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Healthcare roundup: Preventive services, high cost of asthma inhalers and low insulin prices

Recent judicial decision impacts some service coverages

By Jeff Levin-Scherz, MD, MBA | May 9, 2023

Our population health leader weighs in on preventive services, the high cost of asthma inhalers, a drop in insulin prices and some recent healthcare successes in this monthly update.
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Last month, a federal district court ruled that certain preventive care mandates violate the Appointments Clause of the U.S. Constitution. The decision specifically targets care recommended by the U.S. Preventive Services Task Force (USPSTF). The Biden administration appealed the decision, but the opinion is in effect unless the judge or an appeals court issues a stay.

Although the opinion is in effect, few employers will change plans midyear and most will wait for a final ruling before making any plan changes. Additionally, the services covered by this ruling and the associated cost are narrower than initially thought.

The Affordable Care Act (ACA) requires employer-sponsored health plans to provide certain preventive services with no out-of-pocket costs for plan members. There are three types of required preventive care:

  1. Childhood and adult vaccinations recommended by the Advisory Committee on Immunization Practices (ACIP) and endorsed by the director of the Centers for Disease Control and Prevention.
  2. Women’s and children’s health services recommended by the Health Resources and Services Administration (HRSA) and endorsed by the secretary of Health and Human Services including prenatal care, contraceptives and wellness examinations.
  3. Screening and other care recommended by the
    U.S. Preventive Services Task Force (USPSTF) including screening for colon, breast and cervical cancer based on gender and age, screening segments of the population for other diseases and pre-exposure prophylaxis (PrEP) to prevent transmission of HIV.

A list of covered services is available, as well as the authority that recommends each service.

These services are widely used and spare plan members a significant amount of out-of-pocket costs. The Kaiser Family Foundation estimates that in 2018 100 million Americans had cost sharing waived due to this mandate.

Preventive services are inexpensive in the context of total medical expenses. Even PrEP, which is 99% effective at preventing transmission of HIV in high risk individuals, is now available generically and costs just $26 a month. Vaccinations and birth control are cost saving, and the incremental employer spending to eliminate out-of-pocket costs for all these services is modest.

Eliminating out-of-pocket costs for high value services is a fundamental principle of value-based insurance design. Since we know that even modest out-of-pocket costs decrease use, we should offer low or zero cost sharing for the highest value services. Pharmacy benefit managers maintain ACA Preventive Drug Lists that remove cost sharing for targeted prescriptions and over-the-counter medications such as aspirin, folic acid, immunizations, statins, HIV PrEP and contraception.

Last month’s federal district court decision only relates to USPSTF recommendations finalized after the ACA was passed in March 2010.

Most of the requirements for preventive care services without out-of-pocket costs remain in place because they were recommended by ACIP, HRSA or USPSTF before 2010. For instance, recommendations for colonoscopies for those age 50 and above were completed in 2002 and revised in 2008, so they remain in place, but the 2019 USPSTF recommended colonoscopy for those age 45 to 49, would no longer be in place. Here’s a summary of what recommendations are affected.

Implications for employers:

  • Few employers will change their plan benefits mid-cycle or before a final ruling. The existing evidence of coverage states that these services will be covered, and most members are counting on this.
  • Internal revenue code rules around health savings accounts (HSAs) have not changed, so tax-deductibility of HSAs should not be adversely impacted by continuing coverage for these services with no out-of-pocket costs. In the meantime, or until it is formally addressed by the IRS, employers can discuss this issue with legal counsel.
  • The cost to employers of keeping benefit plans up to date with the most current guidelines will be modest.
  • Continued coverage of these services helps demonstrate the employer’s continued commitment to improve member health.

Why do asthma inhalers cost a fortune?

When I started in primary care practice in 1987, the cost for an inhaler for asthma and other respiratory diseases was about $25, which adjusted for inflation would be about $66 today. So it’s puzzling that inhalers for lung disease, which typically contain medication that is off patent for years, retail for $300 to $400 or more. The high prices make those with chronic lung disease less likely to adhere to therapy, which can lead to missed school or work and hospitalizations.

Researchers in Health Affairs reviewed the 53 new inhalers approved since 1986 and found that pharmaceutical companies set up a “patent thicket” creating an average of 10 patents for each medication – making efforts to gain generic Food and Drug Administration (FDA) approval complicated and time consuming. On average, the FDA took 13.5 years to approve generics.

