelter."

According to the New York State Insurance Department (DOI), premiums and rate changes are reviewed by the Superintendent of Insurance. Health insurance companies are required to submit a formal application which DOI may modify, approve, or reject. DOI has not approved any Tier 4 proposals for New York residents, and no Tier 4 plans are currently in effect here.

Senate Democrats will introduce legislation barring the pricing system in

New York State.

Smith and his Senate colleagues joined health advocacy groups in urging New York State Superintendent Eric R. Dinallo to continue to reject all Tier 4 applications that may be submitted before the proposed legislation is signed into law.

"We applaud Senator Smith for taking action on a critical issue that affects thousands of people living with Multiple Sclerosis," said Pamela J. Wiener on behalf of the New York City Chapter of the Multiple Sclerosis Society. "The medications used to treat MS are among the first to be assigned to specialty tiers. Accordingly, the Senator's legislation will protect many people living with MS who would otherwise pay $630 co-pay each month for a medication to treat the disease. At these costs, many people would be forced to forgo taking these essential medications that are used to slow down the progress of the disease and reduce future disability."

Some health insurers have argued that the new pricing structure is necessary to reduce employer medical insurance premiums. But Senate Democrats maintain that the proposed implementation of the Tier 4 pricing would unfairly shift the burden to consumers.

Senator Efrain Gonzalez, Jr. (who has a medically-disabled son who requires special medications already on the Tier 4 list in other states) said that "If this Tier Four structure is permitted in New York State, all families will be living on the brink of a medical state of emergency."

"If they are confronted with new sky-high co-payments under Tier 4, working families in my district will clearly be at risk of losing their health, homes, quality of life and their dignity," said Sen. Gonzalez, Jr., a Bronx Democrat. "We need immediate action to prevent these proposals and protect our most vulnerable families and individuals."

Smith added: "Hard-working families and individuals living with medical conditions are depending on us to help provide affordable health insurance and prescription drugs. We will do all we can to make sure that health care remains accessible and affordable."

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