Bethany Pray, Colorado Center on Law & Policy

Recent years have brought significant advances in treatment of chronic conditions like Hepatitis C, multiple sclerosis and cystic fibrosis, but those treatments have entailed eye-popping price tags that must be dealt with by consumers, carriers, and state Medicare and Medicaid systems. As a result, the high cost of prescription drugs has become a matter of serious public concern.

Efforts to manage the costs of “specialty” drugs, or those on the highest tiers of a health plan’s drug formulary, recently led to legislative and regulatory action. Some efforts are oriented toward carriers and plan design. Nationally, many carriers had expanded use of a cost-sharing method termed “coinsurance” for drugs on the specialty tier, meaning that an enrollee had to pay as much as 40 or 50 percent of a drug’s cost even after satisfying the plan deductible. With some drugs costing over $10,000 a month, the cost to the consumer could be prohibitively steep under the coinsurance formula. Seven states responded with legislation that caps the amount of cost-sharing a carrier can charge for a month’s-worth of medication.

Responding to concerns raised by the Colorado Consumer Health Initiative and Colorado’s Chronic Care Collaborative, the Colorado Division of Insurance issued a bulletin in January 2015 that requires carriers to offer a subset of plans that capped monthly costs at no more than 1/12th of the annual out-of-pocket maximum. This more modest approach, however, will only partially alleviate the financial hardships of Coloradans who rely on specialty drugs. 

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