[Senate Hearing 115-727]
[From the U.S. Government Publishing Office]
S. Hrg. 115-727
PRESCRIPTION DRUG AFFORDABILITY
AND INNOVATION: ADDRESSING
CHALLENGES IN TODAY'S MARKET
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
JUNE 26, 2018
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
__________
U.S. GOVERNMENT PUBLISHING OFFICE
38-796-PDF WASHINGTON : 2019
--------------------------------------------------------------------------------------
COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming BILL NELSON, Florida
JOHN CORNYN, Texas ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia SHERROD BROWN, Ohio
ROB PORTMAN, Ohio MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana SHELDON WHITEHOUSE, Rhode Island
A. Jay Khosla, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
----------
OPENING STATEMENTS
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 4
ADMINISTRATION WITNESS
Azar, Hon. Alex M., II, Secretary, Department of Health and Human
Services, Washington, DC....................................... 6
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Azar, Hon. Alex M., II:
Testimony.................................................... 6
Prepared statement........................................... 45
Responses to questions from committee members................ 46
Hatch, Hon. Orrin G.:
Opening statement............................................ 1
Prepared statement........................................... 80
McCaskill, Hon. Claire:
``Agent Eligibility and Underwriting Guide,'' HumanaOne
Health and Life Products................................... 82
Whitehouse, Hon. Sheldon:
Letters submitted for the record............................. 166
Wyden, Hon. Ron:
Opening statement............................................ 4
Prepared statement........................................... 169
Communications
America's Health Insurance Plans (AHIP).......................... 171
American Hospital Association.................................... 177
Association of American Physicians and Surgeons.................. 201
Campaign for Sustainable Rx Pricing (CSRxP)...................... 202
Center for Fiscal Equity......................................... 209
National Community Pharmacists Association (NCPA)................ 209
(iii)
PRESCRIPTION DRUG AFFORDABILITY
AND INNOVATION: ADDRESSING
CHALLENGES IN TODAY'S MARKET
----------
TUESDAY, JUNE 26, 2018
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 9:25 a.m.,
in room SD-215, Dirksen Senate Office Building, Hon. Orrin G.
Hatch (chairman of the committee) presiding.
Present: Senators Cornyn, Thune, Isakson, Portman, Toomey,
Heller, Scott, Cassidy, Wyden, Stabenow, Cantwell, Nelson,
Menendez, Carper, Cardin, Brown, Bennet, Casey, Warner,
McCaskill, and Whitehouse.
Also present: Republican staff: Brett Baker, Health Policy
Advisor; Jennifer Kuskowski, Chief Health Policy Advisor; Ryan
Martin, Senior Human Services Advisor; Stuart Portman, Health
Policy Advisor; and Jeffrey Wrase, Deputy Staff Director and
Chief Economist. Democratic staff: Laura Berntsen, Senior
Advisor for Health and Human Services; Michael Evans, General
Counsel; Elizabeth Jurinka, Chief Health Advisor; Matt Kazan,
Health Policy Advisor; Joshua Sheinkman, Staff Director; and
Beth Vrable, Senior Health Counsel.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. I would like to welcome everyone to today's
hearing on prescription drug affordability and innovation.
We are pleased to have our Secretary here, Secretary Azar--
who I think is doing a great job--before the committee today,
and I know members on both sides of the aisle are eager to hear
from him on the Trump administration's plan to lower
prescription drug costs.
I was in the Rose Garden when the President announced his
plan to put patients first by lowering prescription drug and
out-of-pocket costs to consumers. And I commend the President
and the Secretary for their focus in this area and for
releasing this comprehensive blueprint.
I also appreciate that HHS is seeking feedback from the
public on the policy ideas in the blueprint. The administration
is prudent to work through options by properly consulting those
affected by these policies first. As we continue to develop
policy options, it is imperative to understand the impact on
patient access, affordability, and innovation before taking any
specific action.
To that end, today, in my opinion, is a golden opportunity
for members to discuss policy proposals and ideas in the
blueprint, which contemplates many weighty issues that would
seriously change the current way of doing things. And on that
note, I believe that those who have criticized the blueprint as
insufficient are either responding from a lack of knowledge or
purely for political gain.
Now, I bring to the table decades of experience of working
on drug pricing. That is why we have titled today's hearing in
a way that clearly explains the heart of these issues, quote:
``Prescription Drug Affordability and Innovation.'' This
hearing title references a concept that has been very important
to me throughout my time in the Senate. After all, the goal is
to help consumers, and the best way to do that is to balance
both affordability and innovation.
Over 3 decades ago, I championed the Drug Price Competition
and Patent Term Restoration Act, which has since become known
as Hatch-Waxman. As I noted in an editorial that ran in Roll
Call yesterday, the Hatch-Waxman law established a system for
regulating drugs that rewards new products while encouraging
generic competitors.
Around that same time, I sponsored the Orphan Drug Act. And
I am proud to say that law has resulted in new treatment
options that have enhanced care and dramatically improved the
quality of life for hundreds of thousands, if not millions, of
people who live with rare diseases. At the time, we thought we
were just taking care of some rare diseases, but it has become
a very important law.
Those two bills are just the tip of the iceberg, though. I
have since spearheaded numerous other legislative initiatives
to address shortcomings in the system and to capitalize on
opportunities for improvement. I brokered the agreement that
allowed physician-
administered biologics to flourish, providing effective
treatment for many cancers and other serious medical
conditions. More recently, I have successfully advocated
policies that promote development of biosimilars as a way to
foster competition and lower costs.
Now, I do not bring up this history to boast, but to point
out that the pursuit of the balance of affordability and
innovation has served us well. Now, nearly 90 percent of
prescription drugs dispensed to patients are generics, yet we
also have realized life-
altering breakthroughs in treatment. Maintaining this balance
must be a part of the conversation here today. And, as we move
forward, I want to keep it that way. And any lasting solution
must continue to be market-driven.
The Medicare Part D prescription drug program is built on a
system of private entities competing on price and service. This
private-sector approach is engrained in the design of the Part
D program, which wisely forbids the government from interfering
with the negotiations between these private entities. For Part
B drugs and biologics, Medicare pays based on the average price
that the manufacturer charges to other payers. This effectively
represents a rate negotiated in the private sector.
Now, do not take this to mean the way Medicare pays for
prescription drugs is perfect. There is certainly room for
improvement. But the fact that the United States continues to
be a pharmaceutical research and development powerhouse is in
large part because we have long preserved the market-based
approach. It is vastly superior to the alternative of direct
government involvement and price-setting. After all, the
private sector has proven time and again that it is far better
suited to identifying challenges and turning them into
opportunities.
One persistent challenge is that certain key drugs and
items are in such short supply that hospitals and other
providers simply cannot even purchase them in sufficient
quantity. These drug shortages, which include generic
medications, threaten patient care and demonstrate a weakness
in our system.
Now, I am pleased to say that my home State of Utah is
taking a leadership role by creating a market-based response.
Utah-based Intermountain Healthcare has joined with other like-
minded systems across the country to form a generic drug
company. This new venture will fill a market need by producing
and distributing drugs that are in short supply. This new
company will also provide more competition that will improve
prices and opportunities for consumers.
There are others too, like some commercial health plans,
that have responded to market demand by offering prescription
drug coverage options that pass along the negotiated discounts
and rebates to their enrollees at the point of sale, rather
than only through lower premiums.
Turning back to the President's blueprint, it contains
policy ideas related to Medicare and Medicaid that merit
serious consideration. For example, the idea of paying for a
drug based on its success in achieving the intended patient
benefit holds promise, especially for novel, breakthrough
therapies that do not yet have competition. We should explore
how these value-based arrangements can work within our Federal
health programs.
We should also assess how we can modernize the popular Part
D program, because it is now more than 10 years old. And a
review of the Part D program should involve action to mitigate
the change in the bipartisan budget deal enacted earlier this
year that increased the discount that manufacturers are
required to provide on drugs in the coverage gap. This
misguided change has only dampened some of the competitive
forces that have made the program so successful.
We will soon hear from Secretary Azar on the policy ideas
in the blueprint. It will be important to understand how the
policies in the blueprint would impact not only the list price,
but patient access, beneficiary premiums, and other cost-
sharing, as well as innovation. As the vast majority of the
blueprint's policies are in the jurisdiction of the Finance
Committee, this engagement with the Secretary will inform how
we move forward.
Now, before I conclude my opening remarks, I must say that
I suspect that some of my colleagues may want to talk about
other pressing issues that touch on HHS's jurisdiction. To head
off just one such issue, I have made my position on the
situation at our southern border known: we must keep families
together as we work to avoid illegal border crossings. We also
need to ensure that children who have been separated from their
parents are reunited, and I know the Secretary is working
aggressively to do so.
However, my experience tells me that our time at this
hearing will be best spent discussing the issues we all have
prepared for weeks to talk about with Secretary Azar. After
all, the cost, innovation, and availability of prescription
drugs is a deeply important and often life-or-death issue for
millions of our constituents each day. My hope is that we can
all take advantage of the opportunity before us today and stay
focused on the agreed-upon subject matter of this hearing.
With that, I am going to turn to our ranking member, my
good friend and partner, Senator Wyden, for his opening
statement.
[The prepared statement of Chairman Hatch appears in the
appendix.]
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman. And, Mr.
Chairman, thank you for holding this hearing.
I am going to get to rescuing Americans who are getting
mugged by their prescription drug bills, as well as the
administration gutting safeguards for those with preexisting
conditions.
First, the American people are owed an answer about what is
going to be done to protect the thousands of children the Trump
administration separated from their mothers and fathers and put
in the custody of today's witness.
As of this morning, Health and Human Services, Homeland
Security, and the Justice Department seem to be doing more to
add to the bedlam and deflect blame than they are doing to tell
parents where their kids are. According to news reports, the
government is ransoming these children by telling their parents
they can have their kids back if they agree to leave the
country.
The President tweeted that the U.S. should forget about due
process rights for immigrants, essentially an endorsement of
judging people by the color of their skin.
The White House Chief of Staff floated this family-
shredding policy in the press more than a year ago. It was not
conjured out of thin air this spring. But with news reports
that the Department is scrambling to collect resumes of
individuals with experience in child care, it is clear that the
Department was woefully unprepared.
This committee has oversight of the child welfare system.
Members here have worked hard on bipartisan child welfare
policies that keep families together whenever it is safe. That
is because unnecessarily ripping children away from their
families and putting them in institutions is harmful to them.
It is harmful to their health. It is scarring to their
emotional well-being. It is detrimental to their growth. That
is a fact, and the Department of Health and Human Services
knows it.
Secretary Azar, you are certainly going to get questions
about this today. An administration that has traumatized
thousands of child refugees, dehumanized these kids and their
parents, and tried to normalize this behavior through
deception, has a lot to answer for.
Now I am going to shift to discuss Americans getting hit
with those enormous bills when they walk up to the pharmacy
window.
When the President said in early 2017 that drug companies
were ``getting away with murder,'' he offered his diagnosis of
the prescription drug cost problem. A year and a half later, it
sure looks like he has decided not to treat the problem.
The President made prescription drug costs a key part of
his pitch to the American people on health care. But the party
in power has not done any legislating on it. They have put out
a so-called blueprint, essentially a collection of the same
questions that have been asked on these issues for a decade or
more.
To me, this so-called administration blueprint looks less
like a blueprint than it does like blue smoke and mirrors. And
a lot of what the President and his team have said is just
head-scratching.
For example, the administration says that European
countries are ``freeloaders.'' He said that if drugs got more
expensive overseas, in effect fattening the wallets of the
pharmaceutical companies, prices fall at home. That is just
fantasy land.
I do not know what magic wand the administration plans on
using to hike drug prices in other countries, and I do not know
if that power today exists.
Second, even if drug companies did come into a windfall
from overseas, it is laughable to expect that they would take
that as a reason to slash prices in America. Look at the Trump
tax law. Huge amounts of cash were showered on these
multinational drug companies. What did they do with it? They
put it into stock buybacks that benefit shareholders, not
consumers.
One other trip to pharmaceutical fantasy land: on May 30th,
the President said that in 2 weeks, drug companies would be
announcing, and I quote here, ``voluntary massive drops in
prices.'' Two weeks went by, 3 weeks went by. It has been
nearly a month. No massive drops in prescription drug bills,
folks. As long as Americans are getting mugged at pharmacy
counters from sea to shining sea, this issue demands serious,
bipartisan action.
To begin that effort in a serious bipartisan way this
morning, I am releasing a comprehensive report that looks at
exactly what makes this industry complicated and why those
policies do so much to make sure that prices just go up and up
and up.
And it is not just a look at the drug manufacturers. There
are a lot of pieces to the puzzle: middlemen, distributors,
misplaced incentives, and broken, out-of-date policies on the
law books. So the report is a comprehensive look under the hood
of the entire pharmaceutical industry for the first time.
Otherwise, what Americans get from the Trump
administration, and the President in particular, when you look
at the record, is talk. The fact is, their blueprint has raised
issues that have been raised for quite some time.
The administration needs to stop pretending that asking the
same questions that have already been asked is the equivalent
to getting results. The fact is there is a big gap between the
triumphant headlines the Trump administration tries to grab on
prescription drugs and the lack of serious proposals put
forward.
So today, I hope we will see that gap getting closed.
One last issue. The Trump administration said recently it
was going to get out of the business of defending protections
for Americans who have preexisting health conditions. These
protections, as millions of Americans know--because they let
them sleep more soundly at night--are the law of the land.
And it is not a narrow policy that applies to only a
handful of people. There are more than 150 million Americans
who get insurance through their employers, and I would bet they
are going to be very surprised to learn this Trump decision can
hurt them too.
If you do not have a preexisting condition, I guarantee you
know somebody who does. And the Trump administration decided it
just is not interested in protecting them.
So we have a lot to do this morning, Mr. Chairman. And as
always, as we have done so often in the past, I look forward to
working with you in a bipartisan way.
The Chairman. Well, thank you. Thank you very much.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. Once again, I would like to thank Secretary
Azar for coming here today. We appreciate you, sir.
Secretary Azar was sworn in as Secretary of Health and
Human Services on January 29, 2018. And because there is a lot
of ground to cover--we all have come to know Secretary Azar
quite well--I would like to move right along. As such,
Secretary Azar, please proceed with your opening statement.
STATEMENT OF HON. ALEX M. AZAR II, SECRETARY, DEPARTMENT OF
HEALTH AND HUMAN SERVICES, WASHINGTON, DC
Secretary Azar. Thank you, Mr. Chairman, Ranking Member
Wyden, and members of the committee. I appreciate the
opportunity to appear before you today to discuss an important
issue: why American prescription drug prices are too high and
what we are doing about it.
Drug pricing was one of the very first topics that I
mentioned before this committee during my confirmation process
earlier this year. I know members of this committee are serious
about taking on this challenge, and I appreciate your efforts
in this area.
From day one of his administration, President Trump has
directed HHS to make drug pricing a top priority. Earlier this
year, the President's 2019 budget laid out a range of proposals
on the issue, including reforms to Medicare and Medicaid,
topics that I testified about when presenting the President's
budget earlier this year before this committee.
In May, building on the budget, the President released a
blueprint to put American patients first. This blueprint is a
plan for bringing down drug prices while keeping our country
the world's leader in biopharmaceutical innovation and access.
It lays out dozens of possible ways that HHS and Congress,
working together, can address this vital issue.
We face four significant problems in the pharmaceutical
market: high list prices set by manufacturers, seniors and
government programs overpaying for drugs due to the lack of the
latest negotiation tools, rising out-of-pocket costs, and
foreign governments free-riding off of American investment.
The President's blueprint lays out four strategies for
tackling these problems, and we have begun acting on each of
them already.
First, we need to create the right incentives for list
prices. Everybody in today's system makes money as a percentage
of list prices, including pharmacy benefit managers, who are
supposed to keep prices down. Everybody wins when list prices
rise except for the patient, whose out-of-pocket cost is
typically calculated based on that price.
One of HHS's initial actions is working to require drug
companies to include their list price in advertisements. For
example, Americans deserve to know the price of a wonderful new
drug that they hear about on TV, before going to ask their
doctor about a product they may find unaffordable.
More fundamentally, we may need to move to a system without
rebates, where PBMs and drug companies negotiate fixed-price
contracts. Such a system's incentives, detached from artificial
list prices, would likely serve patients far better.
Second, we need better negotiation for drugs within
Medicare. That is what President Trump has promised, and it is
what we are going to deliver.
In Medicare Part D, HHS will work to give private plans the
market-based tools that they need to negotiate better deals
with drug companies. Part D is a tremendously successful
program, but it has not kept pace with innovations in the
private marketplace. For instance, well-intended patient
protections may be preventing plans from appropriately managing
utilization. While everybody agrees on the importance of the
drugs that are in the protected classes, manufacturers often
use that list as a protection from paying rebates.
We also want to bring negotiation to Medicare Part B
physician-administered drugs. Right now, HHS just gets the bill
and we pay it. The system may actually be driving doctors to
prescribe more expensive drugs, while potentially tempting
manufacturers to develop drugs that fit into Part B rather than
D.
We are going to look at ways to merge Part B drugs into
Part D and leverage existing private-sector options within Part
B.
Third, we need a more competitive pharmaceutical
marketplace. Thanks to the reforms that Congress passed in the
1980s, America has the strongest generic drug market in the
world. But there are many ways that manufacturers still
unfairly block competition.
Since the rollout of the President's blueprint, FDA has
publicized the names of companies that may be abusing safety
programs to block competition and has issued new guidance to
help lessen the effects these actions may have on generic
access.
Finally, we need to bring down out-of-pocket costs for
American patients. Since the blueprint rollout, CMS has
reminded Medicare Part D plans that it is unacceptable to have
gag clauses barring pharmacists from working with patients to
identify lower-cost options.
More broadly, we are going to work to ensure patients know
how much a drug costs, how much it is going to cost them, and
whether there are cheaper options, long before they get to the
pharmacy counter.
These are just some of the elements of an aggressive, long-
term plan to solve this problem we all care deeply about.
Thank you again for having me here today. And I look
forward to taking your questions and discussing how together we
can help American patients.
The Chairman. Well, thank you, Mr. Secretary.
[The prepared statement of Secretary Azar appears in the
appendix.]
The Chairman. One of the ideas, both mentioned in the
blueprint and that you have discussed publicly since its
release, is doing away with rebates in Medicare Part D through
changes to anti-kickback statute safe harbors. You have stated
that rebates could be replaced with something called a, quote,
``fixed price discount,'' unquote. Now, the terms ``fix'' and
``price'' in the same phrase do make me a little bit nervous.
I am sure it does not mean setting a price, but can you
explain what that term means, how it would be different from a
rebate, and how it would limit list price increases from year
to year or over a longer period of time?
Secretary Azar. Absolutely, Mr. Chairman. Right now, the
problem is that the pharmacy benefit managers make their money
often on getting a high list price, negotiating a big rebate
off of that, and then keeping a percent of that rebate that
they do not necessarily pass to the patient or to the insurance
companies that they work for. And that is just the business
model. It is not saying that they are doing anything wrong; it
is just the business model.
What we are thinking about proposing--and have been asking
for comment on with the request for information that we have--
is moving to a system where, instead of encouraging a very high
list price with a rebate that gets administered after the fact,
what if our contracts that the PBMs have instead just say, here
is the price, here is what we will pay. You have market power
as a pharmacy benefit manager, you control the formulary and
you are going to get this level of discount, here is the price.
And that actually gets administered at the point of sale.
So you take list price out of the equation. The pharmacy
benefit manager has no incentive for a higher list price; it is
just administered right there. It is an actual discount, the
money flows with it, and we just take list price off the table.
The Chairman. States continue to evaluate the concept of a
closed formulary in Medicaid. With the recent examples of
Massachusetts and Arizona and other States, with a bipartisan
mix of Governors considering the idea, there is growing
interest in exploring the outcomes of imposing a closed
formulary in Medicaid through a demonstration project.
How would the Medicaid Drug Rebate Program interact with
such a proposal? And do you envision carve-in protections for
certain drugs or classes of drugs, or required coverage of
medically necessary treatments for which there is no
alternative?
Secretary Azar. So, as you mentioned, Mr. Chairman, the
President's 2019 budget does propose having five States have
the opportunity to see if they can do better than the Medicaid
statutory rebate program in negotiating.
So right now, the system we have is that all drugs are
available in Medicaid, but in return for that, there is a
statutory rebate that the drug manufacturers have to pay. Some
have suggested that the States, if they could run their
formulary the way Medicare Part D runs its formulary, or the
way any of us with our commercial insurance have a formulary
managed, could get a better deal. We would like to give them
that chance to try to see if they can in fact do so.
Now, there would still be patient protections, there would
still be medical appeals, clinical necessity. Everything you
mentioned, Mr. Chairman, would be there, just as it is for your
insurance, my insurance, anybody else's insurance, to protect
you from unreasonable or non-clinically based formulary
utilization management. Absolutely, Mr. Chairman.
The Chairman. Well, thank you. I am pleased that this
administration reversed an Obama-era payment policy that sent
the wrong signal to the nascent biosimilars market. Underpaying
biosimilars, which studies estimate will cost 20 to 40 percent
less than the biologics with which they compete, is not a
recipe for a development of new biosimilars.
What else can be done to increase the use of biosimilars as
a way to increase competition and lower spending?
Secretary Azar. So, Mr. Chairman, we want to do for the
biosimilars market exactly what you did for the generics
market, which is create a very robust, highly competitive
sector here that competes against branded products. And that is
why that payment change was made: to ensure that there is
adequate incentive for biosimilars to come in.
Since we made that change, we actually saw a biosimilar
enter the market at significantly below what analysts thought
the pricing would be--we think, in part, because of our rule
change.
