On June 16th, Kaiser Health News released rather stunning information. A survey by the Kaiser Family Foundation and NPR found that upwards of 100 million Americans have unpaid medical debt. This is crucial to the question of biosimilar availability and the affordability of medicines in general.
Whether you believe that medical debt is ubiquitous, inevitable, or a function of the use of credit cards for cost sharing, the problem exists. People who require hospitalization and/or specialty pharmaceutical treatment often find themselves with large medical bills to pay despite their “adequate” insurance coverage.
Health Insurance Provides Limited Financial Protection
Health insurance coverage long ago stopped paying comprehensively for many expensive procedures and medicines. The introduction of deductibles, copayments, and co-insurance has exposed the risk of medical debt to most Americans. The rising costs of medical interventions and innovative pharmaceuticals has prompted health plans and insurers to limit their financial risk while minimizing the rise in premiums. One can argue strongly that this effort has only been slightly effective. Government subsidies for insurance are needed for so many Americans because premiums are so high for people who actually use the health system. Shifting the costs to patients through deductibles, copayments, and co-insurance has amplified medical debt.
For Medicare eligibles, a prescription for adalimumab could end up costing patients thousands of dollars over the course of a year of therapy, despite contributing only 5% in the catastrophic care phase. And Humira® is one of the more “moderately priced” biologic therapies! On the commercial side, this is a bit less of a risk because of the high utilization of copay coupons and financial assistance from the pharma companies (Medicare does not permit use of this type of financial assistance from the pharmaceutical industry). One person told me that she has been taking Humira for three years, but has had virtually no out-of-pocket spending related to it—she has had continuous use copay assistance from AbbVie. According to the survey, 30% of people responding stated that their current medical debt was primarily due to prescription drug utilization, compared with 50% who attributed their medical debt to emergency department care.
Medical debt amounts ranged widely based on their county of residence—people living in counties with the highest rates of disease had medical debt that was three or four times the levels in healthy counties. This likely correlates with the local variation in socioeconomic factors throughout the country. As the Kaiser survey pointed out, “Perhaps most perversely, medical debt is blocking patients from receiving care.” The researchers explain that approximately one in seven Americans with medical debt claim they have been denied access to hospital or physician care because of their unpaid medical bills.
Out-of-Pocket Costs in Health Plans
This was not supposed to happen. The Affordable Care Act of 2010 provided access to insurance for millions of Americans who could not afford health insurance. This was achieved primarily through Medicaid expansion and the use of subsidies to purchase insurance on the new health insurance exchanges. Unfortunately, the 10 million people or so who gained insurance through the exchanges were still subject to extremely high deductibles (outside of platinum level plans). The maximum out-of-pocket expenses for marketplace plans are still quite high, $8,700 for an individual and $17,400 for a family in 2022. The COVID epidemic has further exacerbated the financial pressure on American families, not to mention the astoundingly high price of fuel.
The current health care system does not forgive medical debt easily. The ability to finance that medical debt is only a Band-Aid solution. In many cases it simply adds to a person’s revolving debt.
The Benefits of Biosimilars and Medical Debt
Therefore, it may be more difficult to state categorically “access to biosimilars means lower costs to patients.” We know that the availability of biosimilars lowers the price of biologic therapies to payers, at least. If nothing else, biosimilar competition lowers the list and net price of the reference product. It is up to payers to pass those savings onto patients in the form of lower out-of-pocket costs and cost sharing. It doesn’t translate into lower premiums (eventually, perhaps, slower premium increases?). To the extent that this happens, as in the development of biosimilar tiers or tier 2 copayments for them, patients may benefit from biosimilar availability or access.
My hope is that the portion of medical debt related to the utilization of biologics may be influenced by biosimilar competition. I’m just not sure what it would take to prove such a connection. I’d be interested in hearing your recommendations.