Despite High Premiums, 2015 Platinum Plans Are Best Buy for Consumers Using Expensive Specialty Drugs
Specialty drug costs accounted for over one quarter of total prescription drug spending in the United States in 20131 and are projected to increase over 60% by the end of 2015.2 Nearly 70% of all FDA drug approvals in 2013 were for specialty drugs, compared to just one third of approvals in 2008. Moreover, in both 2011 and 2012 the majority of all FDA drug approvals were also specialty drugs.3 There is not a standard definition of what qualifies a drug as a specialty drug, but specialty drugs are typically expensive, complex to manufacture, and require special handling and administration, as well as ongoing clinical monitoring.4 Without prescription drug coverage, one year’s worth of prescriptions for a single specialty drug can cost an individual hundreds of thousands of dollars.
The Affordable Care Act (ACA), also known as Obamacare, required all health plans in the individual and small group markets to cover prescription drugs. Before Obamacare was implemented, 82% of plans in the individual market covered prescription medications and 18% did not.5 The ACA also categorized health plans into four metal levels (bronze, silver, gold, and platinum) depending on the percentage of covered health costs that the plan pays for a typical enrollee. Plans in the same metal level can have different premiums, deductibles, copayments, and out-of-pocket limits. Generally bronze plans have the lowest premiums and the highest out-of-pocket costs, while platinum plans have the highest premiums and the lowest out-of-pocket costs.
Using rate filing data for 2015 Obamacare individual market plans, HealthPocket estimated out-of-pocket costs for consumers taking five common specialty drugs (Humira, Copaxone, Gleevec, Atripla, and Norditropin used to treat inflammation, multiple sclerosis, cancer, HIV, and growth deficiency respectively). Among the Obamacare metal plans, platinum plans incurred by far the lowest average out-of-pocket costs for the five common specialty drugs. Out-of-pocket specialty drug costs for platinum plans were 64% lower than gold plans, 74% lower than silver plans, and 78% lower than bronze plans.
Average Annual Out-of-Pocket Costs for Specialty Drugs by Metal Level
|Condition||Medication||Monthly Prescription Cost Without Insurance6||Bronze Annual Out-of-Pocket Cost||Silver Annual Out-of-Pocket Cost||Gold Annual Out-of-Pocket Cost||Platinum Annual Out-of-Pocket Cost|
In every bronze plan examined, the three most expensive drugs (Gleevec, Copaxone, and Norditropin) each incurred annual out-of-pocket costs that reached the plan’s out-of-pocket limit. The same occurred with platinum plans for each of the four most expensive drugs, but platinum plans typically have much lower out-of-pocket limits than bronze plans. The table below displays the average annual out-of-pocket limits for each metal tier,7 as well as average annual premium costs for individual non-smokers aged 30, 40, and 50.
Average Out-of-Pocket Limits and Premium Costs by Metal Level
|Age 30 Annual Premium||$3,186.45||$3,887.39||$4,441.79||$5,256.08|
|Age 40 Annual Premium||$3,587.93||$4,377.17||$5,001.42||$5,918.28|
|Age 50 Annual Premium||$5,014.11||$6,117.08||$6,989.46||$8,270.86|
For a 50-year-old consumer taking the cancer drug Gleevec, bronze plans incurred costs of approximately $11,400 on average, including both annual out-of-pocket costs and premiums. Platinum plans incurred an average total cost of about $9,700, even though their premiums were over $3,000 more expensive for the whole year than bronze plan premiums. The 50-year-old consumer’s average total costs for platinum plans were 12% lower than gold plans, 15% lower than bronze plans, and 17% lower than silver plans.
As for a 30-year-old taking Gleevec, platinum plans were also on average the cheapest option overall. The 30-year-old’s average total costs for platinum plans were 21% lower than gold plans, 29% lower than silver plans, and 30% lower than bronze plans. For a 40-year-old taking Gleevec, platinum plans again had the lowest average total costs. Moreover platinum plans were also the least expensive option on average for enrollees aged 30-50 taking each of the other specialty drugs.