We believe at the FDA that we can get rid of these abuses
by drug companies that are preventing access to their products
for the biosimilar companies to be able to do the clinical
trials needed to bring products to market. We also are going to
keep building the scientific and evidence space for genuinely
interchangeable biosimilars that would really allow the
development of that generic market, as you did under Hatch-
Waxman.
The Chairman. Well, thank you so much.
Senator Wyden?
Senator Wyden. Mr. Secretary, your agency plays a crucial
role in child safety, so I have a few questions that I think
are pretty brief, and I want to see if you can give me some
specific answers.
How many kids who were in your custody because of the zero
tolerance policy have been reunified with a parent or a
relative?
Secretary Azar. So I believe we have had a high of over
2,300 children who were separated from their parents as a
result of the enforcement policy. We now have 2,047----
Senator Wyden. How many have been reunified?
Secretary Azar. So they would be unified with either
parents or other relatives under our policy. So, of course, if
the parent remains in detention, unfortunately, under rules
that are set by Congress and the courts, they cannot be
reunified while they are in detention.
Senator Wyden. So is the answer zero? I mean, you have----
Secretary Azar. No, no. No. We have had hundreds of
children who had been separated who are now with--for instance,
if there was another parent who is here in the country----
Senator Wyden. I want to know about the children in your
department's custody. How many of them have been reunified?
Secretary Azar. Well, that is exactly what I am saying.
They have been placed with a parent or other relative who is
here in the United States.
Senator Wyden. How many? How many?
Secretary Azar. Several hundred. Now, of the----
Senator Wyden. Of the----
Secretary Azar. Of the 2,300-plus that came into our care--
--
Senator Wyden. Okay.
Secretary Azar [continuing]. We probably have 2,047.
Senator Wyden. How many parents have been told where their
kids are?
Secretary Azar. Every parent has access to know where their
child is. We want to ensure that the process is more efficient.
Senator Wyden. That is the 800 number.
Secretary Azar. Well, that is not--that is, actually the
800 number would be the backup on that. But that should be the
failsafe. Every parent should know where their--we have
actually deployed a Public Health Service officer for every
one.
Senator Wyden. But how many parents----
The Chairman. Let him answer the question.
Senator Wyden. Mr. Chairman, the time is short and----
The Chairman. Well, I will give you more time.
Senator Wyden. The American people have been getting lots
of deception, lots of rosy answers, not many facts.
So how many parents--not have access--how many parents have
been told where their kids are?
Secretary Azar. Well, they all--that information is
available for every parent. And we have actually deployed
Public Health Service officers to work with the ICE case
managers to meet with all of those parents. We are progressing
through them, to help them fill out the reunification paperwork
that they need for their background check and to confirm
parentage, as well as to ensure that they make contact, they
know where their child is, they make contact, get them on the
phone, get them on Skype if that is available.
We want to have every child and every parent connected and
in regular communication. And we are making that happen.
Senator Wyden. I asked twice, how many parents were
actually told where their kids are? You said they have access.
And this is just, in my view, part of the rosy responses
the American people have been getting. And it sure does not
line up with the firsthand accounts of parents that I hear from
who desperately want to know where their kids are.
We will hold the----
Secretary Azar. There is no reason why any parent would not
know where their child is located. I could--I have sat on the
ORR portal--with just basic keystrokes, within seconds, find
any child in our care for any parent. It is available right
now.
Senator Wyden. And, Mr. Secretary, suffice it to say
portals are not part of the daily existence of these people.
Secretary Azar. That is why we have case managers and the
800 number for their lawyers or them to use.
Senator Wyden. I would like to hold the record open so you
can tell me specifically as of today how many parents were told
where their kids are.
Now, on drug prices, not less than 14 days after the
President's speech on prescription drugs, Bayer announced the
price of two of its cancer drugs was going up a thousand
dollars per month. That was the second price hike in 6 months.
So it sure does not look like the drug makers are taking your
blueprint particularly seriously.
We have 42 million Americans who get their drugs through
Part D of Medicare. They are getting price hikes every day.
After a year and a half in office, I do not see any
evidence of this administration taking real action until
possibly January 1, 2020, a thousand days after the President
said drug companies were getting away with murder.
So are there any policies in your so-called blueprint that
have actually taken effect and will hold drug prices down?
Secretary Azar. So patients have already saved $8.8 billion
from added generics. They have saved $320 million a year from
the change to Part B Medicare reimbursement.
We have already listed the 150 branded companies that are
hiding behind the REMS program to prevent access to their
product for generic or biosimilar testing. We have put a
dashboard out that shows the price increases. We have already
told the Part D plans that we find the gag clauses
unacceptable.
And I am disappointed by those price increases. And I want
to put the drug companies on notice. You know, we are hitting
July 1st. That is a traditional time for drug price increases.
And I hope they will exercise restraint as we come across this
period.
We have seen fewer increases than we historically do, lower
increases than we historically do as a result of the
President's----
Senator Wyden. My time is up. You did not answer the
question. I asked about Part D changes. And we have not seen,
for those 42 million Americans who get their drugs through Part
D, we have not seen any change.
I will hold the record open for this, as well as the other
matters that you did not respond to. And tell us specifically
what Medicare Part D changes are being made--and when they are
going to be made--that are going to help those 42 million
people.
The Chairman. Senator Stabenow?
Senator Stabenow. Thank you, Mr. Chairman.
Let me first speak to the issue of the children who have
been separated at the border--and I talked to you privately
about this. This is obviously appalling what has happened. It
is an American tragedy. It is a tragedy for these parents and
these children.
And I want to start by calling on you to make sure the over
2,000 children in your custody at HHS are able to get back to
their parents as quickly as possible and that you make this a
priority.
As I indicated to you, we have over 60 children in Michigan
right now. They are in loving, safe foster homes, but that is
not the point. As of my last contact with the agencies, they
did not know, they were not given any information up to this
point about where the parents are. And there was not
communication going on in terms of what is happening for these
children.
So every single day in a child's life--you know, the kids
keep growing up no matter what we do or how long we take, how
bureaucratic we are. Whatever is happening with this
administration, however long you take, every day these children
are growing and changing and experiencing trauma and pain.
And so I just want to go on record as saying that this
needs to get fixed and needs to be the top priority for what
you are focused on in terms of children and families right now.
This is on your watch, and we will hold you accountable.
So let me go on to the question, the topic of the day, and
speak specifically about what is happening with the outrageous
prices of naloxone.
We have an opioid crisis. We have talked about this before.
And let me just speak again about the history of pricing on
naloxone, which is an overdose-reversal drug that has saved
countless lives, as you know.
The drug was first approved by the FDA in 1971--long off
patent. Generic versions have been available since 1985.
As of 2005, a generic vial of naloxone was available for
about a dollar--about a dollar in 2005. But by 2013, now that
we have a crisis, the generic companies are selling the drug
for 15 times as much. And Evzio, a naloxone autoinjector, now
sells for more than $4,000--$4,000--for a two-pack. It was a
dollar in 2005, now a two-pack for the autoinjector is over
$4,000. And as you know, Narcan, the nasal spray version, is
sold for about $150 for a two-pack.
So at your confirmation hearing, I raised this issue, and I
raised the fact that the President's commission on the crisis,
the opioid crisis, recommended negotiating the best price. And
at the time, you said, quote, ``I want to look at that, learn
more about the situation, but if the government is the
purchaser--so let us say, for instance, if we are going to be
buying that as part of the opioid crisis program and are
directly buying that and supplying it to States and first
responders, which is what we are doing, there is absolutely
nothing wrong with the government negotiating that.''
I followed up with a letter with colleagues. You sent a
response that did not even include the word ``negotiation.''
So is naloxone price negotiation in the drug pricing
blueprint?
Secretary Azar. So the blueprint does not address any
specific drug price. Narcan is the nasal formulation of
naloxone, which tends to be a preferred formulation for opioid
overdose first responders. That is actually available--I looked
into this--under the Federal Supply Schedule for acquisition at
$78 a package. And our other first responders, State and
locals, have, through group purchasing, access to that same
kind of pricing there.
We are also working at FDA to bring over-the-counter
naloxone to the market and also to increase even more generic
competition. There, of course, are different formulations,
different administration devices----
Senator Stabenow. I understand. And in the interest of
time, Mr. Secretary, so the answer is ``no,'' negotiation is
not part of what you will be doing.
Secretary Azar. Well, the supply schedule is at $78.
Senator Stabenow. Seventy-eight dollars. It was a dollar,
now $78. Such a deal.
Secretary Azar. Well, it was not nasal. I do not know if it
was nasal at a dollar, to correct you.
Senator Stabenow. Okay. All right. So it was something
slightly different with a naloxone----
Secretary Azar. Nasal is a preferred first responder
vehicle.
Senator Stabenow. It was administered in a different way.
Naloxone itself was a dollar, now with this particular way of
administering, it is $78.
And I just want to share with you that Southwest Michigan
Behavioral Health is planning to spend $366,100 next year on
this particular discounted price that you are talking about--
$366,100 that they could be spending on treatment for people in
Michigan who have an opioid addiction. And instead, they are
paying, even at this discounted rate, 78 times more than what
was available in 2005.
I just have to say, Mr. Chairman, if we want to talk about
rigged systems, there is not a more rigged system than the way
prescription drugs are priced.
The Chairman. Thank you, Senator.
Senator Cornyn?
Senator Cornyn. Thank you, Mr. Chairman.
Mr. Azar, I appreciate your service. I cannot think of
anybody better qualified to serve in the position you are
serving in, so I appreciate the expertise and experience you
bring to this role.
I wanted to just raise the issue because, in addition to
the blueprint that you rolled out to try to control
prescription drug costs, there are other cost drivers that we
see in the health-care system that the administration has tried
to address.
One is, the Department of Labor has now issued regulations
to make it possible for more people to get access to
association health-care plans so they can take advantage, not
of the individual market, but of the employer-provided
insurance market and find their premiums substantially lower.
I would note that people in the individual market, the 9
million people in the individual market, do not have any
subsidies, and they have seen their costs rise by 105 percent
since 2013, which is unaffordable by any measure.
The second thing I just wanted to raise with you--and I am
sure you are aware of--is the good work being done by Senator
Collins and Senator Alexander, Representative Walden, and
Representative Costello, to try to make sure people 250 percent
and below get access to lower premiums for their health-care
coverage. Again, the problem is the unaffordable Obamacare
model, which has all the mandates and provides spotty
subsidies, particularly to people below 250 percent of poverty.
That would result--if embraced by Congress, the Alexander-
Collins-Walden-Costello bill would lower premiums for people in
the individual market by 40 percent and make it much more
affordable.
The tragedy is, unfortunately, the resistance, the never-
Trump approach to the work here in the Congress and in
Washington, has resulted in what used to be a bipartisan bill
basically being abandoned by our Democratic colleagues who
refuse to even work with Senator Alexander and Senator Collins
to come up with a solution for these skyrocketing premiums
under Obamacare.
So in addition to the good work that you are doing on
prescription drugs, which I applaud and encourage you to
continue, these are two other areas that I just wanted to
highlight: one, an initiative by the administration through the
Department of Labor, and the other legislative, but which has
been rejected pending the outcome of the midterm elections by
our Democratic colleagues.
But since I was in Brownsville on Friday--and our
colleagues across the aisle want to talk about this issue and
not prescription drug costs so much--I had the chance to visit
two facilities in Brownsville and was enormously impressed with
the quality of care being provided to these young people who
have been brought across the border without their parents and
some with their parents.
Isn't it true that 83 percent of the individual children in
care were brought or were sent without a parent? Does that
figure sound about right to you?
Secretary Azar. It is true, Senator. Yes. Most of the kids
in our care came here unaccompanied, sent by their parents, or
came here on their own and then they found themselves in our
custody. Yes.
Senator Cornyn. And I have not heard a word from any of our
Democratic colleagues about the 83 percent of the children who
were sent here by their parents, voluntarily separated by their
parents, because of the conditions in the country in which they
live and the hope for a better life here in the United States,
which certainly we all understand.
But it seems to me that what is being advocated here is not
zero tolerance when it comes to violating immigration laws, but
zero enforcement. Indeed, our friend the Senator from
California, Senator Feinstein, whom I have worked with on a
number of occasions, has persuaded all the Democrats in the
Congress, in the Senate I should say, to sign on to a bill that
basically provides a no-enforcement zone for a violation of
immigration laws within 100 miles of the border. And indeed,
you have probably seen where some Democrats in the House have
introduced bills that would literally abolish Immigration and
Customs Enforcement. If you go on Twitter or any of the social
media sites, you will find a hashtag #abolishICE, which
essentially wants to do away with any enforcement of our
immigration laws.
We can all agree that these children ought to be treated
humanely and compassionately and joined together with their
parents where possible. And indeed, there is legislation that
would do that. I hope we can pass that this week.
The Chairman. Senator your time is up.
We will go to Senator Nelson.
Senator Nelson. Thank you, Mr. Chairman.
Mr. Secretary, I would like to seek some answers,
respectfully--to have a civil discourse. You are a friend of a
close friend of mine. And I respect that.
On Saturday, I was not allowed in the detention facility in
Homestead, FL to speak with the 70 children whom I was told
were there who had been separated from their parents.
Do you know what has changed since Saturday with those 70?
Secretary Azar. So, Senator, we are very happy to arrange
visits for Senators and members of Congress to these
facilities. We do need to do so in a way that is orderly,
because they are trying. First and foremost priority is the
safety and well-being of these children whom we and our
grantees care deeply about.
And you should have been and would have been able to
interact with them, but not, of course, interview them. These
are minor children. They are not there to be deposed or
interviewed. So I do want to be careful about that. That is
just simply not acceptable.
We have to protect these children. They are in care. They
are in shelter. This is a difficult situation for all of them.
And we all--I am sure you share that desire that we are doing
our best and our utmost to be respectful of those children.
Senator Nelson. Mr. Secretary, I did not ask that. I asked
what has happened since Saturday to those 70 children.
Secretary Azar. Well, I do not know which 70 children you
met with. I can tell you----
Senator Nelson. No, no. No, no. I did not meet with any of
them. I was not allowed to, as you just stated.
Secretary Azar. You are allowed to be in their presence,
but you cannot depose them. And that is quite clear.
Senator Nelson. I understand. So my question--please, I am
trying to be respectful----
Secretary Azar. Yes.
Senator Nelson. My question is, the 70 children who I was
told were in that facility, who had been separated from their
parents, what has happened to them?
Secretary Azar. So they would either continue to be in our
care or, if they have reached a point where a sponsor who is in
the United States who is a parent or a relative has been vetted
and has been approved for sponsorship, they would have been
released as expeditiously as possible to those sponsors.
Senator Nelson. How many of those children have been able
to be in contact by telephone with their parents from whom they
were separated?
Secretary Azar. So for any of them who have been separated
from their parent at the time of the parent's detention by the
Customs and Border Patrol, within 24 hours of arriving at an
ORR shelter, we endeavor to put them in touch, get on the phone
with their parent. Sometimes that cannot happen if, for
instance, if the parent has been located for criminal
prosecution and placed by the Bureau of Prisons, say, with a
county jail. It may be harder to arrange that communication.
We are actually sending, deploying Public Health Service
officers out there to facilitate that. We want every child and
every parent to be in communication at least twice a week so
that they are talking by Skype or by phone if available. We
want this to happen.
And so I cannot say as to those 70, but all should have
been, within 24 hours of arriving, made in touch, if at all
possible, with the parent, if the parent was accessible where
the parent was being kept.
Senator Nelson. Okay. Now, I asked that question of the
lady who is overseeing the facility of getting the children in
touch and she said that a handful of the children had not been
able to be on the telephone. So I said, well, what is your plan
for reuniting these children? And she said there is a lady
named Barbara Flotus who, since I was there on Saturday--she
does not work except on the weekdays--and I said, well, I will
try to reach Barbara Flotus to tell me what is the plan.
I was prevented from speaking with Barbara Flotus
yesterday, Monday. Can you help arrange that so that I can know
what the plan is to reunite the children?
Secretary Azar. So we will be happy to work with you to
arrange through the grantee--of course, she is not an employee
of my department; she works for a grantee.
Senator Nelson. Through the grantee.
Secretary Azar. So, of course, it would be their decision
if they want to make her available to you. But we will continue
to work with your staff to facilitate, if you wish to speak
with her.
Senator Nelson. You will not hinder me talking----
Secretary Azar. No, of course not. Of course not.
Senator Nelson. Well, yesterday that occurred. So what is
the plan to reunite 2,300 children?
Secretary Azar. Absolutely. So the first thing we need to
do is, for any of the parents, we have to confirm parentage. So
that is part of the process with any child in our care, we have
to ensure--there are traffickers, there are smugglers, there
are frankly just some bad people occasionally. We have to
ensure that the parentage is confirmed.
We have to vet those parents to ensure there is no
criminality or violent history on them. That is part of the
regular process for any placement with an individual. At that
point, they will be ready to be reconnected to their parents.
This is where our very broken immigration laws come into play.
We are not allowed to have a child be with the parent who is in
custody of the Department of Homeland Security for more than 20
days. And so until we can get Congress to change that law--the
forcible separation there of the parent or the family units--we
will hold them or place them with another family relative in
the United States.
But we are working to get all these kids ready to be placed
back with their parents, get that all cleared up as soon as
Congress passes a change or if those parents complete their
immigration proceedings; we can then reunify.
So we want to be ready. The President shares this. We do
not want any children separated from their parents any longer
than absolutely necessary under the law. And we want to
effectuate that and make that happen, Senator.
The Chairman. Senator, your time is up.
Senator Thune?
Senator Thune. Thank you, Mr. Chairman.
Mr. Secretary, back to the subject at hand. You have talked
at length about the goal of lowering list prices, drug prices,
as part of the administration's plan. If manufacturers were to
announce a reduction in list prices, has the administration
considered what that would mean throughout the supply chain in
the Part D program? And particularly, if an announcement came
midyear, how would such a change impact plans and PBMs?
And then I would like to ask, if you can hold that thought,
what then would the beneficiary experience be in the way of
changes in premiums and copays at the pharmacy counter?
Secretary Azar. So I will answer the second first, which
is, if list prices go down, the patient benefits. They pay less
at the pharmacy. That is why list prices matter. Most patients,
whether in Part B, Part D, or just in commercial plans, pay
less at the pharmacy when the list price is lower.
Now your first question. We have heard from many major drug
companies with major products that want to make substantial and
material price decreases. This has shown just how broken our
system of drug pricing and drug distribution is in the United
States, because the pharmacy benefit managers and the
wholesalers are all dependent on getting a percent of list
price.
And the reaction to some has been, if you were to decrease
your price, you will actually be harmed in terms of formulary
status and patient access versus your competitor who has a
higher price.
I would encourage the Senate and Congress to inquire of
pharmacy benefit managers as to whether they have received
suggestions or approaches from drug companies for lower list
prices and what has the reaction been.
I believe still that this will be solved. These are adults.
This is so absurd, it has to be, it will be fixed. But this is
what is keeping the individual companies, so far, from moving.
I do not want to excuse them. The prices are their prices.
Okay? They set their prices; they are accountable for that. But
the channel is definitely not making it easier.
Senator Thune. Okay. Well--and I just think that the
concern in all of this is, does it get passed on in the form of
savings to the ultimate consumer, to the beneficiary?
And then a follow-up question would be, how could that
reduction in list prices be sustained over time?
Secretary Azar. So we are, of course, not counting on just
voluntary reductions in price. It would be nice if that
happens, based on them seeing this is the northbound train,
this is where it is going: we are going to lower list prices,
better negotiations, lower net prices in this country. Get on
the train, get a competitive advantage by moving their first.
That is the idea.
But our plan will be reversing the incentives to ever-
increasing list prices. I mentioned to Chairman Hatch that
means getting after this whole rebate system based on list
prices. It means asking Congress to overturn the Obamacare gift
to the pharma companies of capping rebates in the Medicaid
program at 100 percent.
As they increased their list price, it used to be your
rebate would keep going up. Obamacare capped that at 100
percent. That would bring in billions of dollars and create a
major financial disincentive to higher list prices and would
sustain any lower prices that we would see.
Senator Thune. Okay. Let me ask you something, just
switching gears for just a minute. And you know, because I have
shared with you, how important the 340B program is in my State
to our hospitals. And I think that is probably a view shared by
a number of folks on this panel and all across the Congress.
But could you talk a little bit about what you foresee
happening in terms of proposed changes to the drug rebate
program and how it might impact the 340B program and, perhaps
even more broadly, what you see happening in terms of the 340B
program, realizing there is litigation and regulatory action
underway at the moment?
Secretary Azar. So, as we have seen the 340B program
expand, it has, in some respects, perhaps gotten untethered
from its purpose of helping those hospitals and those uninsured
individuals who have trouble affording access to their
medicines. And I think we want to keep working with Congress to
ensure the 340B program is delivering on that promise and is
not being used for abuse and expanding beyond anything
resembling its actual intent.
Because as it expands, as now more and more drugs go
through that and as the flow of money comes out of that, it can
lead to a cross-subsidization problem. That is what we mention
in our blueprint, where, if it is abused, more money might get
paid elsewhere in the system for people in Medicare, Medicaid,
commercial plans. It might actually be an incentive towards
higher list prices.
So we want to work with you to ensure 340B is there, it is
healthy, it has integrity, and it is tied to its purpose of
helping these hospitals and these patients.
Senator Thune. And we want to make sure there is integrity
in the program too. But most of the players in the field that I
work with and I am familiar with in my State are folks who
operate those programs with great integrity. And it is
important to their bottom lines, which is why I think you hear
us raise this issue so often to you and other members of your
team.
So we will continue to do that, and I hope that you will
continue to work with us and be responsive and try to work with
the affected hospitals to come up with a good path forward.
Thank you, Mr. Secretary.
The Chairman. Your time is up.
Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman.
Mr. Secretary, thank you for coming today.