Health Affairs found that 49% of the patents were for the delivery device rather than the medication. Furthermore, many of the extra patents were registered after generic pharmaceutical companies filed for FDA regulatory approval. Brand name pharmaceutical companies often used these patents to sue generic manufacturers to prevent them from competing. Brand name pharmaceutical companies earned over $111 billion after the primary medication patent had expired on these inhaler drugs from 2000-2021.

Implications for employers:

  • Pharmaceutical companies are increasingly offering medications paired with a delivery system, which allows more patents to delay or avoid generic competition.
  • Reform of the patent system could lead to substantially lower costs for inhaler medications.
  • For high deductible health plans, members may be unaware of the high prices if the inhalers are on preventive drug lists, allowing these medications to bypass the deductible, reducing a member’s out-of-pocket cost but increasing plan cost.
  • Employers can provide information to help employees find affordable alternatives until there is legislation to make these costs more reasonable.

Competition and federal policy impact insulin prices

Eli Lilly, Novo Nordisk and Sanofi manufacture almost all of the insulin sold in the U.S, and each has recently announced price cuts of around 75% on some of the older insulin products they sell. Eli Lilly and Sanofi have also announced programs to cap out-of-pocket payments by people with diabetes who have commercial health insurance, too.

This is terrific news for many, although those with diabetes who have commercial health insurance won’t see much difference. Many employers already have programs that cap out-of-pocket costs to no more than $35 monthly for insulin. Employers will be relieved to have this out-of-pocket limit covered by the pharmaceutical company.

What led to the price cuts?

Increasing public pressure on pharmaceutical companies certainly helped drive prices down. Stories in the press about young adults with Type 1 diabetes dying after they rationed their insulin are horrifying. The manufacturers also faced competitive pressure from Civica, a nonprofit owned by hospital systems and hired by the state of California to manufacture generic insulin.

Federal policy also played a part in lowering costs. Pharmaceutical companies are required to offer state Medicaid programs rebates if they do not receive the lowest price in the market or if their prices rise more rapidly than inflation. Until now those rebates were capped, but new rules taking effect January 1, 2024, mean that pharmaceutical companies could owe Medicaid programs so much that they would have had to pay the government for each vial distributed. So the major manufacturers of insulin decided they preferred steep price decreases to owing large rebates.

Implications for employers:

  • Federal policy can help make pharmaceuticals more affordable, even if the federal government is not allowed to set prices or negotiate for drug products for the commercial market.
  • Future Medicare negotiations over the most expensive outpatient drugs and Medicare rebates for drugs with excessive price increases could also help lower commercial costs, although we’ll have to watch launch prices carefully.
  • While these price cuts for insulin are a relief, large increases in pharmacy spending are likely in the coming years due to improved genomic therapy and new effective drugs for diseases including obesity.
  • Employers can track their formularies to be sure that their members and their plans benefit from these price cuts.
  • Lower list prices for insulin could potentially reduce rebates, although this is still to be determined. Financial models will need to account for these changes in the years ahead.

Recent public health and healthcare successes

It seems like there is a lot of bad news in health policy. It’s distressing to read about high costs, decreasing life expectancy and disparities. A recent JAMA op-ed, The Case for Optimism in Health and Healthcare, brought a brief smile to my face.

Life expectancy for Americans was under 50 in 1900 and rose to 76.8 in 2000. Even with declines in life expectancy due to COVID-19, our life expectancy remains over 76.

The racial life expectancy gap shrunk from 14.6 years to four years over the last century. Much of this was due to improved living standards, as opposed to healthcare. Twice as many adults were high school graduates in 2000 compared to 1960, and the poverty rate was cut by almost half.

The authors note that while life expectancy for 75-year-old Americans is similar to those of other developed countries, we lag in overall life expectancy due to deaths among the young. Our rate of death from automobile accidents has increased more than 20% since before the pandemic, and firearms are now the leading cause of death among those under age 20.

Implications for employers:

  • We have benefited from tremendous improvements in health and quality of life over the last century.
  • Employer-sponsored health insurance is a major source of health coverage for children and young adults. This helps improve member health and provide critical financial protection for families.

Population Health Leader, Health and Benefits, North America

Jeff is an internal medicine physician and has led WTW’s clinical response to COVID-19 and other health-related topics. He has served in leadership roles in provider organizations and a health plan and is an Assistant Professor at Harvard Chan School of Public Health.

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