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Dive Brief:

  • More than half of adults with commercial insurance were informed by their plan that it would no longer cover their medications for a chronic or rare disease, according to a new survey.
  • The poll from healthcare advocacy group the PAN Foundation also found high prevalence of a cost-saving tactic from employers called alternative funding programs, in which plans outsource access to high-cost medications instead of covering them on their own.
  • AFPs are a frequent target of patient advocacy organizations, which argue they hinder access to medications. In response to the survey, AHIP, the major lobby for insurers, said that drugmakers set prescription drug prices at unaffordable levels, placing employers in a difficult spot.

Dive Insight:

Spending on specialty drugs, which treat rare, complex and chronic health conditions, has been skyrocketing among rising rates of the conditions and as more expensive drugs enter the market. Though fewer than 5% of the population uses specialty drugs, the medications account for at least half of pharmaceutical spending in recent years, according to CarelonRx, the health services arm of insurer Elevance.

Rising spending on pricey pharmaceuticals has led insurers to lean on utilization management controls like prior authorizations to try and keep a handle on costs. However, that’s complicated access for patients who need specialty drugs, including in employer-sponsored plans, which cover the majority of Americans.

Fifty-four percent of adults covered by private plans were told by their insurer that their medication was no longer covered, according to the PAN Foundation’s survey of roughly 2,000 U.S. adults in mid-July.

In addition, almost half of such adults said their plan referred them to a third party to help them obtain the medications, through measures like importing the drug from a different country or securing it through a drugmaker’s patient assistance program or charity.

Such AFPs save employer-sponsored health plans money, since they don’t have to cover expensive specialty medications themselves. But AFPs are controversial. The arrangements are often provided by for-profit companies that profit by keeping a portion of the money collected from assistance programs as a fee, according to the Immune Deficiency Foundation.

Patient may have to agree to restrictive terms. And, any amount they pay for their drug through the program may not count towards annual out-of-pocket cost sharing limits, saddling patients with a higher financial burden.

AFPs can also result in delays compared to straightforward insurance coverage. Among patients who elected to work with an external company, more than one-third experienced a delay of one month or longer in receiving their medication — impacting their mental and physical health, worsening downstream health needs and causing other challenges, the PAN Foundation said.

Nearly all adults — 92% — said they were negatively impacted by the delays. And for many, the disturbance was unnecessary. Almost half of patients said that ultimately their medication was once again covered through their health insurance plan.

Amy Niles, the PAN Foundation’s chief mission officer, called the findings “deeply troubling” in a statement.

“The findings of our research indicate how prevalent these practices are,” Niles said.

Still, in an environment where drug companies set ever higher list prices, employers may be forced to contract outside of their plan to obtain alternative access to the medications they simply can’t afford, insurance groups argue.

“No one has more control over prescription drug prices than drugmakers. They alone set prices — and they alone can lower them. Yet they keep raising prices year after year, driving up premiums and out-of-pocket costs for patients and employers,” a spokesperson for AHIP said over email.

Rising costs are employers’ No. 1 benefits concern this year, according to consultancy WTW. Estimates of how steeply healthcare costs will increase for employers in 2025 vary but generally range from 6% to 9%, forcing them to shift more costs onto their employees.

Employers have chalked the increase in medical spend to factors like inflation, higher negotiated prices from providers — and specialty drugs.