Oregon, Illinois join state crusade to limit patient copays

Call it the copay dance. Payers use high copays to steer patients away from pricey brands and toward cheaper alternatives, or even cheaper generics. Drugmakers use copay coupons and cards to steer patients back on course toward their brands.

Now, lawmakers are trying to cut in.

Two bills now pending in the Oregon legislature would cap copays at $100 per 30-day supply of standard-issue drugs. The Senate version spells out a cap of $200 for specialty meds, which often come with 20% or even 30% co-insurance. Both would limit a single patients' share of drug costs. Illinois legislators have introduced similar bills.

That could be a boon for drugmakers, especially considering recent research showing that people have postponed refills--or gone without meds altogether--because they can't afford to pay. More refills and filled scripts obviously means more sales. And the bills aren't unprecedented; a variety of states have similar laws, including New York and Maryland. Some specify annual caps, and others use monthly limits.

Predictably, insurance companies are none too happy about the prospect. If the bills pass, they would lose one of their most-used tactics for limiting their own share of prescription drug bills. The problem, they say, isn't copays--it's prescription drug prices.

And it's true that drugmakers have been rolling out more and more expensive drugs. The case of Gilead Sciences' ($GILD) Sovaldi--and its $84,000-per-treatment-course list price--is best known, but new cancer drugs run into six figures now, with new immunotherapies from Merck ($MRK) and Bristol-Myers Squibb ($BMY) tagged at about $150,000. Put a 20% co-insurance bill on that, and it's far out of reach for many U.S. patients.

Payers have been pulling out all the stops to fight back. Insurers and pharmacy benefits managers, such as Express Scripts ($ESRX) and CVS Health ($CVS), have negotiated cut-rate prices on Sovaldi--and other meds, too--for exclusive or preferred places on their formularies. That sort of arm-twisting is guaranteed to continue, particularly in drug classes where various brands are easily interchangeable.

Those discount deals happen behind the scenes, though. Copays are public. Negotiated discounts help payers keep their margins up. Plus, copays directly hit average folks, who also happen to be voters. If insurers raise premiums to offset rising drug spending, the link is not so obvious.

The drug industry's lobbying group, PhRMA, tells the Portland Business Journal that it's "neutral" on the Oregon bills, while Oregon BIO is tracking the legislation. The bills already have backing from patient advocacy groups and others, which have banded together to fight for the legislation. Their Cap the Co-pay campaign--and a similar one in Illinois--is battling with powerful insurance industry lobbyists, including the trade group America's Health Insurance Plans.

The insurers say limiting copays just shifts the cost to insurance premiums. Their industry is supporting a different bill that would require drugmakers to be more transparent about their pricing models.

- read the Portland Business Journal story
- see Cap the Co-pay's list of state limits

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Editor's note: This story was corrected to show that Oregon BIO has taken no position on the Oregon copay bill, rather than supporting it as previously stated.