Average Total Annual Costs for Enrollees Taking Specialty Drugs by Age and Metal Level
The cost comparisons between metal levels in this study only apply to their average costs. Although platinum plans incurred the lowest average total costs for specialty drugs among the metal levels, there were individual silver and gold plans with lower out-of-pocket costs than some platinum plans. Moreover there were individual bronze plans with lower annual out-of-pocket costs than some silver and gold plans.
Instead of choosing a plan based on metal level, a consumer can reduce their health care expenses by estimating their total annual costs for each available plan. For consumers taking very expensive specialty drugs such as Gleevec, out-of-pocket costs for Obamacare plans that cover those drugs will usually be close to the sum of the annual premiums and out-of-pocket limits. Consumers with any prescribed drugs should also verify that their drugs are listed in their plan’s formulary. Regardless of its maximum out-of-pocket limit, a plan will not cover costs for prescription drugs that are not contained in its formulary. Additionally, there are no limits on annual out-of-pocket costs for enrollee medications outside the health plan’s formulary.
Data for this study was obtained from qualified health plan rate filings within the individual and family health insurance market with effective date January 1, 2015. Cost-sharing data was collected for bronze, silver, gold, and platinum plans in the individual health insurance market. Small group, large group, Medicare, and other health plans outside the individual market were not included in this study. On-exchange stand-alone dental plans were also excluded from this study. The costs examined were premiums, deductibles, annual limits on out-of-pocket costs, and copayments/coinsurance for prescription drugs.
Rate filings were gathered from Arizona, Connecticut, Indiana, Maine, Michigan, North Carolina, Rhode Island, Tennessee, and Virginia. Rate filings must be approved by the state department of insurance and thus may be rejected or may require alteration before final approval is given to the health plan. When discrepancies existed in the filings, plan attributes entered as inputs in the actuarial calculations were used.
HealthPocket obtained the top five specialty condition therapy classes ranked by 2013 per-member-per-year spending from Express Scripts’ April 2014 report on 2013 specialty drug spending. For each specialty condition, the top specialty drug by market share was selected for inclusion in this study. For each drug, costs of a year of prescriptions were estimated using CVS Pharmacy price quotes and standard adult dosages from goodrx.com. All cost estimates assume no reduction in premiums or cost-sharing due to income-based government subsidies.
This analysis was written by Jesse Geneson, data researcher at HealthPocket, and Kev Coleman, Head of Research & Data at HealthPocket. Additional data collection and analysis was performed by Katherine Bian. Correspondence regarding this study can be directed to Mr. Geneson at email@example.com.
1Specialty Drug Spending at Lowest Rate Since 2007. Express Scripts. April 8, 2014. http://lab.express-scripts.com/insights/industry-updates/report-specialty-drug-spending-at-lowest-rate-since-2007
2Specialty Drug Spending to Jump 67% by 2015. Express Scripts. May 22, 2013. http://lab.express-scripts.com/insights/specialty-medications/specialty-drug-spending-to-jump-67-percent-by-2015
3Specialty Drug Approvals in 2013. Express Scripts. March 26, 2014. http://lab.express-scripts.com/insights/drug-options/specialty-drug-approvals-in-2013
4The Growth of Specialty Pharmacy. UnitedHealth Center for Health Reform & Modernization. April 2014. http://www.unitedhealthgroup.com/~/media/UHG/PDF/2014/UNH-The-Growth-Of-Specialty-Pharmacy.ashx
5 Kev Coleman. Few Existing Health Plans Meet New ACA Essential Health Benefit Standards. HealthPocket. March 7, 2013. http://www.healthpocket.com/healthcare-research/infostat/few-existing-health-plans-meet-new-aca-essential-health-benefit-standards
6Drug costs at CVS Pharmacy were quoted from goodrx.com on August 12, 2014.
7The out-of-pocket costs in this table differ from the out-of-pocket costs in HealthPocket’s July 2014 rate filing study: plans were included in this study only if they had complete data for deductibles, drug copayments/coinsurance, and out-of-pocket limits, while plans with incomplete data were included in the July 2014 study.
Kev Coleman, Jesse Geneson, Katherine Bian. 2015 Obamacare Rate Filings Reveal Changes in Out-of-Pocket Costs. HealthPocket. July 14, 2014. http://www.healthpocket.com/healthcare-research/infostat/2015-obamacare-out-of-pocket-preview