Longtime rallying cries in the bleeding disorders community have been for insurance plans to cover all factor products and for a clear and simple factor product order approval process. Unfortunately, economic forces, including a downward spiraling economy and state budget deficits, may result in more insurance plans having restricted formularies and/or prior-authorization requirements.
A large number of states now have declining economies. This translates to smaller tax revenue generation, which results in underfunded state budgets. States with underfunded budgets usually respond in two ways: cutting the budget or raising taxes. Since this is an election year, it is highly unlikely that states will be raising taxes.
Budget cuts affect funding to state programs that provide coverage of factor products, such as Medicaid, state hemophilia programs and Children with Special Health Care Needs Programs. This has a significant impact on our community. Cuts can be direct, such as a specific reduction in dollars for a specific state program. Or, they may be indirect, such as putting cost controls in place (like a restricted formulary or prior-authorization requirements for Medicaid and other state programs).
According to the July 2008 Nelson A. Rockefeller Institute of Government State Revenue Report, only 10 states had declining economies in February 2008. Three months later, in May 2008, 36 states had declining economies. It is anticipated that more states will be in a budget deficit by the end of the year. Many states will be looking to Medicaid, the largest piece of any state’s budget, to rein in costs. Within Medicaid, pharmacy is a big area of cost increase, driven significantly by rising specialty pharmacy costs and increasing numbers of consumers qualifying for state programs. Specialty pharmacy is defined as expensive drugs used to treat chronic medical conditions, many of which are either infused or injected, such as factor products. Specialty pharmacy drugs include factor products. A large number of new specialty pharmacy drugs are being introduced to the marketplace, and insurers are struggling with how they will pay for them.
Payers/managers of drugs have two incentives to better manage specialty pharmacy drug costs: The first is a cost savings motive strictly from a business operational perspective. The second related motive is a poor economy that may quicken the need for any payer to increase oversight of management of specialty pharmacy drug costs to lower costs and be more competitive. Two tools to maximize potential cost savings are restricted formularies and prior authorizations.
Commentary and Analysis
- For Medicaid and other state programs providing coverage for factor products, the bigger the state budget deficit, the more drastic and earlier the budget cuts will come. For example, Gov. Arnold Schwarzenegger is proposing to cut $4 billion in healthcare in California. With greater cuts will come the greater likelihood of restricted formularies and prior-authorization requirements.
- For commercial payers and drug plans, cost savings (to increase profits) or the poor economy could speed up the implementation of restricted formularies and prior-authorization requirements.
- Any formulary restriction will likely be by classification of factor product. It would be very unlikely to have only one approved factor VIII or factor IX product covered. For example, as of this writing, there are five drugs in the recombinant factor VIII classification, two of which are the same drug and two of which are made by the same manufacturer.
- Prior authorization is not a bad requirement. However, any prior-authorization requirements should not delay a person’s timely receipt of needed factor product. Length of allotted time to review a pre-authorization request is critical, as is the medical basis for the review process itself.
- The bleeding disorders community should be prepared to vigilantly monitor developments involving restricted formularies or prior authorization with Medicaid (and other state programs) in each state, as well as with commercial payers and drug plans.
There are several ways you can advocate for people with bleeding disorders who are facing these issues. You can work with the National Hemophilia Foundation, your local chapter and your hemophilia treatment center (HTC) to monitor your state budget and any impact on drug coverage through Medicaid, the state hemophilia program (if applicable) and the Children with Special Health Care Needs Program. You can monitor legislative developments through the state legislature and administrative developments through the Division of Health.
Further, you can work with your chapter and HTC to educate consumers, physicians and HTC staff about these issues. You and other members of your chapter can also meet with state legislators and Division of Health administrators to advocate for a full formulary of factor products and “reasonable” prior-authorization requirements that do not delay a patient’s timely receipt of needed factor product.
In this time of economic uncertainty, it is more important than ever to monitor insurance plan developments in your state. Now is the time to advocate for insurance plans to cover all factor products and simplify the factor product order process. We must be vigilant.