Who can afford it? The Patient Protection and Affordable Care Act's failure to regulate excessive cost-sharing of prescription biologic drugs.

• Author: Callam, Michael

1. INTRODUCTION II. OVERVIEW OF PRESCRIPTION DRUGS A. Biologic Drugs v. Traditional Small-Molecule Drugs B. Prescription Drugs in Modern Medicine C. Legislative History of Prescription Drugs 1. Prior to the Patient Protection and Affordable Care Act 2. The Patient Protection and Affordable Care Act III. THE PPACA'S BIOLOGIC DRUG PROVISIONS A. Biosimilars are Not a Cost-Effective Solution 1. Factors that Hinder Competition of Biosimilars 2. Minimal Savings to Patients B. PPACA's Negative Affect on Prescription Biologic Drug Coverage 1. Metal Tiers of Coverage & Essential Health Benefits 2. Statutory Construction Invites Exclusion or Limitation 3. Excessive Cost-Sharing Continuing into the PPACA Era IV. PATIENTS NEED PROTECTION A. Proposed Recommendation 1. Modify and Enact the Patients' Access to Treatments Act of 2012 IV. CONCLUSION I. INTRODUCTION

   Fifty-year-old Michael Taffe, a former elite-level gymnast and vice president of a software company, received a phone call that drastically changed his life. (1) He was told he had rheumatoid arthritis, lupus, and diabetes. (2) In the following twelve years, Michael was diagnosed with shingles, gout, Sjogren's syndrome, (3) and an episodic tremor which caused his left hand to spontaneously jump. (4) Additionally, for the past nine and a half years, he has experienced a loud noise in his ears that started one morning and has yet to stop. (5) Unable to continue working at a high-level management position, Michael now works at a golf course where he is better able to focus on his health. (6) Each day, Michael takes numerous prescription biologic drugs. (7) Despite having insurance, he has already spent $12,000 this year out of his 401K savings account to pay drug costs not covered by his plan. (8)

   In a similar story, Jamie Love's wife was diagnosed with cancer and needed a life-saving biologic medication that costs $100,000 per year. (9) Ironically, Jaime is the director of Knowledge Ecology International, a non-profit organization which works toward improving individuals' access to necessary medications. (10) Jaime's wife is not eligible for Medicare for two more years and is currently covered by his expensive private insurance policy which costs them more than $2,000 per month. (11) Love is eligible to switch to Medicare, but cannot because it would leave his wife uninsured. (12) Until the provisions of the Patient Protection and Affordable Care Act (PPACA) (13) that ban insurers from denying coverage to persons on the basis of their preexisting conditions become effective in 2014, the best hope of keeping his wife alive is for Love to continue making the unaffordable co-payments (co-pays) (14) on his insurance policy. (15)

   Similarly, Marie D'Orsaneo lives with rheumatoid arthritis. When her condition worsened, she was prescribed Rituxan, an expensive injectable biologic drug for which prior authorization from her employer was required. (16) While waiting a month for approval, Maria's health deteriorated so rapidly she could not continue her job as a physician's assistant and needed relatives to move into her home to help her perform daily functions. (17) Maria is struggling to afford her prescription of Rituxan that costs approximately $7,000 per month. (18)

   The Taffe, Love, and D'Orsaneo stories demonstrate an emergent problem within modern medicine: insurers are legally permitted to utilize unaffordable cost-sharing requirements, exposing policy holders to financial risk if diagnosed with a chronic disease that requires a biologic drug (19) prescription. (20) Excessive cost-sharing requirements, specifically excessive co-pays or coinsurance, (21) defeat the basic purpose of health insurance of transferring risk from the insured to the insurer. (22)

   Biologic drugs treat serious, complex, and chronic conditions such as cancer and rheumatoid arthritis. (23) It is expected by 2016 that seven of the top ten prescription drugs will be biologic drugs. (24) For employer-provided insurance, biologic drugs make up about seventeen percent of employers' total drug costs, though only about one percent of the workforce consumes them. (25) The average annual price of a biologic drug is $24,000 and costs are expected to grow by forty percent by 2017. (26)

