About the Author

James C. Capretta

James C. Capretta

New Atlantis Contributing Editor James C. Capretta is an expert on health care and entitlement policy, with years of experience in both the executive and legislative branches of government. E-mail: jcapretta@aei.org.


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James C. Capretta’s Latest New Atlantis Articles

 Health Care with a Conscience” (Fall 2008) 

 Health Care 2008: A Political Primer” (Spring 2008) 

 The Clipboard of the Future” (Winter 2008)

 

 More on James C. Capretta

Text Patterns - by Alan JacobsFuturisms - Critiquing the project to reengineer humanity

Wednesday, April 16, 2008

No One Ever Said Health Care Policy Would Be Easy 

Paying for Drugs; The Cost of Prevention

On Monday, the New York Times ran this front page story on private insurers moving more high cost prescriptions onto a “fourth tier” for purposes of insurance reimbursement. Insurers typically sort prescriptions into various tiers on a “formulary” to help steer patients toward lower cost and preferred (from the insurers’ perspective) medications. Tier 1 drugs tend to have very low patient cost-sharing requirements, while tier three drugs, often brand-name products, are more expensive for the patient to use. Now, some insurers have created a Tier 4 which requires patients to pay as much as 25 to 33 percent of the costs for drugs placed on it. That can translate into hundreds of dollars a month for some expensive therapies treating chronic conditions like multiple sclerosis. Importantly, while patients can use clinical alternatives for other brand-name drugs, most of the drugs moved into this new Tier 4 are so new and cutting-edge that no alternatives to them exist yet. These patients with incurable chronic illnesses are thus facing a lifetime of hundreds of dollars each month in drug costs, when they had been expecting to pay perhaps $20 or $30 a month.

And last week the Washington Post ran this story which suggests that many prevention efforts are not cost-savers. The article examines previous studies showing that prevention measures must frequently be administered to many more people at possible risk of a health problem than the number who would actually face the health problem many years down the road. Even if the prevention intervention is not very expensive, the cost of providing it to many more people who would never develop a problem adds up quickly.

These articles remind us that health care policy is indeed a complex undertaking. What’s needed is a framework that can help policymakers sort through competing and conflicting priorities. For instance, some may be tempted to impose price controls on high-priced therapies, but such controls would undermine the incentive for companies to find new breakthroughs. Finding a sensible balance of patient responsibility and socialization of costs for chronic illnesses will be difficult, but surely we are all better off when chronic conditions can be treated successfully with these new products, which many currently healthy people will develop as they age. It seems likely that private insurers and employers, facing competing pressures from their healthy and sick enrollees, are already working to find the right balance.

Regarding prevention, the Post story is a good reminder that the landscape is not quite as simple as some suggest. The key to successfully promoting cost-effective prevention in public policy is better targeting the people who will likely benefit from those efforts. That should be the focus of much new research and data analysis.

posted by James C. Capretta | 1:28 pm
File As: Health Care