Before I start my questions, I want to urge your staff at
CMS to carefully consider the requests of the entire bipartisan
New Jersey delegation to extend the imputed rural floor. This
is critical to New Jersey hospitals. Both Democratic and
Republican administrations have extended it. And I hope that
you will have your staff pay some critical attention to it.
CMS predicts prescription drug price growth in 2018 will be
double what it was in 2017, contrary to the President's
pronouncement that there would be a, quote, ``voluntary,
massive'' drop in prices in early June.
And one of the reasons that we are not seeing reduced
prescription drug prices is because some bad actors continue to
game the system to prevent cheaper drugs from coming to market.
In fact, the FDA recently named and shamed some of the worst
actors who were deliberately blocking the development of
cheaper generic drugs.
Congress is working to pass the CREATES Act, which is a
bipartisan bill that would go after the abuse of some companies
that are preventing cheaper drugs from coming to market.
Does the administration support the CREATES Act?
Secretary Azar. So, Senator, we do not have the formal
administration's support on it, but, obviously, what is in the
CREATES Act resonates completely with what we have been saying
and what FDA has been doing to prevent the very abuses that you
have correctly laid out there.
Senator Menendez. Well, I hope that the administration can
come to a formal position.
Secretary Azar. Thank you.
Senator Menendez. This is bipartisan legislation.
Secretary Azar. Thank you.
Senator Menendez. It does exactly what the President's
blueprint said he sought to do by ending bad actors in the
pharma world.
And so let me ask you, after the FDA named and shamed on
May 17th, have there been any behavioral changes by these
companies?
Secretary Azar. I do not know if there has been any change.
Let me check with Commissioner Gottlieb on that and get back to
you, if that is okay.
We have put out two guidances as a follow-up to that also,
making clear that they should not be able to hide behind our
regulatory processes to protect safety. That was part of the
follow-on to that.
But if I can get back to you to see if we have seen any
greater access----
Senator Menendez. Okay; I would appreciate that.
Would you commit to working with me and my colleagues in a
bipartisan way to ensure customers see generics come quickly
and as safely to the market as possible?
Secretary Azar. Absolutely. In fact, I would love to hear
from you as you learn of abuses in the system or entities that
are manipulating patent processes. Please consider me an open
door for any input or pointing us to those. Absolutely.
Senator Menendez. I appreciate that.
Are you familiar with the Reducing Drug Waste Act of 2017,
also bipartisan legislation?
Secretary Azar. I am not, Senator. I would be happy----
Senator Menendez. Okay. I would like to call it to your
attention. This is including members of this committee who have
joined together because the HHS Office of Inspector General
found millions of dollars in waste due to drug packaging. And
so----
Secretary Azar. Yes, yes. I am sorry. You did mention this
to me in the confirmation. I am sorry, but I have not yet
learned enough of the detail on that. I am sorry. Yes.
Senator Menendez. Okay. Well, this is bipartisan
legislation. The Senator from Iowa and Senator Klobuchar and
many others, on a bipartisan basis, are looking at this as a
way to stop the, basically, waste of drugs as a result of drug
packaging.
So I ask you to look at that as well.
Let me just turn to the question of the children who are
being stripped away from their parents at the border.
I have to differ with you. The reason we have a crisis is
that the administration has decided that even those who come to
a border crossing, present themselves, and ask for asylum, are
turned away at a legitimate border crossing.
They come back the second day; they are turned away again.
They come back a third day; they are turned away again. And
after traveling thousands of miles, obviously fleeing horrific
violence, they are not about to not have an opportunity for
asylum.
And so the administration criminally prosecutes them, and
in doing so separates children, who have been sent thousands of
miles. I was looking at a map of where these children are.
Primarily, it seems to be in blue States--and we are happy to
house them--but we do not want to really have them stripped
away from their parents.
So I heard your response to Senator Nelson. Let me ask you
this. Will those parents who have been deported and whose
children are here--are they going to be reunified? And if so,
how?
And secondly, my understanding is there are still 2,000
minors who are separated from their parents who have not been
reunited. What is the time frame?
I heard what you said is going to take place. What is the
time frame that you estimate when that will take place?
Secretary Azar. So, as to any parent who is deported, of
course, the child has independent rights. We often do find that
when a parent is deported, they ask the child to remain
separated and remain in this country. That happens in normal
proceedings. I do not know in the last couple of months----
Senator Menendez. But a child who is a minor cannot make
that case for themselves.
Secretary Azar. They have counsel, and sometimes they
actually decide to remain or the parent actually asks that we
have them remain in the country. We keep them in touch, though.
As long as the child is in our care, we keep them in touch,
even if the parent is outside the country.
So in terms of timing, again, we are working rapidly to
confirm parentage and do the vetting and proper criminal
background checks, et cetera on any parents who are in custody
so that we are ready to go as soon as either the parent's
immigration proceedings are complete and we can reunify at the
time, say, of deportation, or, if asylum were granted, if they
were entered into the country, we could connect them then.
Or we, of course, have alternatives, if there are other
relatives, a parent who is already in the country, we would put
them with that parent or with other relatives here in the
country. We have to expeditiously get children out of care and
custody.
Senator Menendez. But you do not have a time frame?
Secretary Azar. Well, it is very much dependent--right now,
I would gladly put these children back with their parents in
the custody of ICE or Customs and Border Patrol, but I legally
cannot, because at the 20-day mark they have to be sent back.
We need Congress to change this 20-day limit on parent
unification.
Senator Menendez. Or we need to stop criminally prosecuting
them and allow them to alternatively----
The Chairman. Senator, your time is up.
Senator Portman?
Senator Portman. Thank you, Mr. Chairman.
I look forward to talking about drug pricing in a second.
But let me just comment briefly on this.
As you know, we spent a couple of years studying the issue
of unaccompanied kids, UACs. And HHS has, in my view, a very
difficult job to do, which is to help with regard to kids who
come without their parents. These are unaccompanied kids.
Now we have added to that with the separation of kids from
families, which I think was a bad idea. And I commend the
President for the executive order which changes that approach.
We now have to deal with the kids who are already in the
system.
But even though you have a very tough job to do, as you may
know, in the Obama administration and in the Trump
administration, I have not felt as though HHS has done a very
good job in a very tough situation, because they have not come
up with this agreement between the Department of Homeland
Security and HHS. There is a memorandum of understanding and a
commitment to come up with an operating agreement so we can
understand how the handoff occurs, who is in charge.
But as recently as April of this year, we had a hearing on
this. And HHS said that they were willing to take a fresh look
at the question of who has responsibility for these kids once
they leave an HHS detention facility or are placed with a
sponsor.
My concern is that nobody is responsible. And you know, I
got involved in this initially because of these eight children
who ended up coming from Guatemala, ended up at an egg farm in
Ohio because they were given to their traffickers--in the Obama
administration--rather than to a family that was going to take
care of them.
So my question to you today is--and again, I will get to
drug pricing in a second, which is next in my questions--but
one, you are taking a fresh look at this, as I understand it.
You have a July deadline to come up with this operations
agreement.
I do not know if you have followed this closely, but are
you on track on the operations agreement with DHS? And who is
going to be accountable or responsible for these children once
they leave a Federal Government agency's custody and go off
with a sponsor?
Secretary Azar. So we have a memorandum of agreement with
the Department of Homeland Security to ensure adequate and full
vetting of any potential sponsor. These are relatives. They are
either parents or aunts, uncles, adult relatives.
Senator Portman. Well, again, in the case of the egg farm,
they were traffickers.
Secretary Azar. Well, and that was--obviously, there was a
mistake; something happened. And so we have to have vetting,
including fingerprinting.
Senator Portman. Right. This is how we got into it, right?
So better screening, that is a good thing.
Secretary Azar. Screening, exactly.
Senator Portman. Yes.
Secretary Azar. Once they are placed with a sponsor, they
are no longer subject to our jurisdiction. We cannot sort of
pull a child back from a relative. We do not have the legal
authority. They are then under the State and local child
welfare laws, as well as, of course, they are subject to any
immigration proceedings that they may have.
But we do not have any authority to go out and pull a child
back from a sponsor once they are in that sponsor's custody.
That would be local child welfare authorities that would, at
that point, be accountable. Obviously, if we learn about it, we
would let the authorities know.
Senator Portman. And again, I want to get on to drug
pricing for a second here, but one of the concerns obviously is
that we were not even--and this goes back to the Obama
administration again, and the first part of the Trump
administration--not even telling the States that the kid was in
their jurisdiction. So, kind of hard for child welfare to step
in.
And again, there is an issue of getting these kids to their
hearing. I mean, that is the idea. More than half of them, we
think, are not showing up for the hearing, which is the whole
idea: to get them with a family pending their hearing on their
immigration status. So we have some work to do still.
I know you are aware of that. I just want to make sure you
knew that we are going back and forth with your team, and we
expect to have this operations agreement in place by July. It
was also committed to during our April hearing.
On drug pricing for a second, I know Senator Stabenow
talked about one of the issues that is a big deal to me, which
is how you deal with the opioid crisis and the people who need
naloxone, which is this miracle drug that reverses the effects
of an overdose. And specifically, the Evzio cost increases: 575
bucks for a naloxone autoinjector in 2014, just 4 years ago;
today over $4,000 for one of these things.
And so you go on your dashboard--which I applaud you for.
You have a dashboard now where you can see drug pricing
information more transparently, but it is very confusing
because it shows Part D spending per unit--this is for
Medicare, obviously--increased from 739 bucks to $4,500, and
the list price was actually below both of these. And when we
push on this, we are told, well, this does not include some
other information like the manufacturers' rebates or other
price concessions, which seem to run the other way.
But anyway, we have been pushing on this and trying to get
HHS to give us an answer. Why can't all that information be on
the dashboard? If consumers are really going to have the
transparency that you want and we want, why can't we also
include what is going on with regard to the rebates or other
prices concessions?
Secretary Azar. Well, taking it beyond the naloxone and
that particular drug instance, disclosing publicly negotiated
rebate rates is disclosing highly confidential information. Let
us say we took just any other regular drug and we started
publicly disclosing negotiated discounts. There could be very
serious anticompetitive issues with that, as there would be if
Walmart were forced to disclose their Tide discounts. Their
competitors would love to have that information more than
anything. So we have to be careful here.
We are happy to get you whatever information we have, but
that is just an initial reaction on that issue of disclosing
whatever the discounted rate would be on a particular product.
It would be a concern.
Senator Portman. I would think, you know----
The Chairman. Senator, your time is up.
Senator Portman. Well, these drugs are bought by the
taxpayer, not Tide. Tide is bought by some taxpayers, but it is
a different issue. So, one, with regard to us and consumers
getting the transparency on Medicare and Medicaid, I would
think we are going to end up there. We have to figure out a way
to provide that information.
The Chairman. Senator Bennet?
Senator Bennet. Thank you, Mr. Chairman.
Thank you, Mr. Secretary, for coming back to the hearing.
And thank you for your service.
Just along the lines of--slightly along the lines of
Senator Portman's original questions--did HHS have a role in
participating in the design of the administration's zero
tolerance policy at the border?
Secretary Azar. We deal with the children once they are
given to us, if they are unaccompanied. So we are not the
experts on immigration.
Senator Bennet. But you were not involved in planning
meetings on implementing----
Secretary Azar. It would not be appropriate for me to
discuss interactions within the administration. Our role is on
receiving the children, though, not on setting immigration
policy or the border.
Senator Bennet. To that end, Mr. Secretary, is the process
you described today a special process for reuniting the 2,300
kids with their families, or is this the existing process that
ORR uses for unaccompanied minors?
Secretary Azar. This would be the process we use for any
child in our care to ensure safe placement. Because, again,
unfortunately, it may seem like, oh, their parents, they came
across the border with them, they were separated, oh, just
reunite them automatically.
Unfortunately, these children are often being captured by
traffickers, gangs, cartels. That journey through Mexico is a
horrific journey of rape and violence and deprivation. And
often, the--not often, but we do see traffickers and very evil
people sometimes claiming to be the parent of children. So the
same protections we have for any unaccompanied children are
vitally important here in terms of confirming parentage and
vetting.
Senator Bennet. So I can appreciate why you cannot answer
precisely when every single child will be reunited with their
parents, but could you give the committee a sense of whether
you are talking about days or weeks or months? What is your--
what direction have you given HHS employees or contractors who
do the work that I am sure you feel as urgently about as we do?
Secretary Azar. So, yes, I and the President share the goal
of doing all the work, getting the children reunited. I cannot
reunite them, though, while the parents are in custody because
of the court order that does not allow the kids to be with
their parents for more than 20 days. I find it hard to imagine,
but we need Congress to fix that.
What I have ordered our team to do--I want the kids ready,
I want the parents confirmed and vetted so that we can place
them as soon as either Congress changes the law or the parents
are through their immigration proceedings and ready to be
deported or released, so that we are ready to reconnect them.
Now, in the interim, I have a separate legal obligation to
keep working to expedite if there are other sponsors in the
country--a different parent or other relatives whom I can place
them with--because I cannot have them with us any longer than
necessary.
Senator Bennet. So do you imagine that we will be having
this conversation weeks from now, or do you think this will be
resolved weeks from now?
Secretary Azar. If Congress does not change the 20-day
limit on family unification, then it depends on the process for
any individual parent going through their immigration
proceedings. As long as they are in detention, they cannot be
together for more than 20 days--absurdly, but it is the case.
Senator Bennet. What is the age of the youngest child who
is in HHS's care?
Secretary Azar. We have infants in our care. Senator, as
shocking as it sounds, we have always had infants in our care,
even just straight unaccompanied children just left on the
border as infants.
Senator Bennet. What is the youngest? What is the youngest?
Secretary Azar. It is zero. I mean, infants.
Senator Bennet. Infants.
Secretary Azar. We have infants. We always have, from
parents or smugglers or traffickers who leave or have lost a
child at the border and they are placed in our care. So we have
always, the program has always had, as devastatingly tragic as
that sounds----
Senator Bennet. And what happens, Mr. Secretary, if a
child's parent has already completed expedited removal
proceedings and has been deported? How is the child notified
and how long does a child have to wait to be reunified under
those circumstances?
Secretary Azar. So if the parent wishes to have the child
reunified, we will work, of course--because we have to confirm
the parentage and the vetting to ensure, even in a foreign
country, that the parent does not have any information, that we
do not have any information suggesting that we are placing the
child in jeopardy.
We work then, of course, with the home country for the
transfer of the child there if that is the parent's wish for
the child to be reunified. There are instances, however, where
a child may assert their own right to pursue asylum or other
claims that they have independent of their parents and may seek
to remain in the country and remain in our care because of
their or their lawyer's assertions.
Senator Bennet. And are children, Mr. Secretary, from
certain countries treated differently from children from other
countries? Or is everybody treated the same?
Secretary Azar. Everybody is treated the same within our
care. Immigration laws, as you know, are different, especially
with regard to contiguous countries, Mexico and Canada. There
are provisions that the Department of Homeland Security would
be expert in that are different on immigration laws and the
processes there around deportation that I am not the expert in.
But children in our care--we treat all of these children
the same and attempt to reconnect them, get them to sponsorship
as quickly as possible. And of course, it might be dependent on
cooperation with home countries getting us birth certificates
or other confirmation information.
Senator Bennet. Thank you, Mr. Secretary. Thank you, Mr.
Chairman.
The Chairman. Thank you.
Who is next now? Senator Carper?
Senator Carper. Thanks. Thanks so much.
Mr. Secretary, welcome. It is good to see you. Thank you
for your being here today and responding to our questions.
I want to just follow up just briefly on the issue of
children at our borders and families on our borders.
We are paying a lot of attention to the symptoms of the
problems, and we should. It is serious, and it needs to be
dealt with. It is not an easy issue to deal with.
I spent part of yesterday in New York City, and I was with
Jeh Johnson, who was the previous Secretary of Homeland
Security, talking about these very same issues from his
perspective as a Secretary of Homeland Security.
And one of the things that we discussed was how important
it is to get right what is going on on the border. And in the
spirit of Matthew 25--``When I was a stranger in your land, did
you welcome me?''--I think it is important for us to focus on
that and treat these kids the way we would want our kids to be
treated.
The other thing is, it is important for us to focus on the
root cause for why these kids and these families are coming to
our border. And I would remind my colleagues that about 20
years ago in Colombia, a bunch of gunmen rounded up the
Colombian Supreme Court members, took them into a room and shot
them to death. Shot them to death. And you had the drug lords,
you had the FARC, the leftist guerillas, almost working in
concert to bring down, weaken and bring down the government of
Colombia at a very desperate time.
Some leaders of that country stood up and said, ``We are
not going to let this happen to Colombia.'' And those leaders
were supported by Bill Clinton, President, Joe Biden, the
chairman of the Foreign Relations Committee, Dick Lugar, who
was the senior Republican on Foreign Relations, to come up with
something called Plan Colombia--Plan Colombia--which was, you
can do it, we can help in terms of stabilizing your country,
security for your country, economic opportunity in your
country. They had to do the heavy lifting, but we helped.
We have a similar approach. It is not called Plan Colombia
for Honduras, Guatemala, El Salvador. I call it--it is a Plan
Colombia for those countries, and it does many of the same
things that Plan Colombia has done.
We are in our third year on this program, and we need to
continue to fund it; we need to continue to do oversight on
that.
And the reason why these people are coming to our country
is because they live horrific lives. They are lives of
desperation--dangerous, high homicide rates, lack of economic
opportunity. We are complicit in their misery. That is why we
have a moral obligation to help them, and we are trying to do
that. So I would just leave that at your feet and my
colleagues' feet really.
I want to talk a little bit about value-based pricing. We
have talked about this before. I like to say, ``Everything I
do, I know I can do better.'' And I think that is true of all
of us, and that is true about the delivery of health care, and
a big piece of that is pharmaceuticals.
And as we have discussed before, transitioning to value-
based reimbursements for drugs is top priority to not just
reduce drug prices for seniors who might be in Medicare, but
also for our government, for our taxpayers, and for just
regular, ordinary people.
What are stakeholders and your policy experts telling you
about value-based contracting of prescription drugs and how
this policy could improve affordability for consumers and our
government programs and, ultimately, for taxpayers?
Secretary Azar. Well, Senator, thank you for your
leadership in the area of value-based payment. We are already
moving forward on that. Commissioner Gottlieb has just
recently, a couple of weeks ago, put guidance out to create a
better pathway for sharing of information and discussions
between pharmaceutical manufacturers and insurers around health
economic information and to plan on new product launches so
that they can actually collaborate and build those value-based
arrangements as quickly as possible.
We are working on guidance around government price
reporting and anti-kickback statute rules that can, again,
create a greater pathway around how private actors, and we, can
set up these value-based arrangements there. We all believe, as
you said, it is the future of how we need to pay for drugs, pay
for outcomes, pay for health care.
Frankly, I would love to see it if they could be more
incorporated into the overall holistic health of the patient,
more of a bundled notion. I think that is probably, long-term,
the future of value-based health care, more than just the
payment on the drug itself.
Senator Carper. What action do you need from us on this
side of the dais to enable you to implement value-based pricing
and to ensure that the spending for health-care services and
products is aligned to lower overall health-care costs? What do
we need to do?
Secretary Azar. So I believe we have the authority to
create these pathways around value-based reimbursement models
directly through the anti-kickback statute and government price
reporting.
If I find that our regulatory authority is limited, I will
come back to you and ask you for that authority, because it is
so critical.
The Chairman. Senator, your time is up.
Senator Carper. Mr. Chairman, I just want to commend you
and the ranking member for holding this hearing. I think this
is terrific.
The proposal from the administration is a broad proposal. I
just think it is like a baseball team that hits a lot of
singles and doubles. I do not know that there are any home runs
in their proposal, but a lot of singles and doubles.
And my hope is that we can work together and score some
points on the board for taxpayers and for citizens. It is great
that we are here doing this. And I appreciate the Secretary
being here.
The Chairman. That sounds like a triple to me, Senator.
[Laughter.]
Senator Cassidy?
Senator Cassidy. Secretary Azar, thank you for being here.
Let me start off with a specific drug, and then we will
build from that into a line of questioning.
You and I in the past have spoken of Gleevec, a drug which
was released in 2001, which used to be probably a couple
thousand dollars a year. Now I am told that it costs $8,800 a
year in Canada, and it costs $144,000 here in the United
States.
Now, as you and I both know, the way that the catastrophic
coverage works is that once somebody moves into the
catastrophic portion, the beneficiary is responsible for 5
percent of the list price, not the net price. And so I have a
former patient--only ``former'' because I am no longer
practicing. She is paying 5 percent of $144,000 for a drug
which has been released since 2001.
Now, my staff tells me that the company that has Gleevec
has extended the ability, the patent protection if you will,
with an agreement with the generic competition.
Now, Senator Stabenow asked, ``What do we do about this?''
And you responded, ``We need competition.'' I would say, what
do we do about Gleevec? Available since 2001, Canadians spend
less than $9,000; we spend $144,000. That is egregious, and my
patient can't afford 5 percent of the list price.
What do we do about that?
Secretary Azar. So, Senator, I may be misinformed here, and
I want to get back to you on this, but I do believe that
generic Gleevec is actually available.
Senator Cassidy. So then let us say that we are back in
2015 or 2016 in which this would apply and which, again, a drug
15 years after release is $144,000 a year. Because there will
be another Gleevec; if now there is a generic, there will be
another Gleevec.
How do we address that?
Secretary Azar. So one of the items in terms of
affordability that we have is in the President's budget--which
I would love the chance to work with the Congress and this
committee on--which would be to reform the Part D drug benefit
to actually create several changes, one of which would be a
genuine, for the first time ever--and I think Ranking Member
Wyden has a separate piece of legislation to this effect--a
genuine, out-of-pocket catastrophic----
Senator Cassidy. So let me pause on that. So one of the, as
we both know, but just for context, one of the pernicious
effects of the rebate system which we have is, it moves people
more quickly into the catastrophic. But even if the patient is
protected, the taxpayer is on the hook.
