Getting Ahead of Medicare Drug Price Reductions

Why did SCAN decide to lower prices on these medications instead of waiting to see what would happen with Medicare negotiations?

We wanted to make medications even more affordable than we do today for our members. Today, 90% of the medications seniors with SCAN take are available for a $0 co-pay. For the remaining, we know affordability could be an issue, so we wanted to figure out how to crack that nut. We looked at the brand-new medication space. These are mainstay therapies for diabetes and stroke prevention that are superior to the generics that are available. So we asked ourselves how can we invest in a benefit that has the potential of truly impacting health outcomes by lowering the co-pays and making them more affordable and accessible. It was outside of the negotiation piece that’s going on with the government. It was more the opportunity with brand-new medications where we had the ability see what value we could drive for our members.

These are all brand-name drugs that are preferred over their generic counterparts?

There are generics that could help with stroke prevention or help you manage your diabetes. But these treatments are approved as first-line treatments and are often preferred over the generics that are available. For example, if we think about Xarelto and Eliquis for stroke prevention, these are considered superior to Warfarin, where you have to go in for lab tests all the time, and they lower the risk of bleeding and other side effects. So most folks are on Eliquis or Xarelto because they are superior.

Did your co-pay reductions relate to the Medicare negotiations?

There’s all this noise surrounding drug pricing, and people just want to know if their insurance covers their medications. Our focus is on making the prescription benefit simple for our members. Then, when considering how we could make prescription drug costs more affordable, these come up across the U.S. because they are mainstay treatments. That’s how our list aligned so well with the government’s. It’s kind of strategic common sense that they align. That is why the government is negotiating these—because they are the top drugs that Medicare beneficiaries are taking and it’s costing Medicare so much.

Why do you feel like insurers need to get out in front of these negotiations?

Inflation across the U.S. has been going up dramatically. When we think about the average senior, they are living off $48,000 a year, and prescription medications play a huge role in how they live their life. We wanted to figure out where those additional opportunities are and invest there so we could truly try to help make over 65 be the golden years.

From an insurer’s perspective on the prescription side, before a consumer gets a medication, there’s like seven stops. From the manufacturer to the pharmacy dispensing it, there is too much cushion each step of the way, and the consumer is bearing the brunt of the cost. We just think that, because of the way the system works today, it’s our responsibility as an insurer not to wait a couple of years, or longer, for someone else like the government to step in.

Some of these medications are expensive. What are members’ current co-pays?

Yes. We don’t want our members stopping their stroke prevention medication or diabetes medication when they hit the coverage gap. We have our generics squared away; beneficiaries can get them for zero. Today we cover these brands for about $25 to $35 co-pays. We wanted to make them less expensive so they would not worry about any affordability concerns when managing their health.

If people are on a number of medications, which many older individuals are, that can add up over time.

The fact is, when you take a look at older adults, they are on anywhere from three to up to 15 medications.

Did you have any data showing beneficiaries were not adhering to these medications because of cost?

A couple of years ago, we did the same thing with insulin. Before the insulin savings program was mandated across the U.S. for $35, we covered it for zero because we had taken a look at our data on insulin and you see that exact effect. You just know that, amongst brand-new medications when they are mainstay therapies, this is an issue that comes up. It’s the same premise to say, if you ensure that cost is not an issue, everyone has equitable access that can improve health outcomes.

How were you able to lower the co-pays on these medications?

It was a decision to make an investment to do it. We’re reinvesting. When we look at the entire product offering that we provide our members—medical, supplemental, pharmacy—there’s always choices you make. We could have decided to make our OTC [over-the-counter] benefit something like $500 per quarter. Insurers are making conscientious decisions about benefit offerings, and, as we invest in ours, we want to make it on something where the end result is healthier people. With Medicare Advantage, these are all choices. There’s a lot of things being offered in Medicare Advantage, but do they truly impact health at the end of the day or are they just shiny objects that sell a product? And with commercials, we’ve conditioned people to ask if plans offer things like pest control or pet walking or whatnot, right?

Are potential changes in drug prices something brokers should be considering when they sell Medicare Advantage products?

When brokers talk with their clients, they always do a needs assessment. What comes up as the top two things in a Medicare beneficiary needs assessment is whether their doctors are in the network and affordability of medications. Brokers usually place their clients based on networks, which are pretty expansive, so then it really comes down to medications. Last year, I had a broker come up to me after we were rolling out our benefits. He said, “Dr. Jhawar, you know what? I’ve been in this business 20 years, and what I really am is a medication advisor. That’s what I do for my clients. I put them on the plan that best serves their medications.”

How do you think Medicare negotiations will impact the overall market, should they go forward?

Everyone is negotiating drug prices to bring about affordability to Medicare beneficiaries today. I don’t think we have a strong stance on the government doing it. However, we can bring more affordability to Americans; that’s what we’re all about, right? We’re a nonprofit organization and we’re not beholden to shareholders, so we’re focusing on our members. We’re doing this day in and day out. We don’t need to wait for something two years from now to make things better. What you see with SCAN, being a nonprofit, is our relentless focus on bringing affordability to our members and offering meaningful benefits that actually keep them healthy and independent.

Do you think that lowering co-pays for these medications will help move the market? Maybe even give Medicare some direction during negotiations?

CMS [the Centers for Medicare & Medicaid Services] is going to look at everything that all the insurers have been doing up to date. I mean, if I was there, I would be doing that. They have all of the data across the U.S. to look at and say, “For Eliquis, this plan got it for the lowest rate, and I’m going to use that as my starting point and dive even deeper with pharma.” So, if anything, this is giving a lot of leverage for anyone who continues to negotiate going forward.