Covered California will become the first health exchange in the nation to cap the cost of specialty prescription drugs, a move that may help consumers avoid choosing between buying food or paying for their medicine.
Some patients can spend their entire maximum out-of-pocket costs in just a few months on prescription drugs that cost thousands of dollars.
Michael Barefoot is one of those consumers who couldn’t afford the high price of his prescription medicine.
The 29-year-old recently moved to San Diego from North Carolina for work and school.
When he suffered a back injury and required medicine for six months, he was surprised to find out it would cost him $300 per month.
He said he needed to go without groceries and other household items just to pay for the medicine.
“The high price of prescription medications is just ridiculous,” Barefoot said. “I think it should be capped.”
In May, Covered California announced it will do just that - cap the cost of specialty drugs at $250 per month, per prescription, for most of its consumers. It’s the first state health exchange in the U.S. to do so.
Prescription caps will range from $150 to $500 and must be offered by every health plan in the individual market as well as by all plans offered by the exchange, according to a Covered California’s website.
“The consumer is going to benefit from this,” said Eric Lundy, an insurance broker based in El Cajon, Calif.
He believes the rate changes set to take effect in 2016 for Covered California participants will set policy for all insurance carriers over the next year or two.
Because pharmaceutical companies are constantly developing new drugs, the cost of that technology and testing is phenomenal, Lundy said.
“Consumers are demanding better therapies and they’re willing to pay for those therapies,” he added.
Whether at the pharmacy counter or through their insurance premiums, under the current system, the consumers pick up the tab.
By putting a cap on expenses, Covered California is trying to benefit consumers, however everyone paying a premium is going to bear that difference in cost, Lundy said.
“Everybody’s premiums are going to ultimately rise because they’re covering that cost instead of the individual who needs that medication covering that cost,” he said.
In a written statement, Covered California Executive Director Peter V. Lee said more needs to be done to control the costs of new prescriptions.
“While Covered California is doing its part to protect consumers against these rising costs, a broader solution is needed to curtail the explosion in specialty drug costs so that consumers get the care they need without driving up insurance costs so much that consumers can no longer afford coverage,” Lee said.