So I am looking here at a CMS report which says that the
Federal taxpayer outlays to PBMs had increased from roughly $11
billion in 2010 to $33 billion in 2015. And so the taxpayer is
getting hosed because of this. So even if we protect the
patient with our 5 percent, how do we protect the taxpayer?
Secretary Azar. And you are absolutely correct, and I am
really glad you raised that, because that is one of the five-
point changes to Part D that we have proposed in our budget to
actually reverse that incentive structure and the catastrophic
benefit to ensure that the pharmacy benefit manager is bearing
80 percent of the cost, taxpayers only 20 percent, so that the
PBMs have more skin in the game to get that list price
controlled, because we are going to be on the hook for that.
Senator Cassidy. So would we change so that it is only the
net price that counts in moving the patient to the catastrophic
as opposed to the list price?
Secretary Azar. It would be total expenditure, but that
would be because the list would do that. The PBMs would
actually have more incentive to get that list price controlled,
not just the net, because they are going to be bearing 80
percent of that in the catastrophic.
Senator Cassidy. Okay. And then I also see that one of the
proposals is that currently, or maybe one proposal is to get
rid of the rebate structure altogether, but another proposal is
that a third, at least a third, of the rebate would be returned
to the patient at point of sale. Why not 100 percent? Why
should the patient be forfeiting two-thirds of that rebate
amount?
Secretary Azar. I think as we get after the issue of
whether rebates should be allowed at all, that may be where we
end up in terms of fixed-price discounting pulled forward at
the point of sale completely.
In the budget proposal, we proposed a third. There
obviously is significant debate about the issue of pulling
forward rebates. We think it is the right thing that patients
should get the benefit of these rebates----
Senator Cassidy. So let me--because I only have 20
seconds----
Secretary Azar. It is not set in stone.
Senator Cassidy. I do not mean to cut you off. I am sorry.
Just in the interest of time--one more thing. If Part B does
not come into D, let us imagine another Gleevec within the Part
B space in which we are paying that, the U.S. taxpayer is
paying this, we are basically a price-taker, as you said, but
overseas they are paying far less. Why not reference pricing?
Why not say, okay, let us take our five biggest developed
countries--Germany, Japan, Australia, Canada, Britain, France,
you name them, pick five or six of those--and we are going to
have a price which is some multiple. It might be 1.6, it might
be 1.2, but it will not be 14 times, such as was the case with
Gleevec.
And so just imagining, again, within the Part B space, why
not reference pricing?
Secretary Azar. It is something we could look at. I would
rather use the tools of the competitive marketplace than price
fixing at the national level to keep patient choice and
patient----
Senator Cassidy. I will point out, that did not work with
Gleevec.
The Chairman. Senator, your time is up.
Senator Cantwell?
Senator Cantwell. Thank you, Mr. Chairman.
I am sorry I had to step out for a while, but I did hear
your opening statement. And I wanted to, because you mentioned
four things: list price, negotiating tools, cost share, and the
foreign outlook.
On plans for negotiating, one of the best negotiating tools
I think that is out there is the provision of the basic health
plan or essential plan that is now operating in a few States,
where families can have affordable--basically, the State ends
up negotiating. The State negotiates on behalf of a large group
of individuals, those who may not belong to a large employer or
an employer that does not have insurance.
So those can see as little as a $6 copay for generic drugs,
$15 copay for brand drug formularies, or a $3 copay for brand
drugs off the formulary. So in my mind, that is a great model.
Why? Because it is a negotiating tool by creating market
leverage by a large group of individuals who would not have
market power.
You know, I call it the Costco model. If you buy in bulk,
you should get a discount. So that State, in this case New York
or Minnesota, buying in bulk is getting a discount. Why
shouldn't we continue to look at that as a model?
Secretary Azar. So I want to learn more about how the basic
health plans are doing that. And as long as it is done in a
competitive framework of competitive insurance, as opposed to
with any preferential thumb on the scale that hinders any other
private insurance actors and choice in the system, I mean, any
kind of those collective aggregations that allow you to
negotiate is exactly what we do in Part D with the negotiating.
That is why we get such good deals in Part D through our
private plans.
Senator Cantwell. Well, I think you will find that in New
York, I think there are 13 different insurers that are bidding
into that market. What they like is that they know they are
bidding on 650,000 people, so they are willing to give a
discount.
Secretary Azar. Sure.
Senator Cantwell. So I am looking for market power for
individuals who are not finding it in other ways.
Secretary Azar. I am happy to look at that with you.
Senator Cantwell. Great; great.
Secretary Azar. Yes.
Senator Cantwell. I am sure a more thorny question--I have
in our State a woman, Ms. Guzman Colindres, who is being held
in Washington State. She was from Honduras and was seeking
asylum and now is separated from her child.
So I want to know--I know you have had a bunch of questions
here already--but what, beyond confirming the relationship
between child and parent and the criminal check, the
background, what else needs to happen for her to be processed?
Secretary Azar. Okay. So in terms of reunifying her with
her child?
Senator Cantwell. Yes.
Secretary Azar. Okay. First off, I want to ensure that she
knows where her child is. I want to make sure she is in touch
and they are able to communicate. If that is not happening,
please offline let me know, and we will, as with all of the
children and parents, want to make sure that is happening.
Senator Cantwell. She has not been able to talk to her
child, so I want to make sure that that happens.
Secretary Azar. We want to make sure that happens. We are
working--every parent and child, we want them in regular touch,
regular communication. So please, let me know offline; we will
get on that and make sure that that is happening.
In terms of reunification, once she is cleared, you know,
from a background check perspective, at that point it is really
if she completes her immigration proceedings, if she is granted
asylum into the United States, then she can be reunified.
If she ends up having a deportation order, we reunify at
that point.
The only thing that I cannot do is send the child back to
be with her while she is in a detention facility, because of a
court order allowing a max of 20 days. Congress could change
that; we hope they will so we could get these kids reunified.
Senator Cantwell. No, no. Mr. Azar, I think what you need
to hear is that this problem in her case, Ms. Guzman's case,
did not exist prior to this administration changing the law. In
that case, Ms. Guzman seeking asylum would have come to our
border, asked for asylum, and would have been processed in a
way that she was able to stay in the community with her child
and not be seen as a threat.
This administration is turning her into a threat. We want
due process. We want people to be understood. But people
seeking asylum should not be treated the same way as some
criminal that the President is now talking about incessantly.
We want people with criminal backgrounds to be stopped
before they even get into the United States, but we want those
who are seeking asylum not to end up in a detention center
never to be heard from again or have to be brought up at a
hearing as a way to get attention to their case.
Secretary Azar. And if they--I do not want to speak about
her case because I do not know it--but if they present at a
lawful border crossing as opposed to coming illegally into the
country, they will not be separated, they will not be arrested,
they are not violating the law.
So the challenge here is, she came in the country
illegally, and we have laws, and we are enforcing the laws.
Senator Cantwell. And I will want to find out, besides
doing that background check and the parentage, how long is it
going to take her to have that process? What are the other
steps that she will have to take?
Secretary Azar. Those would be the steps we would have to
take, but she has to be able to receive the child. And if she
is in custody, I cannot legally, because of the 20-day limit,
reunite her with her child.
Senator Cantwell. I am asking you how long it is going to
take you to do both of those things. So we are going to get
back to you on both.
Secretary Azar. Yes. We cannot--there is no deadline on it,
but as quickly as possible.
Senator Cantwell. I think that is what we want.
Secretary Azar. Well, the problem is, one has to confirm
parentage. If she is from Honduras, I have to get a birth
certificate from Honduras perhaps.
Senator Cantwell. I am going to talk to you about that too,
because I think there is technology that can help speed up this
process.
Thank you.
Secretary Azar. We would be happy to. Anything that will
speed it up.
Senator Cantwell. Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Casey?
Senator Casey. Thank you, Mr. Chairman.
And, Mr. Secretary, thank you for being here.
I wanted to ask you about the issue of preexisting
conditions. We are told this affects 130 million Americans, so
a lot of people are affected by it.
I know that when you were here last or, I am sorry, when
you were at the HELP Committee, Senator Hassan asked you a
question about it, and you said, regarding the issue of
preexisting conditions and the Attorney General's legal
position, you said, quote, ``We share the view of working to
ensure that individuals with preexisting conditions can have
access to affordable health insurance,'' unquote, and that you
also look forward to working with Congress, quote, ``under all
circumstances,'' unquote, to achieve that shared goal.
Because it does affect that many tens of millions of
Americans, to say there is an uncertainty with regard to this
because of what the administration said in a legal proceeding,
in a case, and what you have said here as Secretary--there is a
lot of uncertainty.
And if there is one aspect of our health-care policy that
needs absolute certainty, it is that both parties, both houses,
with the administration, are going to guarantee that no one who
has coverage now that has a preexisting condition will lose it
and no one in the future will have that uncertainty.
So I guess one of the first questions I have for you is,
what have been your recommendations to the President regarding
how you and the administration generally are going to maintain
those protections for people with preexisting conditions?
Secretary Azar. So, of course, my discussions with the
President are not something I am at liberty to discuss. But the
administration's position is we support, of course, Graham-
Cassidy, the proposal that is in the budget, the 2019 budget.
And as part of that, it would provide for States to have
alternative mechanisms to, say, an individual mandate as a
means of protecting preexisting conditions.
In terms of litigation, the litigation in Texas versus Azar
that you are referring to, in that litigation, that is a legal
position first, a constitutional matter regarding the impact of
the removal of the tax provision and then the impact on the
mandate and then, following the Obama administration's views of
construction there, that the other provisions must fall if that
provision falls.
We are operating the 2019 program under existing authority,
existing interpretations, as if everything is remaining as it
is. So we are doing everything to keep stability in the program
and operate the program as it is there.
Senator Casey. Yes. Mr. Secretary, why not take the
uncertainty off the table, just say we will support this policy
no matter what? You are not forced as a legal matter to take a
position. The administration has chosen to take that position.
There is no mandate that you take that position in a court of
law or otherwise.
Why not just say, we are going to make sure, by way of
policy, by way of any other action the administration takes,
that everyone who has a preexisting condition will have
coverage and treatment no matter what? Why not just make that
the position of the administration?
You do not have to tell me what you told the President, but
it ought to be clear to the American people what the
administration's policy is on preexisting conditions.
One hundred thirty million people--why not make it very
clear that that is, in essence, a broad statement of the
administration's policy or whatever the hell we call it these
days?
Just be clear about it and say that there is no question
that this administration, HHS, the White House, the Department
of Justice, no one, no institution, no entity in this
administration has a position other than we will guarantee--not
have access to coverage, guarantee--because that is what the
law provides today.
Why not say, we are just going to uphold existing law? You
can have your debates with us about a lot of other issues. But,
my God, why is this--why is there any uncertainty at all?
Secretary Azar. Well, of course we are upholding existing
law. And the position of the Attorney General is the position
as to what the existing law is in the statute and before the
courts.
But the policy position of the administration is that, in
whatever framework we have around the individual markets, we
support solutions to ensure people with preexisting conditions
have access to affordable insurance.
And we will work with Congress. If the Affordable Care Act,
if those provisions are found to be invalid, we will work with
Congress to continue the efforts to find alternative ways to
provide affordable insurance for people, including for those
with preexisting conditions.
Senator Casey. But, Mr. Secretary, that sounds like a lot
of legal mumbo-jumbo to people. Why not just make it clear that
the policy----
Secretary Azar. We are a country of laws, so we follow the
law, whatever the law happens to be.
Senator Casey. But this is not found in law, this is----
Secretary Azar. My policy preference does not become law.
Senator Casey. You can get to the same policy outcome by
saying we will ensure that people will have this protection.
The Chairman. Your time is up.
Senator McCaskill?
Senator McCaskill. Thank you.
I am going to follow up with the same topic Senator Casey
was on.
On Saturday, the President of the United States said at a
very public rally--he was being critical of Senator McCain who
voted ``no'' on the Republican plan to repeal and replace the
ACA. And then he said, I am quoting, ``It is all right, because
we have essentially gutted it anyway.''
Do you agree with the President's statement?
Secretary Azar. What the President I believe was referring
to----
Senator McCaskill. It is a simple ``yes'' or ``no.''
Secretary Azar [continuing]. Is that fact that without----
Senator McCaskill. Either you agree with the President----
Secretary Azar. Without the individual mandate, individuals
now are free, they are liberated from having to pay a tax to
buy insurance they do not want and cannot afford. And that is,
I believe, what the President was referring to.
Senator McCaskill. And have there not been other steps that
have also been taken that have gutted it, that are resulting in
much higher premiums on the individual markets this year?
Secretary Azar. No, the steps that we are taking are to try
to provide affordable options to individuals, the forgotten men
and women, the 28 million who have been locked out of this
unaffordable insurance in the individual market. We continue to
try to find affordable options for them in the system.
We have tried to work on a bipartisan basis to get Congress
to appropriate CSRs to stabilize that market there for this
year. Congress would not do that.
Senator McCaskill. So do you support CSRs being paid and
stabilized?
Secretary Azar. We did support what was at the time
bipartisan legislation to fund CSRs and create reinsurance.
There was not, at the end of the day, bipartisan support on the
Alexander-Collins-Nelson package that was at play.
Senator McCaskill. I think there is bipartisan support.
Secretary Azar. If there were, it would have passed, but it
did not.
Senator McCaskill. Well, I will just tell you, no, it has
not----
Secretary Azar. The President personally pushed for its
passage.
Senator McCaskill. Mr. Secretary, that bill has not even
been brought to the floor. Mitch McConnell has decided we are
not allowed to vote on that bill.
You all are in charge of health care. You control the White
House, you control Congress. And this bipartisan bill you speak
of, first of all, the President went back and forth as to
whether CSRs would ever be paid. You know that.
So, yes, we got together in a bipartisan way. And I think
the chairman will not argue with me about this. Those bills are
sitting there, and I think they've got 60 votes.
Inexplicably to me, the Republican Party--I have not seen
the President at a rally saying, ``Let us pass the CSRs.'' I
have not heard him at a rally saying. ``Let us stabilize with
reinsurance.''
I have heard him say, ``We have gutted it.''
So to just sit there----
The Chairman. Well, if I could interrupt for a second.
I have to say that Senator McConnell, the leader, would
have included this in the omni, but the Democrats objected to
that.
Senator McCaskill. Mr. Chairman, I will guarantee you this.
If Mitch McConnell will put on the floor the bipartisan pieces
of legislation that have been negotiated to stabilize the
markets, you will pass that by--I cannot imagine there is any
Democrat who would vote against that.
I do not know what the negotiations are in these magic
rooms that none of us gets to see. The same place the tax bill
was done, the same place appropriations bills are done--we do
not get to see what is going on. I do not know what is going on
in those rooms.
The Chairman. That is what happened.
Senator McCaskill. Well, I am not sure what happened, Mr.
Chairman, because we are not allowed to be----
The Chairman. I am.
Senator McCaskill [continuing]. Told or we do not see.
But I know this, that the President is proud that they have
gutted this.
And I want to offer into the record a very important
document, which is a document that was received, and it has not
been made public before, back in 2010 when the House was
investigating the way preexisting conditions were handled
before the ACA protections.
Mr. Chairman, I would ask unanimous consent to enter into
the record the ``Humana Agent Eligibility and Underwriting
Guide.''
The Chairman. Without objection.
[The document appears in the appendix on p. 82.]
Senator McCaskill. This document goes through--and by the
way, all the companies have this. I want people to remember
what it was like, because the administration has gone to court
to do away with preexisting conditions.
The Attorney General in my State has gone to court to do
away with preexisting conditions protections in the United
States.
There were 400 things listed, including high blood
pressure. And what it says in this document is, ``Below
conditions are permanent declines unless otherwise indicated,''
everything from autism to diabetes to pregnancy to high blood
pressure. Denying air traffic controllers and miners and
steelworkers the ability to get insurance--they were told they
were not supposed to write insurance for them.
It is stunning to me that we find ourselves in this place,
that this administration--and what they do is more important
than what they say, and what they are doing right now is going
to court and saying, do away with all of the consumer
protections that were put in the ACA to prevent millions of
people who have the 400 different conditions that said, do not
write insurance for these people, we do not want them.
So I understand that you can say that somehow it is our
fault that this legislation is not getting passed, but I think
the American people are going to make an independent judgment
on that.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Brown?
Senator Brown. Thanks, Mr. Chairman.
Chairman Hatch mentioned during his opening remarks that
over a month ago, President Trump hosted many of my colleagues
in the Rose Garden to tout his drug pricing blueprint,
promising, quote--this is our chairman quoting our President--
``massive cuts'' to drug prices. Weeks later, as the ranking
member pointed out, he doubled down on his commitment to the
American people.
I would like to point out that now a month later, we are
still waiting for these, quote, unquote, ``massive cuts'' that
the President promised. My guess is we will see dozens more
prices increase before we see any massive cuts.
So, Mr. Secretary, if you would answer this ``yes'' or
``no.'' Do you agree there are scenarios where pharmaceutical
companies increase the list price of their product and price
gouge consumers for no reason other than to increase their
profit margin?
Secretary Azar. Of course. We have seen examples of that.
Yes.
Senator Brown. Okay. Thank you. The fact that there is
absolutely no repercussion for a company that engages in this
type of predatory behavior is a problem surely that contributes
to our broken drug pricing system.
Do not take my word for it. Let me read briefly from a
letter I received from an Ohioan whose husband has Parkinson's
disease. She wrote, ``My husband takes numerous medications,
some of which are expensive, but one in particular gets my
attention. I noticed last year when I was preparing our tax
return, the retail price of this generic drug fluctuated
between $1,000 and $3,000 for a 90-day supply.'' She said, ``I
thought this was exorbitant, started asking why the price was
so high, though I did not get a satisfactory answer. So I was
doubly shocked when we last refilled our prescription, again,
for a 90-day supply. The price: over $6,000.''
It is getting so generic brands of drugs are costing more
than those that have not gone off patent yet. ``Because
Medicare cannot negotiate drug prices, it seems,'' her words
again, ``some unscrupulous companies see that as an open door
to gouge the government and to gouge all the rest of us too,''
unquote.
The incentives included in the administration's drug
pricing blueprint to lower prices or shift costs along the
supply chain are not enough to fix this broken system. There is
nothing in your proposal that will prohibit or penalize the
actions that are gouging Ohioans.
The government needs tools to prevent these companies from
jacking up the price of lifesaving drugs, like EpiPen or
naloxone, to jack them up overnight and make millions off the
backs of hardworking Americans whose lives--literally, lives in
these cases--depend on these medicines.
My Stop Price Gouging Act would give the government the
tools it needs to hold these bad actors accountable by imposing
penalties on corporations proportionate to the severity of
their price gouging--proportionate to the severity of their
price gouging.
It would hold bad actors accountable, something we rarely
do around here.
My question, Mr. Secretary, is, will you commit to
reviewing this legislation, which I introduced last year? And
will you commit to working with me on finding a way to prevent
pharmaceutical companies from price-gouging consumers, as you
acknowledge they sometimes do?
Secretary Azar. Absolutely--happy to work with you on that.
We agree, the price-gouging by sole-source generics--and our
plan actually does address that. We want to give Part D plans
the ability even midyear, if there is any price increase on a
sole-source generic, to allow the formulary to be reopened
immediately rather than waiting for the end of the year.
We also want to open up Medicaid rebates for those drugs so
that there would be uncapped liability based on that kind of a
price increase. And if there is a Part B drug, we have as part
of our budget proposal an inflation penalty there for any drug
increased above the rate of medical inflation, as you have
suggested also.
Senator Brown. Okay. I mean, that is just Part D, not
everyone. That is not everyone we need to protect, so work with
us on that.
Last thing, Mr. Chairman, in my last minute or so.
I know that many of my colleagues have already raised our
collective concern over the administration's actions to
separate children from their parents, something that is
shameful and embarrasses all of us as members of this
government.
While I understand policies at DHS and ORR remain in flux,
the situation continues, of course, to be extremely troubling
to anyone paying attention.
Last week, in response to reports that facilities under
your purview were preventing children from comforting one
another, I sent a letter to you and Secretary Nielsen
concerning the care provided for traumatized children at HHS
facilities.
Regardless of the topic, I have had trouble getting written
answers to my letters in this administration. So in the
interest of getting a timely response, I would like to ask you
to please commit to getting me a response to that letter by the
end of this week.
Secretary Azar. I have not seen that particular letter. I
will get you a response. I just responded this morning to--and
it may have been including your questions in the letter.
I can tell you, in terms of comforting, there are no ORR
restrictions on comforting of tender-age children or any other
provision other than, of course, State child protection laws
around that.
There was some media story. I have no idea. I have asked
about this. There is no basis for what that individual
reported. These are normal child care facilities subject to
State law.
These grantees, these charities, I cannot tell you how
seriously they take their mission to care for these children.
It is actually inspiring to see their work.
Senator Brown. I wish the administration, of which you are
a part, took equal care in caring for our children.
Thanks.
The Chairman. Senator, your time is up.
Senator Whitehouse?
Senator Whitehouse. Thank you, Mr. Chairman.
Secretary Azar, welcome.
I want to begin by echoing Senator Menendez's comments
about the imputed rural floor problem. Unless that is
corrected, you will be creating a market-shifting reimbursement
cliff around Rhode Island, differentiating it from
Massachusetts and from Connecticut.
We are not a very big State, so it really does not make any
sense to undo what has been the status quo for years. And we
will continue to work to try to make sure that we do not create
that anomaly.
I think we have had this conversation before. But as you
know, I think one can generally divide the pharmaceutical
market into three categories. One category is where there is a
functioning competitive marketplace. The other category is
where there is a legally approved monopoly protected under
patent law, for instance. And the third is where a company
enjoys a de facto monopoly, because there is not real
competition. And it is in that third sector of the
pharmaceutical industry that I think we have seen the worst
misbehavior.
