Fighting Over Who The Healthcare Punching Bag Should Be: Health Plans vs. Pharma

By Clive Riddle, August 25, 2017

Earlier this month the Doctor-Patient Rights Project released Not What the Doctor Ordered: Barriers to Healthcare Access for Patients an eighteen page report presenting consumer survey results regarding health insurance coverage denials. The Project issued statements in conjunction with the report including from Stacey Worthy, Executive Director of Aimed Alliance and one of the Project’s founding members, who said “our research reveals a hidden healthcare crisis. The current debate about healthcare reform has focused on getting more Americans covered. Yet, the real crisis is among patients with chronic illnesses who tell us that insurance is worthless when their insurance providers withhold coverage of essential treatments prescribed by a doctor.”

The Project highlighted that the survey found:

• Insurance plans denied treatment coverage 24% of patients with a chronic or persistent illness or condition
• 41% of these patients denied coverage were denied once, while 59% were denied multiple times.
• 55% of those denied treatment said they were denied a prescription medication
• 41% of those denied treatment said they were denied a diagnostic or screening test
• 24% of those denied treatment said they were denied a medical procedure
• 53% of those denied coverage for a treatment of a chronic or persistent illness appealed the denial
• 49% of those appeals were ultimately successful
• 70% of the denied treatments for chronic or persistent illnesses were for conditions described as “serious
• 43% were for treatment of patients described as “in poor health”
• 29% of patients initially denied coverage reported that their condition worsened
• 34% denied coverage had to put off or forego treatment altogether

What isn’t clear at all in the report, is what the overall denial rate was for the 1,500 consumers surveyed. One wonders why that information wasn’t shared. The report focuses on denials for those responding that they had a chronic or persistent medical illness or condition, or on types of denials for the overall population surveyed.

The report tells us that 55% of the denials were for prescriptions, with 37% of these for formulary exclusions, while 12% required prior authorization, 9% required step therapy and 5% involved therapeutic substitutions. It becomes less clear from the report what portion of these denials still resulted in an alternative covered prescription, or ultimate coverage of the requested prescription after qualifying conditions were met.

The health insurance industry counters that runaway prescription costs are what we should be focusing on. The Blue Cross Blue Shield Association, AHIP and others have regularly produced reports highlighting the prescription cost problem. AHIP, for example one month ago posted Myth vs. Fact: What’s Behind Drug Prices on their website, in which AHIP goes about “fact-checking some of the pharmaceutical industry’s main arguments for why they have to charge hundreds of thousands of dollars for a course of treatment.” They cite reports and articles to support statements including: “High prices have little or nothing to do with drugs’ innovation or efficacy for patients”; “Pricing is based on what already exists, and competitors use shadow pricing to drive each other’s prices higher”; and “Instead of promoting true medical advances, a common business strategy in the pharmaceutical sector is to buy the rights to older drugs and then immediately jack up the prices.”

Morning Consult wrote about the dustup between the two sides this week, stating that health insurers are “alleging it [the Project Report] is part of a campaign by the pharmaceutical industry to distract the public from rising drug prices,” and that “Insurers say the coalition [Project] is tied to pharmaceutical companies.” The article quotes AHIP: “Big Pharma initiated another long-rumored political ad campaign in its attempts to distract from skyrocketing drug pricing, AHIP spokeswoman Cathryn Donaldson said in an email Monday, adding that instead of spending money on advertising campaigns, pharmaceutical companies should address high prescription drug prices.”

The article also quotes the other side punching back: “PhRMA spokeswoman Holly Campbell said pharma companies spend 20 percent of their revenue on research and development, fueling economic growth and bringing patients new treatments. In contrast, the insurance industry invested $0 in R&D and instead spend nearly 20 percent of premium dollars on administrative costs, she said in a Monday statement.”