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Massachusetts health care — wonky, with a healthy dose of reality

Globe opines on Employer Responsibility and Drug Price Transparency

Globe opines on Employer Responsibility and Drug Price Transparency

February 28, 2017

The Boston Globe ran two opinion pieces yesterday on employer responsibility in health care and the need for increased transparency in prescription drug pricing, both of which Health Care For All supports

An editorial expressed support for the concept put forth in Governor Baker’s budget proposal to require a contribution for  employers that provide inadequate health insurance coverage to employees, or do not provide coverage at all. Specifically, the Governor’s proposal would require employers with at least eleven full time employees (FTEs) to cover at least 80% of their workers or to pay a penalty of $2,000 per FTE. This assessment would be calculated on a sliding scale, meaning that the closer employers get to the 80% coverage benchmark, the less they would pay. HCFA agrees with the new employer contribution proposal. Governor Baker’s suggestion closely resembles the employer responsibility law that was originally included in Massachusetts’s 2006 health reform law. The state requirement  was repealed in 2013 in preparation for implementation of the Affordable Care Act (ACA)’s employer responsibility provisions. However, especially with the ACA in jeopardy, it is critical that health coverage remains a shared responsibility between employers, employees, insurers, payers, and providers, and that Massachusetts employers continue to pay their fair share.  

The second Globe article, an op-ed by Eric Schultz, the president and CEO of Harvard Pilgrim Health Care, lays out a compelling case for increased transparency for prescription drug prices. As Schultz points out in the article, prescription drug prices continue to grow at a furious pace and the United States continues to pay disproportionately high prices for both name brand and generic drugs. As an example, Schultz cites Harvoni, a drug used to cure hepatitis C, which costs $94,500 for a twelve week regimen in the United States, while it would cost essentially half that amount in the United Kingdom and only $900 in India. Schultz points out that it would be cheaper for Harvard Pilgrim to fly a member with hepatitis C (along with a guest) back and forth from the Cayman Islands twice, pay for the member to purchase Harvoni through a Cayman medical facility and receive follow-up testing and screenings, and treat the member to a nine day all-expenses paid vacation on the Cayman beaches– than it would to treat the member here in Massachusetts.

Clearly there is a problem with the way prescription drugs are priced in Massachusetts and across the United States. This is largely due to a lack of transparency. Health insurers routinely negotiate discounts and rebates with drug companies, yet insurers are not allowed to disclose publically the cost of those discounts. In addition, drug manufacturers do not disclose the amounts spent on administrative overhead, marketing, and research and development, all of which remain hidden from public scrutiny.

Health care costs continue to rise in Massachusetts, and a leading driver of cost growth is the rising cost of prescription drugs. From insulin to epipens, life-saving drugs have caught headlines and public attention for massive price increases (insulin prices have more than tripled since 2003, while epipen prices have increased six fold in the past decade). That is why HCFA is supporting a pair of bills recently introduced in the State House, H. 1228 and S. 652. Both bills would empower state agencies to collect information on costs of production from drug manufacturers and ensure that the Commonwealth is paying a fair price for prescription drugs. These legislative proposals are an important first step towards ensuring that Massachusetts consumers can afford critical medications, and that insurers won’t have to pay the equivalent of a Caribbean vacation to provide access to life-saving treatments here in the Commonwealth.   

                                                                                                                                                       - Alec Lebovitz