And my concern is that you get these companies that come in
that buy up a drug manufacturer, add no value, invest in no
research, but simply crank up the price for speculative
purposes.
First of all, do you agree with me that these de facto
monopolies do exist in the prescription drug market?
Secretary Azar. I do. We have seen that with some of these
sole-source generics that Senator Brown and I were just talking
about.
Senator Whitehouse. Or even not a generic; just a
pharmaceutical that is outside of its patent could still have a
monopoly.
Secretary Azar. You could, if you see a branded company
abusing the patent system, the REMS programs, or other things
that we want to get after----
Senator Whitehouse. Or after the expiration of their
patent.
Secretary Azar. Exactly, anything that----
Senator Whitehouse. They could continue to have a de facto
monopoly.
Secretary Azar [continuing]. Prevents entry of a generic.
Right.
Senator Whitehouse. So the concern that I have is that we
are not seemingly addressing that problem. I know that you have
proposed reopening a formulary, but if you have a situation in
which a drug manufacturer has a de facto monopoly, they were
able to succeed at the original low price that the speculator
then came in, bought the company, and bid up, it is always
going to be within their capability, should a competitor
emerge, to drop back to their original price and price out the
competitor. So you can play the market in that way.
And the threat that somebody might reopen a formulary is
not very helpful in that case, because a wise speculator will
happily bet that nobody will come into that marketplace because
they can drop their price back again and price them back out.
It seems to me that we have tools that go back to the age
of grain silos and railroads and Ma Bell for dealing with
monopolistic behavior. Why not just use those time-tested tools
once a particular entity has been determined to have a de facto
monopoly and, in many cases, is not even a member of the
pharmaceutical industry, just a speculator trying to squeeze
money out of the system?
Secretary Azar. I think, Senator, that is a fair question,
to look at antitrust policies and competition law there in
those circumstances to see if monopoly power is being abused.
I do not purport to be an expert in DOJ or FTC antitrust
policies, but I think that is a fair question. I will follow up
on that. I think that is a fair thing to look into.
We do need to increase competition, though. I do think
still----
Senator Whitehouse. I think we all agree on that.
Secretary Azar. One of the things we asked about in the
blueprint was whether we are actually, in this country,
underpaying for and under-reimbursing for generics. We need a
strong, robust generic market.
We may be driving those prices so low that we are creating
manufacturing anomalies that lead to sole-source products there
with others exiting. We need to look at that and be open-minded
about whether we have actually made it too low even.
Senator Whitehouse. I think in the area of de facto
monopoly, it would be hard to identify an agency of government
that actually has responsibility in that area. And I do not see
DOJ showing any signs of life. So I think that is part of the
problem right there.
I will ask you a question for the record related to what I
am hearing are very significant problems getting drugs in
emergency rooms. And so just to flag that between us now so
that, when you see the QFR, you know that this was a question
that I was concerned about.
Mr. Chairman, thank you.
The Chairman. Senator Warner?
Senator Warner. Thank you, Mr. Chairman.
Mr. Secretary, it is good to see you again.
And I know this is a hearing about drug pricing today--and
I will come back to that--but I, like a number of my
colleagues, have some questions about the ongoing crisis of the
children at the border.
The Department of Health and Human Services has contracted
facilities to house thousands of unaccompanied minors,
including one in my State in the Shenandoah Valley, the
juvenile center near Stanton, VA, where there have been very
disturbing reports of abuse and lawsuits filed as a result of
those accusations.
I sent the administration multiple letters on the need for
us to get information back--Senator Kaine and I have. And my
hope would be that we can get those responses. And I would be
anxious to know if you would be able or willing to comment on
any of the accusations made about the center in Stanton.
Secretary Azar. Sure. So without regard to the particular
individuals involved, it is important to know that when we get
these children into our care, they are immediately evaluated
with a mental health and behavioral evaluation. As there are
with any children, with 12,000 children in our care, 60,000 per
year, there are going to be some children who need extra care,
some of which is mental health or may present a risk to
themselves or others.
We have contracted with some facilities, including the one
you mention, that specialize in juvenile care of a special need
for those who may be a risk to themselves or others. Our
children are kept separate from the rest of the juvenile
population. It is a separate grant provision. They are required
to fully comply with all State licensure, State laws around
medication, et cetera.
We oversee that. The State licensing authorities oversee
that. Obviously, we take any allegations very seriously here.
We want proper and appropriate care for these children, so any
allegations are quite disturbing.
I have seen nothing to confirm the nature of those
allegations, but we will certainly respond to and work with you
on that.
Senator Warner. My hope would be--the reports have come up
of minors being kept in solitary confinement for 23 to 24
hours, to being strapped to a chair, to being strapped to a
chair without any clothing, to having bags put over their head,
all practices that both seem inhumane and worthy of a great
deal of review.
Now, I just wonder--understanding you may not be able to
speak to the specifics of what happened in Stanton--what level
of training does the ORR provide for guards in these type of
facilities? If in fact these actions took place, I would hope
that we would put training regimes in place that would not
sanction such behavior.
Secretary Azar. So again, without in any way being able to
confirm the validity of any of those types of allegations, this
would be subject to State requirements and licensure around the
care of children in any kind of custodial arrangement, and so
whatever the commonwealth of Virginia's licensure requirements
are and oversight there, in addition to ORR oversight.
I do not know that we have separate training in addition to
State licensure requirements around the care in those juvenile
detention facilities. I will be happy to get back to you on
that, because I do not know the answer to that question.
Senator Warner. We have sent a couple of letters. The
sooner you can get me a response on those, the better.
Secretary Azar. Thank you.
Senator Warner. Let me move for a moment to an area that
Senator Whitehouse was already talking about, and that is
around the pricing of generic drugs.
We saw a great deal of relief 15 years ago. But as you have
indicated, generics were priced right below the price point or
sometimes margins were so thin that companies would not
continue to produce, particularly, older patented drugs. And
the ability to keep competition in the generic marketplace has
dramatically declined. In many areas, we may only have one
generic.
What tools has the administration proposed or can you or
CMMI use to try to increase more generic competition and
actually build enough of a market here where there might
actually be, in addition to the brand, three or four generics
to provide the kind of price competition that we need to bring
drug prices down?
Secretary Azar. I absolutely agree with you. And certainly,
if you have any suggestions, I would welcome them.
We are working, the FDA Commissioner is working, to ensure
that as we have any product approaching sole-source status as a
generic that we are making clear to the other manufacturers
that that is a market opportunity. We will make expedited
pathways for generic approval, streamlining any processes we
have to get products to market there to compete and bring them
in.
We need to look on the reimbursement side. That is where
the request for information has asked for insight there.
Again, any help you can provide, ideas--open door, please.
Senator Warner. I would love to sit down with you on that,
because I do think with pricing transparency and, again, more
knowledge within the marketplace of possible opportunities, we
can actually see whether the market will perform or not or
whether we need, as Senator Whitehouse and I tend to agree,
other things to kind of spur this type of competition.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
My partner would like to ask a question or two.
Senator Wyden. Thank you, Mr. Chairman.
I have one last pharmaceutical question and then a matter
that we have to clear up. And I will do that as part of my
closing remarks.
Now, Mr. Secretary, earlier I asked you what you were doing
to help the 42 million seniors on Medicare Part D with their
skyrocketing prescription drug bills. You deflected the
question by talking about other matters.
And after asking you again what you were going to do to
help the seniors on Part D--and I have your exact quote here--
you said this morning you hope that the big drug companies will
exercise pricing restraint.
As we begin to wrap this up, Mr. Secretary, I just have to
tell you, to get real pricing relief for those millions of
seniors I have been asking about on Part D, it is going to take
a whole lot more than your hopes that your former CEO pharmacy
colleagues are just going to step in and help those seniors.
So my last pharmaceutical question is going to deal with
another matter that will determine whether we are actually
going to get some results here or just continue to make these
vague promises.
Press reports indicate you and your office are negotiating
directly with drug makers to lower the price of drugs like
insulin for patients who pay cash for their drugs. Is that
correct?
Secretary Azar. That story was a mystery to everybody I
have spoken to at my department. We have no idea what that was
in reference to.
Senator Wyden. So it is not correct.
Secretary Azar. I am not aware of negotiating that CMS is
doing around cash payment on any product.
We are having discussions, of course, with drug companies
that are thinking about decreasing their list prices to see if
we can help clear barriers, do anything in the channel--as I
have mentioned to you privately--working to see how that can be
facilitated to drive prices down.
But that story was a mystery to everyone I asked about it.
Senator Wyden. Then let us make sure we understand what
these conversations are all about. You do not see them as
negotiating about anything.
Secretary Azar. No. No. If companies are seeking to lower
their prices and they are facing barriers from wholesalers or
pharmacy benefit managers, we are attempting to see if we can
clear any barriers that we have--regulatory, political, or
otherwise--around that to help facilitate that.
Also, you know, anything that we do, Senator--you made a
statement about my previous answer, and I think you sort of
cabined it as if it did not relate to Part D. Anything that we
do to lower list prices will help our patients in Part D
because of their cost sharing. Our five-point plan that is in
our President's budget would decrease patient out-of-pocket
cost sharing by tens of billions of dollars if only Congress
will pass the five-point plan that we have.
We want to fix the Stars system and protected-class system
to allow genuine negotiation against the drug companies in Part
D, where now they are not paying commercial-level rebates in
Part D. We would empower greater competition there.
Senator Wyden. Mr. Secretary, you are a smart fellow and
good at this, but that is not what you said. You said----
Secretary Azar. Well, I have said it now.
Senator Wyden. Well, great. But you earlier said you hope--
I am just reading it to you--you hope they will exercise
restraint.
Secretary Azar. That is one we can all--listen, I would
love it if drug companies cut their drug prices just on their
own now. It would be great also if there were no price
increases. That is not our plan.
Our plan is that we create the regulatory and financial
incentives--competition, negotiation, out-of-pocket payment
incentives--to lower list price. That is our plan. Those would
simply be ancillary benefits.
Our plan is to get that to happen by our actions. That is
what I meant.
Senator Wyden. Well, Mr. Secretary, I just want to wrap up
with one other very disturbing aspect of the hearing.
You told me a little bit ago that the Department has 2,047
kids in its custody, so----
Secretary Azar. That are separated. We have about 12,000
unaccompanied minors in our program.
Senator Wyden. So a little bit after you made that
statement, you said the Department has 2,053 kids. And that was
the same number that was reported 6 days ago.
Secretary Azar. Actually, that was the number in a press
release yesterday. By the evening, it was down to 2,047. It is
obviously a fluid situation, but by evening--it is just the
press release shows the 2,053. But as of last night, the last
information is 2,047. We have them, they are in the system. It
is not like there is a mystery here. It is just--as we outplace
these kids to parents or to their relatives, that number will
change.
Senator Wyden. Mr. Secretary, the point is, in both of
these areas that we have talked about today, and with respect
to prescription drugs, I do not think you are going to fix the
problem of skyrocketing prescription drug bills if your former
industry colleagues get off the hook by your signaling at a
hearing like this that you hope that something might happen.
And I do not think we are going to solve this calamity of
kids being separated from their parents at this kind of pace. I
mean, no matter whether we are talking about 2,053 or 2,047, it
is going to take you months and months and months to bring
these kids back to their parents and back to safety.
So on both counts, I sure hope--and you are a smart guy,
there is no question about that--I sure hope we are going to
see action rather than this continued effort to offer us rosy
projections and happy thoughts that, for seniors, are not going
to help them when they get mugged at the pharmacy window and,
for the kids, are not going to help them get to safety anytime
soon.
Thank you, Mr. Chairman.
The Chairman. Okay.
Senator Whitehouse. Mr. Chairman, may I ask unanimous
consent before we conclude?
The Chairman. You want to ask a unanimous consent? Go
ahead.
Senator Whitehouse. I would like to, related to the imputed
rural floor issue.
The Chairman. Sure.
Senator Whitehouse. I have a letter from the Hospital
Association of Rhode Island expressing its concern about the
boundary effects that this will create. Also, a letter from our
Governor, Governor Raimondo, expressing her concern. And also,
a delegation letter from the entire Rhode Island delegation to
Administrator Verma.
Mr. Chairman, this is important to us. It is not like----
The Chairman. We will make those part of the record.
[The letters appear in the appendix beginning on p. 166.]
Senator Whitehouse. Thank you.
The Chairman. Okay. Thank you.
Senator Casey. Mr. Chairman?
The Chairman. Yes?
Senator Casey. I know we went to a second round, may I
ask----
The Chairman. No, we are not going to a second round. I
think we have to respect--what?
Senator Wyden. Can Senator Casey ask one question, like I
did?
The Chairman. Sure, you can ask one question, but I am not
going to a second round.
Senator Casey. Okay.
The Chairman. I think the Secretary has been more than
gracious. He has answered every question, and he has answered
them well, as far as I am concerned.
Go ahead.
Senator Casey. Mr. Chairman, thank you.
I know the Secretary has been here a while.
Just very briefly. This issue of children at the border and
the separation policy--I have said it is a policy straight from
the pit of hell. I think most people agree with that.
I know the executive order is in place. The problem,
though, is zero tolerance led to the problem of separation.
Zero tolerance will continue to separate children, unless you
change and have alternatives to that policy.
But here is my question. You have read, I know, Mr.
Secretary, all of the statements made by medical professionals
all across the country. This is one from The Washington Post,
Dr. Charles Nelson, pediatrics professor at Harvard Medical
School, quote: ``The effect on children'' would be, quote,
``catastrophic.''
You heard from the Academy of Pediatrics. We have all read
those statements about the adverse and long-term, permanent
damage it does to children, some of those damages being
inflicted as well even if they are with the parent in
detention.
So the one question I have for you is, what, if any, of
these organizations that live their lives to give us
information about the effect of policy like this on children,
whether it is the Academy of Pediatrics, the American
Psychiatric Association, for folks with children and
individuals with disabilities, the Association of University
Centers on Disabilities--did HHS in the lead-up to this policy
or once the Attorney General announced zero tolerance, did you
or anyone at HHS--and if you are aware, did anyone at the
Justice Department--ever consult with the American Academy of
Pediatrics?
Secretary Azar. So first, I want to share your concern.
None of us--none of us--wants impacts on these children, none
of us wants the separation. We do everything we can to mitigate
any impact on these children with mental health care, medical
care, dental, vision, education, activities, athletics.
We try to ensure as happy, as safe, as good an environment
for these children through people who exercise real compassion
on them.
I am not aware of engagement with any of those particular
groups. I believe Dr. Ellie McCance-Katz, our administrator for
SAMHSA, has been working with ORR with her expertise, her
psychiatric expertise. I believe that is the case.
Certainly, our grantees are trained in and are expert in
clinician care. Every child goes through mental health
evaluation and mental health care when they are there. But it
is not a desirable situation to have children separated from
their parents.
Listen, at the up-front, if the parents did not bring them
across illegally, this would never happen. We are where we are
in terms of--once they are separated, we want to reunite them.
If Congress will get rid of the 20-day ban on family
unification, we will act so quickly to get those kids back
together with their parents. But as long as I have a court
order not allowing that integration with the family, it blocks
me.
We want that to happen. We want the reunification. We want
these kids well cared for.
Senator Casey. Well, I know we have to go.
But, Mr. Secretary, I will submit to you some questions in
writing for you to answer as part of the record with regard to
kids with a disability, kids with Down syndrome, how they are
being cared for, how many kids you have under your care. So I
will be submitting those for the record.
Mr. Chairman, thank you for the extra time.
The Chairman. Thank you, Senator.
And I just want to say, you know, I have been here 42
years. And I have seen a lot of witnesses in my time, and
certainly a lot of them on health care, and a lot of witnesses
who have been in your position. I have never seen a better
witness than you. You are clearly very competent. You are
clearly doing a really good job. You clearly have been saddled
with some really, really tough problems. And I have confidence
that you will handle them expeditiously and well.
So I am really, really proud of you, to be honest with you.
And I think everybody in America ought to be proud of you and
ought to be glad that you are in this position.
Finally, to add further clarity to what occurred on the
Alexander-Collins stability package, I want to note that when
Senator Collins asked for a unanimous consent agreement to call
up and pass the amendment, Senator Murray objected. The
Democrats seem to have no interest in working with us to
stabilize the individual market. So it is nice to pretend
otherwise, but that is really what happened. And it was pretty
disturbing to me.
Mr. Azar, I have been around a lot of Secretaries in my day
and have chaired three major committees. You have had some of
the worst problems I have seen in the history of my 42 years.
And I want to personally extend my congratulations and
compliment you for the efforts that you have put forth, for the
work that you have done, for the care that you have exhibited,
and for the kindness that I have seen.
Keep it up. These are tough times; these are tough issues.
These families are all suffering. These kids are in danger. And
I am just glad you are there. And I think people ought to be
thanking you rather than criticizing you.
Well, I would like to thank everybody for their attendance
here and participation today in this particular hearing. And
again, thank you, Secretary Azar, for your excellent testimony.
I ask that any member who wishes to submit questions for
the record do so by the close of business on Tuesday, July
10th.
And with that then, this hearing is adjourned.
[Whereupon, at 11:50 a.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Alex M. Azar II, Secretary,
Department of Health and Human Services
Mr. Chairman, Ranking Member Wyden, and members of the committee,
thank you for the opportunity to appear before you to discuss an
important issue: why prescription drug prices are too high, and what we
are doing about it. I know members of this committee are serious about
taking on this challenge.
Drug pricing was one of the very first topics I mentioned when I
appeared before this committee during my confirmation process earlier
this year, and I appreciate the Finance Committee's efforts in this
area.
From Day One of his administration, President Trump has directed
HHS to make drug pricing a top priority. Too many of our family
members, neighbors, and friends have worked hard their entire lives
only to see their savings wiped out just to afford drugs they need to
live.
Earlier this year, the President's 2019 Budget laid out a range of
proposals for lowering drug prices, including through reforms to
Medicare and Medicaid.
In May, building on the budget, the President released a blueprint
to put American patients first by lowering drug prices and reducing
out-of-pocket costs. This blueprint is a plan of action for how to
bring prices down while keeping our country the world's leader in
biopharmaceutical innovation, and lays out dozens of possible ways HHS
and Congress can address this vital issue. Some of these proposals came
out of Congress, and we look forward to working with you as we take
action.
Over the last decade, four significant problems have arisen in the
pharmaceutical market: high list prices set by pharmaceutical
manufacturers; seniors and government programs overpaying for drugs due
to lack of the latest negotiation tools; rising out-of-pocket costs;
and foreign governments free-riding off of American investment in
innovation.
The President's blueprint lays out four strategies for tackling
these problems, and we have begun to take action on each of them
already.
First, we need to create the right incentives for list prices. I
know firsthand the serious problems with today's complex system of drug
pricing. Right now, everyone in the system makes their money off of a
percentage of list prices: both drug companies and pharmacy benefit
managers, who are supposed to keep prices down. Everybody wins when
list prices rise--except for the patient, whose out-of-pocket cost is
typically calculated based on that price.
One of HHS's initial actions is working to require drug companies
to include their list price on their television commercials. For
example, Americans deserve to know the price of a wonderful new drug
they hear about on TV--before going to ask their doctor about a product
they may find unaffordable. But more fundamentally, we may need to move
toward a system without rebates, where PBMs and drug companies just
negotiate fixed-price contracts. Such a system's incentives, detached
from artificial list prices, would likely serve patients far better.
Second, we need better negotiation for drugs within Medicare--that
is what President Trump has promised, and it's what we're going to
deliver.
In Medicare Part D, HHS will work to give private plans the market-
based tools they need to negotiate better deals with drug companies.
Part D is a tremendously successful program, but it has just not kept
pace with innovations in the private marketplace, leading seniors and
taxpayers to lose out. Well-intended patient protections may be
preventing prescription drug programs from appropriately managing
utilization, even in accordance with the formulary created by doctors
and pharmacists and approved by CMS. While everyone agrees in the
importance of the drugs in Part D's protected classes list,
manufacturers often use that list as protection from paying rebates.
We also want to bring negotiation to Medicare Part B, physician-
administered drugs. Right now, HHS just gets the bill, and we pay it.
This system may actually be driving doctors to prescribe more expensive
drugs, while potentially tempting drug companies to develop drugs that
fit into Part B rather than D. We are going to look at ways to merge
Part B drugs into Part D, to create competition where savings can be
safely obtained, and leverage existing private-sector options within
Part B.
Third, we need a more competitive pharmaceutical marketplace.
Thanks to the reforms Congress passed in the 1980s, America has the
strongest generic drug market of any country in the world.
But there are still too many ways that drug companies are unfairly
blocking competition. Since the rollout of the Trump administration
blueprint, FDA has publicized the names of companies who may be using
safety programs to block competition, and issued two new guidances to
help lessen the effects these actions may have on generic approvals.
This work follows many FDA accomplishments under Commissioner Scott
Gottlieb, including record-setting generic drug approvals in 2017 and
measures to build on Congress's work to build a market for biosimilars.
Finally, we need to bring down out-of-pocket costs for American
patients. Patients should not be dropping their drug regimen because of
high costs. Since the blueprint rollout, CMS has reminded Medicare Part
D plans of its existing policy which requires plan sponsors to ensure
enrollees pay the lesser of the Part D negotiated price or copay, or be
subject to CMS compliance actions making it unacceptable to bar
pharmacists from working with patients to identify lower cost options.
More broadly, you ought to know how much a drug costs, how much it's
going to cost you, and whether there are any cheaper options, long
before you get to the pharmacy counter. We look forward to working with
Congress and stakeholders to understand how best to deliver this level
of transparency.
Thank you again for having me here today. What I have laid out are
just some elements of an aggressive, long-term plan to solve the
problem we all care deeply about. I look forward to taking your
questions and discussing ways we can work together to bring down
prescription drug prices and help American patients.
