As many patients, doctors, insurers and employers know, our current methods for paying for prescription drugs are highly defective:
1. Insurers and employers are being asked to pay often outlandish prices for drugs for their insureds
2. Insurers seeking to avoid paying excessive prices have created restrictive formularies that cause doctors to waste time consulting large numbers of formularies and to have to beg from mere clerks on behalf of their patients
3. Patients have had to beg their doctors to plea on their behalf and often suffer sticker shock at the pharmacy counter and even go without drugs their doctors know they need
I propose to allocate percentages of premiums to go into an all-the-patients need/all-the-doctors prescribe insurance paid prescription national drug funding system.
The total percent of premiums for drugs would be set by Congress from time to time and might be 5% for covered individuals under age 40 as of January 1 of the year and 15% for older individuals.
The percentages might automatically decrease by .5% as of January 1 each year to adjust for average yearly patent expirations unless Congress negates the automatic decreases (due to the production of new and more useful drugs), since we wouldn’t want drug makers to merely sit on fixed revenue streams.
Drug makers (and their associated intellectually property rights holders nationally) would ask the Food and Drug Administration (FDA) by August 1st to include their drug(s) in the system and this would be done for each drug that has FDA marketing approval as of September 1st of the year.
A drug maker would also supply the FDA with an address where insurers will send premium partition payments.
The system would not go into operation prior to 2018 unless:
1. at least 50% of the drugs approved by the FDA since 1995 and still approved are included by a June 1st and
2. at least 80% of the classes have a drug included by a July 1st and
3. at least one protease inhibitor is included
4. at least one recombinant auto-immune drug is included
5. at least one recombinant long-acting insulin is included
6. at least one recombinant short-acting insulin is included
7. at least one recombinant cancer drug is included
8. at least one clot-busting recombinant drug is included
9. at least ten recombinant drugs are included
10. at least two combined oral contraceptives are included
The federal government would not be required to disclose participation from May 1st to August 1st, since fear, uncertainty and doubt and the chance to have an extraordinary large share of a market for a year with above average remuneration are major reasons for drug makers to participate.
Legislatures and insurers individually shall have the option of adding and paying for their selected drugs FDA approved after the August 1st cutoff date (and raising premiums by no more than 1% in total).
Each insurer would propose partition percentages by each October 1st for each class (anti-depressant, ACE inhibitors, etc.) of drugs enumerated by Congress and enumerate the number of their PPACA conformant health insurance insureds who had paid-up July coverage to the Dept. of Health and Human Services (HHS). These classes would be pretty much like the classes listed in the PDR and pharmacy text books.
HHS would then compute industry average partition percentages for each class by each October 15th from data received by the 5th.
Each insurer would then propose partition percentages by each November 1st for each drug in each class in the system.
HHS would then compute industry average partition percentages for each drug by each November 15th from data received by each November 5th.
Basically insurers would get to vote on drug pricing by the number of paying PPACA conformant health insurance customers they have.
The percentages of premiums (5%, 15%) allocated to drugs would mean drug pricing would be fair as well as firm.
Insurance companies would remit industry average partition percentages of premiums to drug makers at the addresses supplied to the FDA within 20 days of premium receipt.
Insurers don’t have to pay on a time prorated basis if the drug is off the market or not generally promptly available for its insureds for any reason. The Secretary of HHS may reallocate the unpaid prorated shares to one or more drugs in the same class.
Consumer co-pays to help pay for manufacturing costs in the face of uncertain demand would be $100 for a periodic dose or month supply of a recombinant drug or $4 (plus a $6 add-on [plus a $5/$10 per molecular chemical ring up to five add-on for the off-patent/patented key molecular entity of a drug, except for contraceptives] if and as requested by a manufacturer in October) per month supply.
There would be no insurance policy drug deductibles.
After the first full year of operation (hopefully 2017, so starting January 1, 2018):
1. the same percentages would be taken from Medicaid funding
2. Medicare Part D money would go into the system
3. Medicare Part D premiums and donut holes would be eliminated.
Medicare and Medicaid money would be partitioned by HHS computed industry average and paid monthly, with time prorated reductions in HHS selected cases of non-availability of a drug.
Patients receiving Medicaid, SNAP, TCA/TANF, Section 8, LIHEAP, Nation School Lunch Program Free Lunch Program or federal phone help and proof as defined by HHS regulation thereof would simply have a $4 co-pay per prescription or $10 co-pay per prescribed recombinant drug container for personally needed quantities. Appropriate rebates to adjust for these lower co-pays shall be paid to dispenser claimants.
Each drug would be retained in the system unless the manufacturer or an entitled exclusive US rights holder takes the drug out of the system for five years (which may be shortened after 350 days by the Secretary of HHS on request of the withdrawing party) by registered mail received by the FDA in July, or the drug is taken off the US market on a permanent basis by the FDA.
Third parties such as insurers/hospitals/pharmacies/employers/governments don’t legally have to provide or pay for prescription drugs not in the all-the-patients need/all-the-doctors-prescribe system after it covers drugs.
Entities actively selling a drug on a commercial scale (over $5,000/month) in the US outside of the system in any year after the system begins operation would have a legal obligation to promptly supply the drug at a reasonable and affordable price for 30 days of supply, a course of less than a month or dose(s) for a period or periods of at least 30 days. The buyer such as a patient or other responsible party shall pay the smallest of the following at retail or within 30 days of receipt otherwise:
1. the seller’s invoice price
2. the Canadian “maximum price” of the drug or a comparable Canadian counterpart, if known
3. the Veterans Administration price of the drug or a comparable VA counterpart, if known
4. ten percent of the annual federal expected financial contribution (EFC) as for “a(nother) child” from the patient’s household “going to college” plus $20
5. an amount reasonably considered both reasonable and affordable by the responsible party
The name of the VA or Canadian counterpart shall accompany payment if its price is smallest.
If option 4 or 5 is invoked by an individual, a copy of a filled out federal college student financial aid form shall accompany payment (listing the drug as “a(nother) child”).
If option 5 is invoked, the reasoning shall be detailed and evidenced. Individual buyers shall list appropriate additional amounts not considered on the financial aid form in writing. Timely writings shall accompany payment.