Specialty drugs spark latest battle between Virginia hospitals and health insurers

A person in charge of the Publix pharmacy collects the drugs. (Joe Raedle / Getty Images)

Some of Virginia’s largest health insurers are taking more control over the supply chain for specialty – and often expensive – drugs used to treat cancer, rheumatoid arthritis, and inflammatory bowel diseases such as Crohn’s disease and ulcerative colitis.

The hospitals are not happy with it.

The practice, called “white bagging”, is not new. But Virginia is the last state where hospitals say they are experiencing major expansion. United Healthcare, the State third insurer, currently has 77 drugs subject to white bagging conditions. The company will add 12 anti-cancer drugs starting June 18, according to spokesperson Trasee Carr.

Anthem, which has more than 40% of Virginia’s market share, also announced that several additional drugs would be subject to requirements starting July 1, said Julian Walker, vice president of communications for Virginia Hospital and Healthcare. Association.

Anthem would not comment directly on this story, instead referring to a May 18 letter supporting the practice of the Virginia Association of Health Plans, which is lobbying for the industry.

White bagging refers to a new model of acquiring specialized drugs, prescribed to patients with serious health conditions requiring more complex treatment. Normally, hospitals and doctors source drugs from their own suppliers, keep their supply on-site, and charge the medical side of the insurance for reimbursement, said Dr Madelaine Feldman, a rheumatologist in practice and expert in pharmaceutical supply circuits who made presentations to members of the General Assembly on drug prices.

But in recent years, a growing number of insurance companies have taken care of the procurement themselves – forcing suppliers to purchase drugs through specialized pharmacies. These drugs are then returned to the facility for administration.

“They say, ‘Let’s not pay the supplier to buy and invoice,’” Feldman said. This is because hospitals, in particular, are often able to source their own drugs at heavily subsidized prices and provide them to patients at a premium. This mark-up is then passed on to the insurance company when billed for reimbursement.

At the same time, it is increasingly common for large insurers to have specialized pharmacies and the companies that negotiate the cost of prescription drugs. This consolidation ensures that the benefits and discounts associated with the purchase of pharmaceutical products flow to the insurers.

White bagging allows them to bypass suppliers altogether, delivering drugs at prices over which they have more control. while pocketing the savings. Hospitals say the process poses significant patient safety concerns – forcing doctors to administer drugs without supply chain oversight. Insurers, meanwhile, argue it’s a way to cut costs for patients.

“This practice saves consumers and payers – that is, employers – significant amounts of money,” said Doug Gray, executive director of the Virginia Association of Health Plans. “The reason hospitals complain is because they tag the drugs and keep the difference.”

A central part of the debate in Virginia is how the white bags will affect patients. The State Council of Pharmacy is currently in the process of finalizing new regulations this would add safety barriers to the practice – primarily by requiring that drugs be handled correctly and that there is clear communication between the specialist pharmacy and the receiving facility.

Hospitals, however, are pushing the council to consider whether the practice is legal under current state law. In addition to complaints that it violates patient choice and imposes unnecessary relationships with third-party pharmacies, they say white bagging is simply ineffective for doctors and patients.

“Just imagine your medications going through the mail,” said Matt Jenkins, director of pharmacy services for UVA Health and president of the Virginia Society of Health-System Pharmacists. “And I don’t mean to say it’s a stroke of luck for the postal system. But your infusion is scheduled at the doctor’s office, and we just hope the medicine arrives on time. “

Stock via Getty Images.

Concerns about the timing is one of the many arguments against the process. In California, where providers are fighting their own battle against white bags, the State Board of Pharmacy has received nearly 30 pages of comments opposing the process of hospitals and pharmacists. A pharmacy manager at one hospital said he had to throw away drugs worth thousands of dollars when three vials were delivered to a separate department mail room.

“After receiving and opening the container, pharmacy staff found three vials of the medicine that were supposed to be kept in the refrigerator but had been delivered to an unauthorized area,” he wrote. “The vials totaled nearly $ 10,000 worth of medication and the temperature was out of range.”

Waste is a problem even when drugs are administered correctly. When providers get their own medications, they can use the same medication for multiple patients – a prescription medication like Remicade, for example, which can treat multiple autoimmune conditions. But when drugs are packaged in white bags, they are specifically prescribed and approved for one person.

“Chemotherapy drugs, for example, have a high margin of efficacy and toxicity, which means there is a narrow window of the right dose for the right patient at the right time,” said Dr Richard Ingram, chairman of a private oncology practice in Winchester. In other words, if a patient develops serious side effects from a drug, or if the dose needs to be adjusted based on weight or symptoms, it cannot be used to treat someone else.

“The system shipped a drug that the patient will no longer receive,” he said. “And it can’t be reused as a general inventory. So the practice can be very wasteful. “

Insurers say the real concerns come down to costs. In the VAHP’s letter to the Virginia Bureau of Insurance, Gray wrote that hospitals mark up the cost of some specialty drugs between 200 and 500 percent compared to private clinics. And suppliers are already working with the same shipping companies that are used by specialty pharmacies, he said, making the logistical arguments largely absurd.

“It is difficult for VHHA to argue that white bagging creates a breach of contract when their members dramatically inflate the cost of specialty drugs year after year, ”Gray wrote. Some experts say the financial concerns are more valid for independent practices and infusion centers, where prices are more modestly inflated to cover staff time and basic expenses like rent.

However, among providers, there is great skepticism that insurance companies’ cost savings will be passed on to patients. Gray said white bagging worked by lowering drug prices and the overall cost of premiums. But the same California pharmacist who complained that the drugs were administered incorrectly said that one of his patients was suddenly hit with a much higher copayment after changing his drug delivery pattern.

Drugs purchased exclusively through insurers, Ingram said it was more likely that companies will insist on brand name drugs, which are more likely to benefit from discounts manufacturers.

“What we have seen is that we are going to prescribe a biosimilar or generic version because it is less costly for patients – especially patients who have a co-payment which is a percentage of the cost”, a- he declared. “And the insurance company will reject it and say you have to use the brand name, which is a lot more expensive.”


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