______
Questions Submitted for the Record to Hon. Alex M. Azar II
Question Submitted by Hon. Orrin G. Hatch
Question. One of the world's most pressing public health problems
is the emergence of bacterial infections that are resistant to
antibiotics. According to the Centers for Disease Control and
Prevention (CDC), at least 2 million Americans fall sick every year
with antibiotic-resistant infections--and of that number, sadly,
approximately 23,000 people die.
Federally mandated infection control and stewardship programs,
combined with clinical best practices, encourage limiting antibiotic
use to appropriate cases. While reducing the inappropriate and
unnecessary use of antibiotics can slow how quickly bacteria become
resistant to current therapies, this alone will not solve the problem.
Manufacturers must develop new or improved antimicrobials. But when
used appropriately, antibiotic therapies designed to treat high-
priority infections are generally going to be low-revenue, low-volume
products. As a result, drug development in the antimicrobial space is
expensive and risky. The financial reward to bring priority antibiotics
to market is low. One study estimates that there have been sixteen new,
brand name antibiotics approved for use since 2000. Only 5 generated
annual sales of more than $100 million. Poor return on manufacturer
investment as well as gaps in scientific research pose significant
barriers to develop new and novel antibiotic therapies.
At today's hearing we are examining ways to encourage greater
prescription drug innovation, competition, and affordability. Part of
that plan should include appropriately incentivizing drug manufacturers
to create new antibiotics. Over the years, Congress has implemented a
number of new policies to respond to this crisis. Specifically, in
2012, legislation I authored called the Generating Antibiotic
Incentives Now (GAIN) Act was signed into law. This law gave companies
enhanced tools that encouraged development of new antibiotics and
allowed an expedited FDA approval process for antibiotics that treat
life-threatening infections.
Mr. Secretary, I would like you to provide me specific and detailed
recommendations outlining how you believe Congress and the
administration--this time working together on solutions--can refine the
Medicare inpatient prospective payment system to help hospitals cover
the cost of new antimicrobial drugs that are designed to be used only
as a last line of defense to treat resistant infections. Just last
month FDA Commissioner Scott Gottlieb announced he has talked to CMS
Administrator Verma about the feasibility of designing a new
demonstration program focused on a license-based reimbursement model.
While the specific details of this policy have not been publicly
unveiled, I ask for your personal commitment to regularly provide me,
and the other members of the Senate Finance Committee, updated
information about the administration's work on this cross-agency
initiative. It is critical that you share any research, data, and
recommendations that identify ways Congress can improve current law in
order to spur innovation in the antibiotic class.
Answer. The increase in serious antimicrobial drug resistant
infections is a critical public health concern and a growing threat to
patients. Developing new drugs is a costly endeavor. If product
developers know that they will not be able to recoup their investments,
there may be reduced incentive to invest the significant money needed
to discover and develop such a drug.
We are currently discussing ideas as part of the FDA's broader
policy work in this area. We plan to release more information soon and
look forward to working with Congress as we further our thinking.
______
Questions Submitted by Hon. Chuck Grassley
udi
Question. Secretary Azar, Senator Warren and I have long supported
the inclusion of medical device identifiers on the Medicare claim form
\1\ and have urged both CMS and FDA to work together to implement this
recommendation supported by HHS OIG \2\ and MedPAC.\3\
---------------------------------------------------------------------------
\1\ Letter from Senator Elizabeth Warren and Senator Chuck Grassley
to Marilyn Tavenner, Administrator, Centers for Medicare and Medicaid
Services (December 22, 2014); letter from Senator Elizabeth Warren and
Senator Chuck Grassley to Daniel Levinson, Inspector General,
Department of Health and Human Services, August 12, 2015, https://
www.grassley.senate.gov/sites/default/files/news/upload/
2015.08.06%20UDI%20Letter%20to%20OIG.pdf; letter from Senator Elizabeth
Warren and Senator Chuck Grassley to Sylvia Matthews Burwell,
Secretary, Department of Health and Human Services, March 8, 2016,
https://www.grassley.senate.gov/sites/default/files/news/upload/
2016_03_09%20CEG%20to%20HHS%20regarding%20UDI.
PDF; letter from Senator Elizabeth Warren and Senator Chuck Grassley to
Gary Beatty, Chair, Accredited Standards Committee X12, August 29,
2016, https://www.warren.senate.gov/files/documents/2016-8-
29_UDI_letter_to_ASC_X12.pdf; ``Senators Warren and Grassley Comment on
HHS Report on Medicare Savings From Inclusion of Medical Device
Identifiers on Claim Forms,'' October 4, 2016, https://
www.warren.senate.gov/?p=press_release&id=1270; letter from Senators
Elizabeth Warren and Chuck Grassley to Seema Verma, Administrator,
Centers for Medicare and Medicaid Services, November 8, 2017, https://
www.warren.senate.gov/files/documents/
2017_11_08_Letter_to_CMS_re_UDI_and_claims.pdf; letter from Senators
Elizabeth Warren and Chuck Grassley to Scott Gottlieb, Commissioner,
Food and Drug Administration, June 12, 2018, https://
www.warren.senate.gov/imo/media/doc/2018.06.12%20Letter%20to%20
Gottlieb%20on%20UDI%20and%20claims.pdf; letter from Senators Elizabeth
Warren and Chuck Grassley to Seema Verma, Administrator, Centers for
Medicare and Medicaid Services, November 8, 2017, https://
www.warren.senate.gov/files/documents/2017_11_08_Letter_to_CMS
_re_UDI_and_claims.pdf; letter from Seema Verma, Administrator, Centers
for Medicare and Medicaid Services, to Senators Warren and Grassley,
January 8, 2018; letter from Senators Elizabeth Warren and Chuck
Grassley to Scott Gottlieb, Commissioner, Food and Drug Administration
June 12, 2018, https://www.warren.senate.gov/imo/media/doc/
2018.06.12%20Letter%20
to%20Gottlieb%20on%20UDI%20and%20claims.pdf.
\2\ Department of Health and Human Services Office of Inspector
General, ``Shortcomings of Device Claims Data Complicate and
Potentially Increase Medicare Costs for Recalled and Prematurely Failed
Devices,'' September 2017, https://oig.hhs.gov/oas/reports/region1/
11500504.
pdf.
\3\ Medicare Payment Advisory Commission, ``Report to the Congress:
Medicare and the Health Care Delivery System,'' June 2017, p. 234,
http://medpac.gov/docs/default-source/reports/
jun17_reporttocongress_sec.pdf.
Do you agree with HHS OIG and MedPAC that including device
identifier information in the Medicare claim form could improve
identification and tracking of medical devices and strengthen post-
---------------------------------------------------------------------------
marketing safety efforts at the FDA?
In addition, do you feel the addition of device identifier
information to the Medicare claim form could be a crucial addition to
the program integrity of Medicare?
Answer. It is CMS's understanding that the Accredited Standards
Committee X12 (ASC X12) proposed package for the next version of the
claims form will include the device identifier (DI) portion of the
unique device identifier (UDI) for high-risk implantable devices
between willing trading partners. After ASC X12 moves forward the
package for the next version of the claims form, the process continues
with consideration by the National Committee on Vital and Health
Statistics (NCVHS). NCVHS may hold hearings and obtain input from
stakeholders in preparation for development of its recommendations to
HHS. CMS looks forward to receiving recommendations from NCVHS and the
completion of the standards development process. CMS would then
consider whether to proceed with notice and comment rulemaking, which
would be necessary to adopt the standards.
liver transplants/unos
Question. On June 27, 2018 a bipartisan Iowa delegation wrote your
office regarding the Organ Procurement and Transplantation Network/
United Network for Organ Sharing (OPTN/UNOS) and a proposal published
in August of 2016 titled Redesigning Liver Distribution.
The delegation expressed grave concerns about this proposal as the
University of Iowa estimates it would reduce by 15 percent the number
of liver transplants performed annual at UI (the only liver transplant
center in Iowa).
The letter went on to say that a compromise was reached by the OPTN
board in December 2017. Our letter was written to draw this important
topic to your attention.
Will you work with my office and the offices of the State of Iowa
to ensure that the distribution of livers for transplantation remains
fair and unbiased?
Answer. The Health Resources and Services Administration (HRSA) is
committed to ensuring fairness and equity in organ allocation policies
consistent with the statutory and regulatory requirements. HRSA
continues to rely on the independent expertise of the Organ Procurement
and Transplantation Network (OPTN) and its members, which includes
stakeholders that are part of the transplant community and other
interested members of the public, to consider and address the
requirements of the OPTN final rule as organ allocation policies are
developed and revised. This approach ensures that transplant
professionals who directly engage in patient care as well as transplant
patients, donors, and donor family members have the opportunity to
bring their experiences and public comments directly to the process of
developing organ allocation policies.
HRSA encouraged all stakeholders and members of the public with an
interest in liver allocation policy to share their views with the OPTN
as part of the public comment process. The OPTN will continue to
evaluate any proposed liver allocation policy in light of all of the
requirements of the OPTN Final Rule, public comments received, and any
relevant data.
dir fees and pbm transparency
Question. Recently, you stated that you will direct HHS' OIG to
study PBM practices specifically as they impact community pharmacies.
Given the lack of transparency surrounding PBM practices, how will this
study or other efforts by the administration bring increased
transparency to PBMs keeping ``spread'' profits that effectively
increase patients' out-of-pocket costs?
Will a study address retroactive DIR fees that also effectively
increase patients' out-of-pocket costs?
Answer. The Department believes addressing the role of PBM
practices under the Part D program is an important component to
addressing high drug prices for American consumers. As pointed out in
the President's blueprint to lower drug prices, because health plans,
pharmacy benefit managers (PBMs), and wholesalers receive higher
rebates and fees when list prices increase, there is little incentive
to control list prices. Consumers, however, pay higher copayments,
coinsurance, or pre-deductible out-of-pocket costs when list prices
rise. The President's blueprint recognizes the major role played by
PBMs in using new utilization management tools to widen the gap between
list prices and net prices. Such recognition is a starting point for
debating and considering potential policy alternatives to ameliorate
these misaligned incentives in the Part D program.
In releasing the blueprint, the Department also issued a Request
for Information (RFI) on issues raised by the blueprint, including
comment from stakeholders on possible changes to the Part D benefit
structure. Further, CMS issued a RFI as part of the 2019 proposed Parts
C and D rule (CMS-4182-P) which sought feedback from stakeholders
regarding issues relating to Part D drug prices in which PBMs play a
major role. The Part C/D Drug Pricing rule recently proposed by CMS
describes action it is considering in future benefit years to address
retrospective pharmacy DIR.
Additionally, the President's FY 2019 budget contains several
policies to modernize the Part D drug benefit to improve plans' ability
to deliver affordable drug coverage for seniors and reduce their costs
at the pharmacy counter, including efforts to address the misaligned
incentives of the Part D drug benefit structure, such as requiring
Medicare Part D plans to apply a substantial portion of rebates at the
point of sale.
drug prices and competition
Question. In the President's blueprint to lower drug prices, the
need to increase competition is highlighted. In addition, the blueprint
focuses on the need to end the gaming of the regulatory processes that
keep drug prices high or that hinder generic competition. I could not
agree more.
S. 974, CREATES, is a bill that targets abuses that undermine free-
market competition and the integrity of the Hatch-Waxman Act process.
The CREATES Act will actually send more parties to the bargaining table
instead of the courtroom by improving and streamlining existing
litigation options. CBO estimates that the CREATES Act would save
Federal programs approximately $3.8 billion by increasing generic drug
competition and associated cost savings.
Will the administration offer its support for CREATES?
Answer. The administration supports the goal of preventing the
delay or deterrence of generic drug and biosimilar development by
ensuring that interested developers have access to the reference listed
drug (RLD) or reference product supplies they need to support generic
and biosimilar applications.
lymphedema
Question. One and one-half million Medicare beneficiaries suffer
from a medical condition called lymphedema. According to a 2001 CMS
decision memo (CAG 00016N), Medicare beneficiaries with lymphedema were
advised to use compression garments in between pneumatic pump sessions
(and occupational and physical therapy sessions) to prevent re-
accumulation of fluid and worsening of the condition. One year later, a
National Coverage Determination policy (# 280.6) stated that
compression garments must be included as part of a conservative
treatment regimen for this condition.
In 2004, CMS determined that for an item to be covered by Medicare
it must fall under at least one statutorily defined benefit category.
CMS has determined the lack of coverage in these situations was because
compression garments did not fall under one of these categories.
However, FEHBP (BC/BS), Tricare, VA, and many State Medicaid programs
recognize and cover compression garments as DME.
Would you please review the CMS regarding whether compression
garments for the treatment of lymphedema should be considered DME for
Medicare purposes as well? This would seem to be consistent with
previous CMS decision memos and NCDs.
Answer. In order for compression garments to be covered by
Medicare, they would have to meet the definition of a Medicare-covered
benefit category. CMS has carefully considered Part B coverage of
compression garments and found that these items do not qualify. CMS is
happy to provide you and your staff with technical assistance as you
consider legislation on this subject.
340b
Question. With so many different terms used to talk about hospital
``charity''--uncompensated care, charity care, community benefit--it is
imperative that the metric used most accurately reflects direct benefit
to the most vulnerable patient populations.
In the President's FY 2019 Budget, the administration proposed
restructuring the 340B program by redistributing hospital 340B program
savings to hospitals providing a minimum level of charity care, set at
uncompensated care levels of 1 percent of patient costs. What data did
you utilize to support setting a charity care level of 1 percent as a
requirement for hospitals to receive redistributed 340B savings? Is
there additional data that you do not currently have that you need? HHS
has asked for additional transparency surrounding charity care in the
proposed IPPS payment rule. What insights is HHS hoping to gain? What
other data points or metrics are needed here? Does HHS have the
appropriate authority to gather this data?
Answer. The President's FY 2019 Budget would modify hospital
payment for drugs acquired through the 340B drug discount program by
rewarding hospitals that provide charity care and reducing Medicare
payments for 340B drugs to hospitals that provide little to no charity
care. Under a regulation that went into effect in calendar year 2018,
certain Medicare Part B payments for 340B drugs have been reduced to
better reflect the minimum average discount 340B hospitals receive.
Current law requires the savings to be redistributed within the payment
system in a budget neutral manner. Under the FY 2019 budget proposal,
the savings from hospitals that provide uncompensated care equaling at
least one percent of their patient care costs would be redistributed
based on their share of aggregate uncompensated care. Hospitals not
meeting that threshold would not be eligible for the redistribution and
the savings from their payment reduction will be returned to the
Medicare Trust Funds.
CMS currently distributes a prospectively determined amount to
Medicare disproportionate share hospitals based on their relative share
of uncompensated care nationally. In the fiscal year 2019, Hospital
Inpatient Prospective Payment System final rule, CMS requires Medicare
disproportionate share-eligible hospitals to submit a detailed listing
of its charity care and uninsured discounts corresponding to the amount
claimed in the hospital's cost report. Currently, charity care, as well
as discounts given to uninsured patients who qualify under the
hospital's charity care or financial assistance policy, are included in
a hospital's total uncompensated care. With this additional information
on a hospital's charity care and uninsured discounts, CMS will be
better able to ensure the accuracy of payments for uncompensated care
under section 1886(r) of the Social Security Act.
______
Questions Submitted by Hon. John Cornyn
medicaid best price
Question. Secretary Azar, pharmaceutical manufacturers that
voluntarily participate in Medicaid are required to pay rebates to
States on covered outpatient drugs, which help Medicaid receive
manufacturers' lowest or best price. The administration's blueprint
asks, ``Does the best price reporting program pose a barrier to price
negotiation and certain value-based agreements in other markets, or
otherwise shift costs to other markets?''
Is the administration considering safe harbors or other mechanisms
to allow for value-based agreements? Would you need additional
authorities from Congress in order to take those steps?
How would changes to best price affect other payers?
Answer. As the President's blueprint to lower drug prices notes,
the Department is considering further use of value-based purchasing in
Federal programs, including indication-based pricing and long-term
financing. For example, the Department is reviewing comments solicited
in the blueprint on the relationship between such programs as Medicaid
Best Price requirements on efforts to promote value-based arrangements
in the States.
Additionally, under current Federal law, drug manufacturers must
provide Medicaid programs the best prices for prescription drugs that
they offer to any wholesaler, retailer, provider, HMO, nonprofit
entity, or governmental entity within the United States. The
President's FY 2019 budget proposes a new statutory demonstration
authority that will allow up to five States to test a closed formulary
under which they negotiate prices directly with manufacturers, rather
than participating in the Medicaid Drug Rebate Program. Prices
negotiated under this demonstration will also be exempted from Best
Price reporting. I am happy to work with Congress regarding this
proposal.
biosimilars
Question. Biologics are a rapidly growing class of drugs that treat
complex diseases like cancer, rheumatoid arthritis, and Crohn's
disease. While we have seen a robust generic market with small molecule
drugs (over 1,000 generic approvals in 2017), we have not seen the same
development of biosimilars to increase competition and provide more
choices to patients. For instance there are currently 10 FDA-
approved biosimilars yet only three are currently being marketed.
What payment policies has the administration implemented to date to
support the uptake of biosimilars? Are there instances in Federal
programs, for example under the new 340B payment rate, where
biosimilars could be disadvantaged?
I understand that FDA has developed educational materials to better
inform physicians about biosimilars, and had launched an educations
campaign in late 2017 to help providers gain a better understanding of
these products. Has CMS considered disseminating those materials to
providers to increase their utilization?
Answer. CMS is committed to providing physicians with the resources
and information they need to provide high quality care to their
patients. Through the CMS website, we offer numerous resources for
providers, including the ability to subscribe to the MLN (Medicare
Learning Network) Connects Provider eNews weekly electronic
publication with the latest Medicare program information. CMS has sent
several MLN Connects newsletters with information on biosimilars,
along with a newsletter \4\ about payment for biosimilar products. CMS
has also published several informational materials to inform providers
about important payment policy changes as they relate to biosimilars.
---------------------------------------------------------------------------
\4\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-
Network-MLN/MLNMat
tersArticles/Downloads/SE1509.pdf.
In the calendar year 2018 Medicare Physician Fee Schedule final
rule, CMS changed the Part B biosimilar payment policy to provide for
the separate coding and payment for products approved under each
individual abbreviated application, rather than grouping all
biosimilars with a common reference product into codes. We believe that
this policy change will encourage greater manufacturer participation in
the marketplace and the introduction of more biosimilar products, thus
creating a stable and robust market, driving competition and decreasing
---------------------------------------------------------------------------
uncertainty about access and payment.
In addition, in the calendar year 2019 Hospital Outpatient
Prospective Payment System rule, we changed to our Medicare Part B drug
payment methodology for biosimilars acquired under the 340B Program.
Specifically, we will pay biosimilars not on pass-through payment
status acquired under the 340B program at ASP minus 22.5 percent of the
biosimilar's Average Sales Price (ASP) instead of the biosimilar's ASP
minus 22.5 percent of the reference product's ASP. We agreed with
concerns that stakeholders raised about the current payment policy that
it could unfairly lower the price of biosimilars without pass-through
payment status that are acquired under the 340B program. We stated that
we believe that these changes would better reflect the resources and
production costs that biosimilar manufacturers incur and that this
approach is more consistent with the payment methodology for 340B-
acquired drugs and biologicals, for which the 22.5 percent reduction is
calculated based on the drug or biological's ASP, rather than the ASP
of another product.
Question. Additionally, the blueprint asks, ``Are government
programs causing underpricing of generic drugs, and thereby reducing
long-term generic competition?'' Is the administration also looking at
whether Federal program pricing is also reducing long-term biosimilar
competition?
Answer. The administration is taking a holistic look at the issue
of prescription drug pricing, including effects of Federal program
pricing in the marketplace.
Question. FDA is in the process of developing a Biosimilar Action
Plan that is supposed to be geared toward promoting biosimilar entry
into the market. Can you share when the plan is expected to be released
and if the plan may include revisions to how the agency treats
manufacturing issues for reference biologics?
Answer. In July, FDA released a Biosimilars Action Plan. This plan
is an important piece of the administration's bold Blueprint to Lower
Drug Prices and demonstrates the progress being made against the
deliverables the President laid out.
The plan is aimed at promoting competition and affordability across
the market for biologics and biosimilar products. Our Biosimilars
Action Plan applies many of the lessons learned from our experience
with generic drugs to accelerate biosimilar competition with four key
strategies.
First, improving the efficiency of the biosimilar and
interchangeable product development and approval process. Second,
maximizing scientific and regulatory clarity for the biosimilar product
development community. Third, developing effective communications to
improve understanding of biosimilars among patients, providers, and
payors. And fourth, supporting market competition by reducing gaming of
FDA requirements or other attempts to unfairly delay market competition
to follow-on products.
rebates and anti-kickback
Question. The administration's blueprint suggests that the OIG
could remove the anti-kickback statutes safe harbor for drug
manufacturer rebates and you've talked about moving to fixed-price
discounts. But as we understand a 22-year-old class-action lawsuit
settlement, manufacturers may be reticent to move to up-front volume
discounts for payers to replace rebates.
How would the fixed-price discounts you've talked about work? Would
they require a change to antitrust law for manufacturers to be willing
to provide them?
Answer. This proposal aims to change the incentives in our system
that reward list price increases. Removing the anti-kickback safe
harbor for rebates and replacing it with a safe-harbor for up front
discounts would encourage the drug industry to shift toward a system
that offers true discounts to the patient at the point of sale.
Drug companies pay rebates and other payments to PBMs, but these
payments are not reflected in patient out-of-pocket drug costs. The
average difference between the list price of a drug and the net price
after a rebate is 26 to 30 percent. These rebates, negotiated in
Medicare Part D and private plans, are typically not used to reduce
patients' cost sharing for a particular drug.