   On March 23, 2010, President Barack Obama signed the PPACA into law. (27) The PPACA includes provisions that create a statutory pathway for litigation of patent issues related to "biosimilar" (28) biological products, also known as follow-on biologics. (29) Utilization of biologic drugs is increasing and is establishing itself as an essential component in modern medicine. (30) Although the statutory pathway of the PPACA is intended to expedite the process of introducing more affordable biosimilar products to the prescription drug market, the potential savings to patients are minimal and the PPACA neglects a serious problem within the current insurance market structure. (31)

   This Note will discuss how the PPACA's abbreviated approval pathway for biological products creates an expedited procedure to bring less expensive biologic drugs to the market, but ultimately fails to make those biologic drugs affordable because of its lack of provisions limiting insurers' use of excessive cost-sharing requirements. Part II provides an overview of prescription drugs, compares biologics with traditional prescription drugs, and provides a brief legislative history of prescription drug laws. Part III analyzes the impact of the abbreviated approval pathway on biologic drugs' costs to prescribed patients. It also examines the PPACA's effects on biologics inclusion into health insurance plans. This Note will demonstrate how the PPACA continues to keep prescription biologic drugs unaffordable for insured patients by permitting private insurers to continue to include excessive cost-sharing requirements in insurance plans. Finally, Part IV proposes a recommendation by which the PPACA would be amended to include a modified version of current proposed legislation. To fully address the problem, Congress must formulate and enact legislation that properly protects patients from excessive out-of-pocket costs, while balancing the insurance companies' interests to remain competitive and profitable.

2. OVERVIEW OF PRESCRIPTION DRUGS

   When developing a statutory standard for prescription biologic drugs on a national scale it is essential to have a sound understanding of the evolution of prescription drug legislation. This section explains the differences between biologic drugs and traditional small-molecule drugs. This section then provides an overview of how prescription drugs are a vital component of modern medicine and describes the primary federal regulations created to protect patients. Lastly, this section discusses provisions of the PPACA that attempt to mimic the success of previous legislation by inducing generic biologic drug entry.

   1. Biologic Drugs v. Traditional Small-Molecule Drugs

      Most traditional prescription drugs are made up of simple molecules mixed together. (32) For this reason, generic versions of small-molecule drugs can be manufactured to be atomically identical to their reference drug. (33) As a result, the manufacturing, marketing, and use in clinical practice of generic small-molecule drugs is relatively easy compared to biologic drugs. (34)

      In contrast, a biologic drug is "[a] substance that is made from a living organism or its products and is used in the prevention, diagnosis, or treatment of cancer and other diseases." (35) Biologics are currently prescribed to treat many conditions including immune system disorders, cancers, blood conditions, and neurological disorders. (36) Biologics and biosimilars require a considerably more complex manufacturing process. (37) The process includes proteins synthesized from living organisms that must be kept in life-sustaining protected environments. (38) First, the organisms endure protein engineering to gear protein molecules to a specific task. (39) The systematic exchange of amino acids results in the biologic candidate functioning even better than the natural variant. (40) Approximately 80,000 different variants of a protein can be optimized through the use of fully automated, robot-based, hight-hroughput screening and the use of special testing systems. (41) Consequently, "biologics ... will inherently exhibit some physiochemical differences in addition to the varying production processes that will also modify the products ... and therefore biosimilars can be close or 'similar' to the innovator products but will not be identical." (42) The science, regulatory processes, and pharmacovigilance (43) mechanisms for these complex biological products are still in an expensive research and development period. (44)

      Biologics and traditional small-molecule drugs have similar development times, but relatively high manufacturing costs and other factors result in biologics being significantly more expensive. (45) The high cost of constructing a biologic drug manufacturing facility and the relatively low production yield of biologic drugs contribute to the high cost of the drugs. In addition, it seems as though a substantial portion of manufacturing costs is attributable to biologic manufacturers' average net profit of thirty-two percent. (46)

      Biologics can be twenty times more expensive per patient than traditional small-molecule pharmaceuticals. (47) For example, the annual price of Herceptin, a biologic that is designed to fight against breast cancer, can exceed $40,000. (48) A one-year supply of Rebif, a biologic drug commonly used to treat multiple sclerosis, can cost more than $30,000. (49) The yearly price of Xelijanz, an oral biologic used to treat rheumatoid arthritis, is approximately $25,000. (50) Most patients require recurrent and large doses because of chronic illnesses, compounding costs and leaving patients in a defenseless position. (51)

   2. Prescription Drugs in Modern...