By removing the safe harbor for rebates and creating one for point-
of-sale discounts, drug manufacturers will be encouraged to offer
discounts that may drive volume for their product, because patients who
have out-of-pocket costs based on the discounted price will save. This
includes patients who are spending through a deductible, using a drug
not covered by their insurance, or who pay co-insurance on the price at
point of sale. It would also better align patients and plans'
incentives to prefer drugs with larger up-front discounts, which would
encourage plans to offer preferential formulary position for drugs with
greater discounts.
indication-based pricing
Question. The administration's blueprint includes actions HHS may
take to increase competition. One of those actions would be to evaluate
options to allow high-cost drugs to be priced or covered differently
based on their indication. Currently, Part D plans must cover and pay
the same price for a drug regardless of the indication for which it is
prescribed.
How would you operationalize indication-based pricing in Part D?
What authorities would you need to do so?
Answer. On August 29, 2018, CMS announced additional flexibilities
in the Medicare Part D program to allow for innovative formulary design
as a valuable approach to expand drug choices and address the challenge
of high drug costs for seniors and government programs. This includes
giving Part D plan sponsors the choice of implementing indication-based
formulary design beginning in CY 2020.
______
Question Submitted by Hon. John Thune
Question. As we continue to drive toward quality and outcomes-based
reimbursement, I am interested in the inclusion of value-based
arrangements in the President's blueprint. I understand that FDA issued
guidance intended to help in facilitating these arrangements a couple
of weeks ago with respect to manufacturer communication with payors. Do
you expect that CMS will issue guidance on this topic as well? How much
will the administration be able to pursue through regulatory action and
what would be needed from Congress to apply this idea in the Medicare
and Medicaid space?
Answer. If you talk to any patient about what they want from health
care, it is outcomes, not process. The outcome that we want is that
when a relative leaves that rehab hospital, he'll be walking out the
door, rather than leaving in a wheelchair. But when the model involves
paying for outcomes, we expect to see some real results. This should be
no surprise: Incentives work. People respond to bonuses, but they
really respond to penalties.
So we are especially interested in ways that we can expand outcome-
based payment and sharing of risk to as many sectors of the healthcare
system as possible. A broken drug pricing system, always under threat
of price controls or national formularies, is not going to support the
next generation of cures. We need a real market for drugs, one that
encourages competition and serves the consumer. We are open to ideas
about how to get there.
Questions Submitted by Hon. Ron Wyden
part d noninterference clause
Question. Under current law, the ``noninterference'' clause
stipulates that the Secretary of the Department of Health and Human
Services (HHS) ``may not interfere with the negotiations between drug
manufacturers and pharmacies and PDP sponsors''--this explicitly
prohibits the Secretary from negotiating directly with drug
manufacturers on behalf of Medicare Part D enrollees.
During the hearing, you stated that your office has been ``having
discussions . . . with drug companies that are thinking about
decreasing their list prices to see if we can help clear barriers.''
One barrier you identified in the hearing was pharmaceutical benefit
managers (PBMs), many of whom offer Part D prescription drug plans
(PDPs).
Since the hearing, despite your ``hopes'' that drug manufactures
would practice restraint, news reports are riddled with examples of
manufacturers increasing their prices since the administration
announced its Blueprint. It is obvious your discussions have not
worked.
Describe the activities and discussions you have had with
individual drug manufacturers in an effort to ``clear barriers'' and
how do those discussions differ from what is prohibited under the non-
interference clause?
Answer. President Trump and I have committed to the American people
that we will work to lower the list prices of prescription drugs. We
are delivering on that commitment. However, there is no single silver
bullet that solves the problem of high drug prices. That is why I
testified before your committee that Congress has a role to play as
well, and I stand ready to meet with you on how we can accomplish this
goal together.
Question. If some of the barriers you have identified are practices
by PBMs or PDP sponsors, have you engaged in similar conversations with
PBMs or PDP sponsors in an effort to have those practices changed? If
so, how do those discussions differ from what is prohibited under the
non-interference clause?
Answer. Yes. Our proposed rule to change the system of rebates
under the anti-kickback safe harbor aims to address these barriers.
Major drug companies have told us that they have at times tried to make
substantial and material price decreases, but the current system made
it difficult to do so, showing just how broken our system of drug
prices and drug distribution is in the United States. I would encourage
the Congress to ask pharmacy benefit managers whether they have been
approached by drug companies about lowering their list prices and what
has the reaction been. Manufacturers set their prices, but the current
distribution system is not necessarily making it easier to lower them.
HHS is not counting on voluntary price reductions from drug
companies. We are instead focusing on reversing the incentives that
keep list prices high.
Question. Please provide an update on President Trump's promise 6
weeks ago that drug manufacturers would be lowering their prices
voluntarily? How many manufacturers have announced plans to lower
prices? For which drugs? And by how much?
Answer. The industry and Congress can and should take specific
action to lower list prices of drugs. For example, the industry could
move further to a fixed price discount system at the point of sale.
There's nothing stopping them. There's nothing stopping pharmacy
benefit managers from changing the contracts they have with their plans
or their employers to enable discount pricing or to move to net pricing
regimes and away from guaranteed rebate structures that lock in
existing incentives toward ever higher list prices.
Americans are already seeing real results thanks to President
Trump's efforts. In the 100 days following the release of the
President's sweeping blueprint to lower drug costs, there were 60
percent fewer brand-drug price increases and 54 percent more generic
and brand-drug price decreases, compared to the same time period in
2017.
More than a dozen drug companies reduced their list prices, rolled
back planned price increases, or froze their prices for the rest of the
year.
Congress can and should evaluate the Obamacare giveaway to drug
manufacturers that caps rebates in the Medicaid program, which benefits
actors who increase list prices faster than the rate of inflation, and
Congress can and should act to get rid of the abuse of the 180-day
generic exclusivity window currently being abused by generic and
branded pharmaceutical companies to delay entry of competitive generic
products.
requiring foreign governments to pay more for pharmaceuticals
Question. The blueprint indicates that HHS will support better
negotiation of drug prices by working with the Department of Commerce,
the U.S. Trade Representative (USTR), and the U.S. Intellectual
Property Enforcement Coordinator to develop the knowledge base needed
to ``address the unfair disparity between drug prices in America and
other developed countries.'' The blueprint additionally suggests that
the administration will make regulatory changes and request legislative
reforms in connection with this initiative.
What specific policies is the administration considering to
increase the amount foreign countries pay for their drugs?
Answer. The administration recently released an advanced notice of
proposed rulemaking to seek feedback on a potential payment and service
delivery model for Medicare Part B drugs known as the ``International
Pricing Index model.'' This model would test the success of an
international referencing pricing index that encourages manufacturers
to either lower the prices of the drugs they sell to Americans under
Medicare Part B to be more in line with the prices that patients in
other developed countries pay, or to increase the prices paid by those
countries.
Question. How will the administration ensure that raising prices in
other countries will result in drug makers voluntarily lowering their
prices here in the U.S. to decrease costs for American patients?
Answer. Pursuant to the President's blueprint to lower drug prices,
the administration is updating a number of historical studies to
analyze drug prices paid in countries that are a part of the
Organisation for Economic Co-operation and Development (OECD).
shifting drugs from medicare part b to medicare part d:
impact on beneficiaries' out-of-pocket costs
Question. Similar to a policy included in the President's FY 2019
Budget, the Blueprint directs HHS to identify instances in which moving
a drug from Medicare Part B to Medicare Part D would be appropriate.
Stakeholders have raised concerns that shifting drugs from Part B to
Part D could result in higher out-of-pocket costs for some Medicare
beneficiaries and negatively impact beneficiaries' access to needed
medications, particularly for those beneficiaries who do not currently
have Part D coverage. A recent analysis by Avalere found that in 2016
average out-of-pocket costs for Medicare beneficiaries were about 33
percent higher for Part D-covered new cancer therapies than for those
covered in Part B.
As HHS Secretary, will you guarantee that no Medicare beneficiary
will be faced with higher out-of-pocket costs under the proposal to
shift drugs from Part B to Part D described in the President's FY 2019
budget and the blueprint?
What are the specific mechanisms that would prevent increased out-
of-pocket costs for Medicare beneficiaries as a result of shifting
drugs from Part B to Part D, including those beneficiaries who do not
currently have Part D coverage?
Please describe in detail the criteria that HHS will use to
determine which drugs would be appropriate to move from Part B to Part
D. How will HHS evaluate and weigh the impact on beneficiaries' out-of-
pocket costs in the context of that determination?
What is the anticipated timeline for HHS to identify drugs that
would be appropriate to move from Part B to Part D as required by the
blueprint?
Will that information be made publicly available? If so, how and
when?
Answer. I look forward to working with Congress to explore ways
that we can bring the negotiation strategies that are currently working
in Medicare Part D, where we receive deals like the commercial
marketplace, into Part B, where prices are modestly negotiated by
providers though Medicare does not have a role in these negotiations. I
hope to work with you and your colleagues to develop legislation that
will provide us with the authority to re-classify Part B drugs into
Part D when appropriate, while taking into consideration the projected
impacts on beneficiary access and cost-sharing, as well as costs to the
Medicare program.
competitive acquisition program for part b drugs and biologicals
Question. The blueprint indicates that HHS may use the existing
authority for the Competitive Acquisition Program (CAP) for Part B
Drugs & Biologicals to provide physicians a choice between obtaining
Part B drugs and biologicals from vendors selected through a
competitive bidding process or continuing to purchase these drugs as
they do today.
Please describe in detail how HHS plans to structure and implement
the CAP described in the blueprint under the existing authority.
The CAP that was in place from mid-2006 through 2008 faced
challenges due to low physician enrollment and the vendor's limited
ability to negotiate discounts. How will the CAP described in the
blueprint differ from the CAP that was in place from mid-2006 through
2008?
Under the CAP described in the blueprint, what specific tools would
vendors have to negotiate discounts?
How would payments to vendors and providers be structured?
How would any savings achieved be distributed among providers,
beneficiaries, vendors, and the Medicare program?
Does HHS plan to monitor and evaluate the effect of the CAP on
Medicare beneficiaries' access to Part B drugs and biologicals and the
quality of care provided to beneficiaries? If so, please describe in
detail how HHS will monitor and evaluate access and quality of care.
What is the anticipated timeline for HHS to implement the CAP
described in the blueprint?
Answer. Currently, Medicare payment for separately payable
outpatient drugs in physician offices, hospital outpatient departments,
and certain other settings is generally based on drug manufacturers'
average sales prices in the United States plus a six percent add-on
payment (ASP +6 percent), and is subject to the sequestration, which
effectively reduces the add-on to +4.3 percent. The dollar amount of
the add-on is larger as drug prices increase, which may encourage
physicians to prescribe higher-cost drugs, and raise beneficiary and
program spending.
The Competitive Acquisition Program (CAP) for Part B drugs and
biologicals, in section 1847B of the Social Security Act (the Act), is
an alternative to the ASP methodology that is used to pay for the
majority of separately payable Part B drugs. Under the CAP, which
operated for a limited time (July 1, 2006, until December 31, 2008),
instead of buying drugs for their offices, physicians who chose to
participate in the CAP placed a patient-specific drug order with an
approved CAP vendor, and the vendor provided the drug to the office and
then billed Medicare and collected cost-sharing amounts from the
patient.
Recently, we have heard from stakeholders, including physician and
hospital groups, manufacturers, distributors, and beneficiary
advocates, that a CAP-like approach with substantial improvements,
particularly in regards to onsite availability of drugs, could
potentially address concerns about the financial burdens associated
with furnishing Part B drugs and their rising costs. CMS sought input
on all of these considerations in the CY 2019 OPPS/ASC proposed rule
and its recent ANPRM for an International Pricing Index (IPI) Model for
Medicare Part B Drugs.
CMS intends to utilize a number of private-sector vendors that
would supply physicians, hospital outpatient departments, and other
included providers and suppliers with the drugs and biologicals that
CMS decides to include in the model. Similar to the CAP, the model
vendors, rather than the health care providers, would take on the
financial risk of acquiring the drugs and would also bill for the
drugs. Instead of paying the model vendors based on bid amounts, as
section 1847B of the Act prescribes, under the IPI model, Medicare
would pay the vendor for the included drugs based on the target price
driven by the international pricing index, which would lower both the
amount Medicare pays for included drugs and beneficiary cost-sharing.
The model vendors would have flexibility to offer innovative
delivery mechanisms to encourage physicians and hospitals to obtain
drugs through the vendor's distribution arrangements, such as
electronic ordering, frequent delivery, onsite stock replacement
programs, and other technologies. We plan to provide physicians and
hospitals in the model test areas with an opportunity to select the
vendors that best provide customer service and support beneficiary
choice of treatments. Physicians and hospitals would be able to
contract with multiple vendors for different drugs and to change
vendors. Vendors would not operate formularies. CMS seeks comment in
the IPI Model ANPRM on whether group purchasing organizations,
wholesalers, distributors, specialty pharmacies, Part D sponsors, and
potentially individual or groups of physicians and hospitals and/or
manufacturers could perform the role of model vendor.
medicaid expansion
Question. Nearly 12 million low-income Americans gained access to
quality, affordable health care under the Medicaid expansion. As a
result, millions of previously uninsured Americans now have access to
affordable prescription drug coverage for essential medications like
insulin for diabetes, oncology drugs for cancer, and medication-
assisted treatment to help tackle substance use disorders. Yet, the
President's FY 2019 budget request proposes slashing Medicaid by $1.4
trillion and eliminating the Medicaid expansion. These severe funding
cuts could force States to eliminate optional benefits, such as
coverage for prescription drugs.
Please explain how gutting Medicaid and repealing the Medicaid
expansion supports State efforts to help millions of Americans to
access and afford vital prescription drugs?
Answer. The FY 2019 budget establishes a block grant or per capita
cap for the traditional Medicaid populations and repeals the ACA
Medicaid expansion. States would have the option to cover the former
Medicaid expansion population through the new Market-Based Health Care
Grants included in the Graham-Cassidy-Heller-Johnson legislation. These
new financing mechanisms will harmonize the treatment of States over
time and allow States to better target resources to their most needy
citizens. To that end, we need reforms to provide States flexibility to
design their Medicaid programs to meet the spectrum of diverse needs of
their Medicaid populations. Currently, outdated Federal rules and
requirements prevent States from pioneering delivery system reforms and
from prioritizing Federal resources to their most vulnerable
populations, which hurts access and health outcomes. Reforms like block
grants, when paired with additional authority and flexibility, can
incentivize and empower States to develop innovative solutions to
challenges like high drug costs and fraud, waste, and abuse. We must
make health care more tailored to what individuals want and need in
their care. The President's FY 2019 budget takes a significant step in
that direction by putting the Medicaid program on a sustainable course
and returning local healthcare decisions back to where they should be
made.
epipen misclassification
Question. Since the fourth quarter of 1997, EpiPen, now owned by
Mylan Pharmaceutical, appears to have been incorrectly reported as a
generic drug. As a result, Medicaid grossly overpaid for EpiPen by not
getting its full due in rebates. After my letters to your predecessor
and public outcry on this issue, Mylan agreed to settle with the
Department of Justice in August 2017 and pay $465 million to resolve
claims that they knowingly misclassified EpiPen as a generic drug to
avoid paying rebates owed to Medicaid. However, the reality is that
they paid less to settle than what they should have paid in rebates in
the first place. An analysis by the U.S. Department of Health and Human
Services' Office of Inspector General released this past year found the
U.S. government may have in essence overpaid EpiPens by as much as
$1.27 billion between 2006 and 2016.
What actions do you think Congress should take to ensure companies
like Mylan cannot get away with short shrifting taxpayers and the
Medicaid program as they have done with the EpiPen?
Answer. The President's FY 2019 budget contained a legislative
proposal to remove ambiguity regarding how drugs should be reported
under the Medicaid Drug Rebate Program so that manufacturers pay their
fair share in rebates. As indicated in the blueprint, HHS is also
manually reviewing each new drug that has been reported in the Medicaid
rebate system on a quarterly basis to make sure classifications are
correct.
preexisting conditions
Question. The Trump administration has decided to argue against the
constitutionality of the Affordable Care Act's important provision that
protects people with preexisting conditions. If the administration is
successful, once again insurance companies will be able to discriminate
against people with preexisting conditions by denying them coverage or
charging them unaffordable premiums. The American people do not want to
go back to the days when health care was reserved for the healthy and
wealthy. At the June 26th hearing before the Senate Finance Committee,
you reiterated that the administration's refusal to defend the law is a
``legal position.'' Later, you affirmed that the ``policy position of
the administration is . . . to ensure people with preexisting
conditions have access to affordable insurance.'' You are named as a
defendant in this law suit.
Do you believe insurers should be able to deny coverage or charge
more for Americans with preexisting conditions?
Answer. The Trump administration stands ready to work with Congress
on policy solutions that will deliver more insurance choices, better
healthcare, and lower costs while continuing to protect individuals
with preexisting conditions. The Affordable Care Act (ACA) statutory
requirements here are very strict and burdensome. While this may help
some consumers, it also prevents States from developing innovative
solutions that are tailored to their populations. I believe that when
States are not permitted to innovate, everyone is worse off.
Affordability, accessibility, benefit options, and procedural
safeguards are all valuable, but our current top-down, Federally-driven
approach is not working well for Americans. I will work with States to
allow innovation within the confines of the ACA.
Question. What did you and your General Counsel advise Attorney
General Sessions and the Department of Justice regarding the
administration's legal approach to the case and the policy implications
of the administration's legal position on individuals with preexisting
conditions?
Answer. The Trump administration remains committed to ensuring more
Americans have access to affordable health coverage and has supported
legislation to protect Americans with preexisting conditions. The
administration's legal position is that the individual mandate is
unconstitutional and that the guaranteed issue and community rating
provisions of Obamacare are not severable from the individual mandate.
family separation
Question. During the hearing on June 26, 2018, you said there were
2,047 children who had been separated from their parents due to the
zero tolerance policy. On July 5, 2018, you shared an updated figure of
under 3,000 and said this figure includes data from prior to the start
of the ``zero tolerance'' policy in May.
What is the exact number of separated children? Please disaggregate
this data by age and country of origin.
Answer. HHS identified a total of 2,816 possible children of
potential Ms. L class members. There were 107 minors under the age of 5
(as of February 20, 2019) and 2,713 between the ages of 5 and 17. The
breakdown of these 2,816 minors by country of origin is as follows:
------------------------------------------------------------------------
Total by Country
------------------------------------------------------------------------
Angola 1
------------------------------------------------------------------------
Belize 1
------------------------------------------------------------------------
Brazil 48
------------------------------------------------------------------------
Columbia 1
------------------------------------------------------------------------
Congo 4
------------------------------------------------------------------------
Ecuador 3
------------------------------------------------------------------------
El Salvador 208
------------------------------------------------------------------------
Guatemala 1,543
------------------------------------------------------------------------
Honduras 937
------------------------------------------------------------------------
India 4
------------------------------------------------------------------------
Kyrgyzstan 1
------------------------------------------------------------------------
Mexico 44
------------------------------------------------------------------------
Nicaragua 2
------------------------------------------------------------------------
Peru 2
------------------------------------------------------------------------
Romania 16
------------------------------------------------------------------------
United Kingdom 1
------------------------------------------------------------------------
Total 2,816
------------------------------------------------------------------------
Question. How many children have been separated from their parents
specifically as a result of the ``zero tolerance'' policy? Please
disaggregate this data by age and country of origin.
Answer. HHS does not distinguish between minors who were separated
from parents or legal guardians as a result of the ``zero tolerance''
policy from other causes of separation. Additionally, the Ms. L court
decision does not distinguish separated minors by whether they were
separated due to the ``zero tolerance'' policy or due to separation by
the Department of Homeland Security (DHS) prior to the announcement of
the ``zero tolerance'' policy. HHS identified a total of 2,816 children
who were potentially separated from their parents or legal guardians
and whose parents were potentially Ms. L class members. DHS
subsequently determined that 79 had not been separated from parents by
DHS.
child placement facilities
Question. Some children's facilities including Casa Padre and the
Shenandoah Valley Juvenile Center have documented health violations,
allegations of abuse, or other failures to adhere to child welfare
standards.
What resources is HHS providing to ensure that children receive
appropriate mental health services, as required by ORR policy?
Answer. The Office of Refugee Resettlement (ORR) provides routine
and emergency medical and mental health care for all UAC in its care,
including an initial medical examination and follow-up care, as needed.
Under the Flores Settlement Agreement, UAC in licensed care provider
facilities, in particular, must receive at least weekly individual and
two weekly group clinical counseling sessions to address their mental
health needs.
Care provider facilities develop their own (ORR-approved) policies
and procedures for their individual clinical programs, including
standards on licensing and education for staff, according to staff role
or discipline. For example, at one facility, mental health clinicians
must have earned an advanced university degree and maintain licensure
through continuing education requirements, while case managers must
have earned a university degree.
Across the national UAC program, ORR works to ensure that care
provider staff are trained in techniques for child-friendly and trauma-
informed techniques in interviewing, assessment, and observation, as
well as on identifying children who have been smuggled (i.e.,
transported illegally over a national border) and/or trafficked while
in the United States. Care providers must deliver services in a manner
that is sensitive to the age, culture, native language, and needs of
each child.
ORR also places children in one of two residential treatment
centers (RTC) for those who have severe diagnosed mental health needs,
per the DSM-5 (Diagnostic and Statistical Manual of Mental Disorders,
Fifth Edition). These UAC have psychiatric and/or psychological
disorders that are not treatable in an outpatient setting and who pose
a danger to themselves or others, as determined by a licensed
psychologist or psychiatrist. While at an RTC, children and youth
receive a combination of intensive therapeutic treatments by an
interdisciplinary team of mental health clinicians. (Please see the ORR
Policy Guide, Section 1.4.6 Residential Treatment Center Placements for
more information.)
Question. How does HHS ensure that, in accordance with ORR policy,
children in custody are aware that certain disclosures to staff are not
confidential and may be shared with other government agencies such as
ICE?
Answer. ORR provides orientations to newly arrived UAC within 48
hours of placement. In these orientations, minors are taught about
their rights and responsibilities, which include general legal-related
information and notification regarding self-disclosures made while in
ORR custody. (Please see the ORR Policy Guide, Section 3.2.2
Orientation for more information).
In preparing and managing case files and documentation, care
providers must ensure compliance with all requirements imposed by
Federal statutes concerning the collection and maintenance of data that
includes personal identifying information. Care providers must ensure
that all records are maintained and protected so that confidential
information and data are secure and not accessed, used, or disclosed to
unauthorized parties or improperly altered. There must be established
administrative and physical controls to prevent unauthorized access to
both electronic and paper records.
There are certain situations in which ORR will communicate a
minor's personal information with other Federal agencies.
When a UAC is referred to ORR's care from another Federal agency,
ORR will request background information to assess whether the minor is
a danger to self or others, whether there are any known medical and/or
mental health issues, and whether other special concerns or needs are
known. ORR uses this information to determine an appropriate placement
for the child or youth in the least restrictive setting.
In situations where a minor is a material witness to a crime and
has information relevant to a criminal proceeding, is a victim of a
crime, or has been charged with a serious criminal offense, ORR will
collaborate with law enforcement on the placement of these minors.
(Please see ORR Policy Guide, Section 1.2.3 Safety Issues.)
If a care provider suspects that a child has been trafficked at any
point in the child's life, the care provider must refer the child's
case to the HHS's Office on Trafficking in Persons (OTIP) for further
assessment. In addition, ORR must refer any trafficking concerns to the
ICE Homeland Security Investigations (HSI) and the Human Smuggling and
Trafficking Center (HSTC), at the Department of Homeland Security.
Referrals to OTIP, HSI, and HSTC may include supporting documents
relevant to investigative purposes. ORR may also request assistance
from other Federal agencies (e.g., Department of Labor) in assessing a
child's case for potential trafficking concerns. (Please refer to the
ORR Policy Guide, Section 3.3.3 Screening for Child Trafficking and
Services for Victims for more information.)
If a care provider suspects that a UAC has been sexually abused
while in ORR's custody, whether by another minor or staff, they must
immediately report the allegation within 4 hours to HHS's Office of the
Inspector General, the Federal Bureau of Investigation, Child
Protective Services and/or State Licensing, local law enforcement, and,
in some cases, the Federal Protective Service at DHS. The same
reporting procedure applies in circumstances where a UAC has allegedly
perpetrated sexual abuse on another minor while in ORR's custody.
family communication
Question. You noted the speed and accuracy with which you could
locate children who have been separated from their parents, saying that
you could find any child ``within seconds'' through an ORR portal.
However, ORR has only provided family members with a 1-800 number and
email address, and parents and lawyers have reported challenges in
accessing information with these tools--for example, busy signals or
long wait times. Moreover, many of these parents are detained
themselves without easy access to phones or the Internet.
What steps is HHS taking to ensure timely and prompt communication
between separated parents and children?
Answer. Within 24 hours of arriving at a UAC care facility, UAC are
given the opportunity to communicate with a verified parent, legal
guardian, or relative (when contact information is available), whether
they reside in the United States or abroad. If a minor's parents are in
Federal custody, the child's case manager will engage with the parents'
case managers and Federal law enforcement officials to verify their
relationship, so that they may communicate.
UAC are allowed a minimum of two telephone calls per week to family
members or sponsors, in a private setting. Some care providers
facilitate video calls between minors and their families, especially
for tender age and non-verbal children. UAC are also allowed unlimited
telephone access to their legal representatives. A minor may also speak
with her or his consulate official, case coordinator, and child
advocate.
Care providers also ensure that all mail, letters, packages,
baggage, or any other items delivered to the care provider and
addressed to the minor are promptly delivered and that UAC can send
letters to family members, sponsors, legal representatives, and others.
Question. How is HHS ensuring communication between non-verbal
children and their parents?
Answer. As previously noted, some care providers facilitate video
calls between tender age and non-verbal children and their families, so
that they may see one another. Also, a child's case manager or
clinician may act as an intermediary for communication between a non-
verbal child in care and her or his parent or legal guardian.
Question. How is HHS coordinating with DHS in instances where
adequate documentation was not collected at the time of separation, or
in instances where family identification numbers were not preserved?
Answer. An interagency team of data analysts, consisting of staff
from various HHS operating divisions (the Administration for Children
and Families' Office of Refugee Resettlement and the Assistant
Secretary for Preparedness and Response, among others), U.S. Customs
and Border Protection (CBP), and U.S. Immigration and Customs
Enforcement (ICE), identified separated children who are in care and
matched them to the parent or legal guardian from whom they were
separated.
This matching effort was conducted during the summer of 2018,
identifying the separated parent for all separated minors in ORR care.
ORR care provider programs facilitated contact between all separated
children and their parents.
family reunification
Question. You emphasized your desire to ``expeditiously'' reunify
families and you have reportedly asked for volunteers to help with
these efforts. I share this goal of getting children and parents back
together as quickly and safely as possible. As you know, family
separation has traumatic and harmful effects on children's health and
well-being.
Has HHS engaged with international aid organizations, such as the
International Committee of the Red Cross, that have experience
reuniting families that have been separated? Please describe your
Department's efforts to engage entities with expertise in this arena.
Answer. HHS is actively coordinating with the governments of El
Salvador, Honduras, Guatemala, and Mexico on family reunification
efforts, consistent with the plan developed by the Federal Government
for the reunification of children with parents outside the United
States and approved by Judge Dana Sabraw of the U.S. District Court for
the Southern District of California in the Ms. L case.
HHS is also coordinating its family reunification mission with the
American Civil Liberties Union on the safe reunification of children in
their home countries. This effort includes other non-governmental
organizations such as Kids in Need of Defense and Justice in Motion.
Question. How many separated children have been reunified with
their parents? Please disaggregate this data by age and country of
origin.
Answer. As of February 20, 2019, there are 2,155 minors who have
been reunified with the parent from whom they were separated. These
minors are further disaggregated below by age and country of origin:
------------------------------------------------------------------------
Country Ages 0-4 Ages 5-17 Total by Country
------------------------------------------------------------------------
Belize 1 1
------------------------------------------------------------------------
Brazil 41 41
------------------------------------------------------------------------
Colombia 1 1
------------------------------------------------------------------------
Ecuador 3 3
------------------------------------------------------------------------
El Salvador 9 163 172
------------------------------------------------------------------------
Guatemala 32 1,110 1,142
------------------------------------------------------------------------
Honduras 36 721 757
------------------------------------------------------------------------
India 3 3
------------------------------------------------------------------------
Kyrgyzstan 1 1
------------------------------------------------------------------------
Mexico 3 16 19
------------------------------------------------------------------------
Nicaragua 1 1
------------------------------------------------------------------------
Peru 2 2
------------------------------------------------------------------------
Romania 2 10 12
------------------------------------------------------------------------
Total 82 2,073 2,155
------------------------------------------------------------------------
Question. What are the circumstances of these reunifications (in
the community, as part of deportation processes, etc.)?
Answer. Consistent with plans developed by the Federal Government
and approved by the U.S. District Court for the Southern District of
California, minors in ORR's care have been reunified with their parents
in a variety of settings. HHS has reunified children with parents in
ICE detention at designated ICE reunification sites. Then, using its
administrative authority, ICE has either released the reunited family
unit to the interior of the United States or has detained the family
unit together in ICE Family Residential Centers. HHS has also reunified
children with parents released to the interior of the United States by
physically bringing children to the parent. For parents who have since
left the United States, HHS and ICE have transported children to their
home country for reunification at reception centers operated under the
authority of the home country government.
Question. For separated children who have been released to
sponsors, please provide data on how many have been released to each of
the four categories of sponsors, in accordance with section 2.2.1 of
the ORR policy manual.
Answer. The table below shows the breakdown of separated minors
released through the TVPRA process not through the court ordered
process, as of February 20, 2019 joint status filing. Please note that
there are three Categories of sponsors (Categories 1-3).
Reunified Minors
------------------------------------------------------------------------
Sponsor Category # of minors
------------------------------------------------------------------------
Category 1 106
------------------------------------------------------------------------
Category 2 281
------------------------------------------------------------------------
Category 3 90
------------------------------------------------------------------------
Grand Total 477
------------------------------------------------------------------------
Question. In order to complete the reunification process, HHS is
collecting DNA samples to match parents and children as quickly as
possible.
How is this information being stored and protected?
Which government agencies have access to this information and under
what conditions?
What happens to this information once the family has been
reunified?
Answer. All DNA data, samples, and results were ordered destroyed
pursuant to the order of Judge Dana Sabraw in Ms. L, and they have been
certified destroyed by the DNA laboratory. No government agencies have
access to DNA data, samples, or results. The information was allowed to
be used only for the specific matching of a child with a parent, and
for no other purpose.
Question. HHS officials told congressional staffers during a
briefing on June 29, 2018 that there were 42 Federal Field Specialists
helping with the reunification process and making reunification
decisions, but that there were plans to increase this capacity.
What are the roles of staff assisting with the reunification
process?
Answer. The Secretary of HHS tasked the Assistant Secretary for
Preparedness and Response (ASPR) with the reunification mission on
behalf of HHS. ASPR designated a Federal Health Coordinating Official
(FHCO) to lead the HHS reunification mission (the FHCO is also the
``HHS operational lead'' as identified in Ms. L court filings). The
FHCO leads the Incident Management Team (IMT), which conducts HHS
reunification operations.
The IMT has included ASPR field and headquarters personnel, ORR
field and headquarters personnel, including Federal Field Specialists,
and deployed assets from the U.S. Public Health Service Commissioned
Corps, National Disaster Medical System Disaster Medical Assistance
Teams (NDMS DMAT), and contracted case management and logistics
personnel.
Question. As of July 10, 2018 how many Federal Field Specialists
are assisting with the reunification process?
Answer. As of July 10, 2018, the HHS Incident Management Team (IMT)
included 177 HHS personnel, including 41 at HHS headquarters and 136 in
the field. These included Federal Field Specialists as well as other
ACF personnel, ASPR personnel, USPHS Officers, NDMS DMAT team members,
and contractors.
Question. DOJ reported that 19 young children in HHS custody could
not be reunified with their parents because the parents had already
been deported.
What steps is HHS taking to communicate with DOJ and prevent any
additional deportations prior to reunification?
Answer. Judge Dana Sabraw of the U.S. District Court for the
Southern District of California stayed removals in Ms. L.
Question. How many parents accepted voluntary departures as a means
of family reunification?
Answer. HHS defers to the Department of Homeland Security (DHS)
regarding questions on the legal decisions of the parents in DHS
custody.
Question. Some news outlets are reporting instances of parental or
sponsor responsibility to cover the cost of the child's
transportation--for example, a case where a father was asked for pay
$1,250 for his daughter's flight in order to be reunified.
What is HHS's current policy with regard to covering the cost of
transportation to achieve reunification?
If a family is responsible for arranging transportation, how does
HHS address financial barriers, especially if impeding reunification or
sponsor placement?
Answer. HHS pays for the transportation costs of separated minors
to be reunified with parents from appropriated funds from ORR's UAC
Program.
information sharing between hhs and dhs
Question. HHS and DHS recently entered into a Memorandum of
Agreement to share information between the two agencies.
How does HHS ensure that sponsors and adult household members have
provided informed consent related to sharing their information with law
enforcement?
Answer. Sponsors and adult household members are provided and sign
an Authorization for Release of Information, which notifies them that
their information will be shared with law enforcement.
Question. What steps is HHS taking to verify DHS allegations of
youth gang activity, particularly given past inaccuracies?
Answer. Allegations of youth criminal activity are verified through
a review of multiple sources of information, including: (1)
attestations from law enforcement, and/or criminal history
documentation (police records, arrest records, court records, probation
records, etc.); (2) non-law enforcement records pertaining to
dangerousness (e.g., school records, child welfare agency records, or
other government institutions); (3) interviews with the child's family
or other caregivers; (4) Significant Incident Reports indicative of
dangerousness or flight risk; and (5) information that indicates that
the child may not be a danger (i.e., reports from school or counselor).
newly migrated families
Question. Your repeated references to the Flores settlement and
related court order present a false choice of family separation or
family detention. As you know, Flores does not require family
separation and does not prevent families from being released into the
community while their case is processed.
For families who have migrated since the executive order on June
20, 2018, how is HHS facilitating the release of families into the
community and providing referrals to any necessary supports and
services?
Answer. The UAC Program is not responsible for the release of
families from ICE custody into the community. However, for UAC who are
released from ORR care to a sponsor in the community, ORR may provide
discharged UAC and their sponsors with referrals for support and
services including behavioral health supports in the sponsor's
community.
______
Questions Submitted by Hon. Bill Nelson
Question. On June 19th, your department informed me that 174
children had been separated from their families between May 6, 2018 and
June 17, 2018 and held in Office of Refugee Resettlement (ORR) shelters
in Florida, including 94 at Homestead.
During my June 23rd visit to Homestead, I was told that the number
had decreased from 94 to approximately 70. I was also told that just 62
of those 70 had been in contact with their parents and that the
remaining eight had not yet been in contact because of difficulties
locating their parents.
Since President Trump signed an executive order on June 20th
intended to end the policy of systematically separating children from
their parents, I have only received one update indicating that, as of
June 25th, the number of children held in Florida had actually
increased to 179. Additional efforts by my colleagues and me to obtain
information and statistics related to separated children have been
repeatedly rebuffed.
How many children separated from their parents since May 6, 2018,
have been held at ORR or ORR-sponsored facilities in Florida?
Answer. As of the February 20th joint status filing, there had been
a total of 264 separated minors who are children of Ms. L class members
who are either currently in a Florida ORR facility or were at any time
during their time in ORR care previously in a Florida ORR facility and
discharged from that facility.
Question. How many total children separated since May 6, 2018, are
currently being held at facilities in Florida and how many are being
held at each ORR or ORR-sponsored facility in Florida?
Answer. As of November 15th, there were 28 minors still in care who
were included in the minors originally identified as potentially
separated. Most of these children are on a pathway to standard
sponsorship discharge, based on a parental decision to waive
reunification.
Question. How many of the total number of children separated from
their families have been reunited with their parents or legal guardians
since President Trump signed his June 20th executive order?
Answer. Of the 2,816 minors identified as potentially separated in
the Ms. L vs. ICE class, as of December 12, 2018, 2,149 have been
reunified with the parent from whom they were separated. An additional
508 have been discharged under other appropriate circumstances--most
through discharge to family member sponsors based on parents' waiving
reunification. There are 79 children who were subsequently determined
not to have been separated from a parent by the government. There were
123 children who were separated from parents and were still in care who
were on a pathway to standard sponsorship because their parents had
waived reunification or a final determination had been made that they
could not safely be reunified with their parent. As of December 12th,
there were 8 children remaining to be reunified with parents.
Question. How many children separated from their families and held
at ORR or ORR-sponsored facilities in Florida have been reunited with
their parents or legal guardians since President Trump signed his June
20th executive order?
Answer. Because children move in and out of shelters during their
admission, this information is not readily reportable.
Question. How many children separated from their families and
currently held at ORR or ORR-sponsored facilities in Florida have made
contact with their parents or legal guardians?
Answer. All separated children in ORR care in all States have made
contact with their parents or legal guardians.
Question. Have any parents of children held at ORR or ORR-sponsored
facilities in Florida been deported? If so, how many and what is HHS
doing to make contact with these parents?
Answer. The Report to Congress on Separated Children provides data
on the number of children in ORR custody who parents were deported,
disaggregated by status as of November 6th.\5\ There are no separated
minors in ORR care for whom HHS or the child's grantee shelter program
has not made contact with the parent. Children are routinely in contact
with parents.
---------------------------------------------------------------------------
\5\ https://www.hhs.gov/programs/social-services/unaccompanied-
alien-children/report-to-congress-on-separated-children/index.html.
Question. On June 26th, I sent a letter opposing this
administration's decision to support a dangerous lawsuit filed by
Republican Attorneys General--including in Florida--that would destroy
our health-care system and hurt as many as 7.8 million Floridians with
---------------------------------------------------------------------------
preexisting conditions.
If this administration and these Attorneys General prevail, health
insurers across the country will once again be able to charge unlimited
premiums for older adults, and discriminate against people with
preexisting conditions by denying them coverage or charging higher
premiums simply because of their past medical history. A preexisting
condition includes cancer, acne, Alzheimer's or simply being a woman.
In making this decision, your administration is turning its back on
133 million Americans with preexisting conditions, including 17 million
children and 7.8 million Floridians.
Do you believe that people with preexisting conditions should be
guaranteed access to health coverage?
Answer. The Trump administration remains committed to ensuring more
Americans have access to affordable health coverage, and has supported
legislation to protect Americans with preexisting conditions. The
administration's legal position is that the individual mandate is
unconstitutional and that the guaranteed issue and community rating
provisions of Obamacare are not severable from the individual mandate.
Question. Do you support allowing insurers to discriminate against
folks with substance use disorders, like opioid addiction, thereby
denying them adequate access to treatment?
Answer. Discussed in response to next question below.
Question. Should these individuals be forced to pay more for their
health insurance?
Answer. HHS, along with the Departments of Labor (DOL) and
Treasury, are committed to enforcing the Mental Health Parity and
Addiction Equity Act (MHPAEA), promoting compliance, providing
guidance, assisting consumers, and conducting investigations of non-
compliance. In July 2017, the Departments, together with other Federal
and State partners convened a meeting to develop an Action Plan for
improved Federal and State coordination of enforcement of the Mental
Health Parity and Addiction Equity Act (MHPAEA). As part of that
process, the Departments also accepted written comments from
stakeholders. More information about this process can be found here:
https://www.hhs.gov/programs/topic-sites/mental-health-parity/
achieving-parity/cures-act-parity-listening-session/index.html.
On April 23, 2018, HHS released the Mental Health and Substance Use
Disorder Parity Action Plan. In addition, the Departments have
finalized the parity compliance program guidance document required by
section 13001(a) of the 21st Century Cures Act. The compliance program
guidance document, referred to as the 2018 MHPAEA Self-Compliance Tool,
can be found on the dedicated mental health and substance use disorder
webpage of DOL's Employee Benefits Security Administration (EBSA),
https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/mental-
health-and-substance-use-disorder-parity. This compliance tool is
designed to assist plans and issuers in advancing MHPAEA compliance and
is largely informed by the audit tool that is used by EBSA
investigators and is made available to HHS and State regulators. It
includes comprehensive guidance regarding non-quantitative treatment
limitations (NQTLs) and required disclosures. The compliance tool
includes both examples of potential parity violations as well as
compliant practices, and is based on EBSA's experience with enforcing
mental health parity. As required by section 13001(a) of Cures, this
document was developed in consultation with respective Inspector
General of each Department. Accordingly, this document satisfies the
requirements of section 13001(a), and will be updated every 2 years.
HHS, along with the Departments of Labor and Treasury, also proposed
additional guidance on NQTLs and disclosure, as well as issued a draft
model disclosure template to assist consumers in obtaining the
information they need to effectuate their rights under the law.
Finally, in December 2017, HHS posted a Mental Health Parity and
Addiction Equity Act Enforcement Report. That report is available here:
https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/
Downloads/HHS-2008-MH
PAEA-Enforcement-Period.pdf. DOL issued its own enforcement fact sheet
in April 2018, which is available here: https://www.dol.gov/sites/
default/files/ebsa/about-ebsa/our-activities/resource-center/fact-
sheets/mhpaea-enforcement-2017.pdf.
Question. If successful, this lawsuit would break the President's
promise to protect guaranteed health coverage for individuals with
preexisting conditions. You would put insurance companies back in
charge and give them free rein to deny care to those who need it most.
Are you comfortable with the DOJ arguing insurers should be able to do
just that in your name? How do you plan to uphold the President's
promise to protect these children, women, seniors and the millions of
other Americans with preexisting conditions?
Answer. The Trump administration remains committed to ensuring more
Americans have access to affordable health coverage, and has supported
legislation to protect Americans with preexisting conditions. The
administration's legal position is that the individual mandate is
unconstitutional and that the guaranteed issue and community rating
provisions of Obamacare are not severable from the individual mandate.
Question. The President's budget and the blueprint suggest moving
some of the drugs paid for under Medicare Part B, which covers drugs
administered in the hospital outpatient department or the doctor's
office, into Medicare Part D to facilitate price negotiations.
How would this change assure access to Part B drugs for the
millions of seniors on Medicare who are not enrolled in Part D?
Answer. I look forward to working with Congress to explore ways
that we can bring the negotiation strategies that are currently working
in Medicare Part D into Part B, where prices are modestly negotiated by
providers though Medicare does not have a role in these negotiations. I
hope to work with you and your colleagues to develop legislation that
will provide us with the authority to re-classify Part B drugs into
Part D, when appropriate, while taking into consideration the projected
impacts on beneficiary access and cost-sharing, as well as costs to the
Medicare program.
Question. During your testimony before the HELP Committee, you said
that moving Medicare Part B drugs into Part D would result in billions
of dollars in savings and that these savings would be more than enough
to take care of Medicare beneficiaries who are not enrolled in Part D
or who suddenly face higher cost sharing.
Does HHS have data to support this claim? If so, please share it
with this committee.
Answer. Under the President's FY 2019 Budget that describes this
proposal, the Secretary will exercise this authority only when there
are savings to be gained from price competition. However, a budget
impact will not be available until specific categories or classes of
drugs are chosen. The President's blueprint includes a Request for
Information (RFI) seeking comment on which drugs or classes of drugs
would be good candidates for moving from Part B to Part D.
______
Questions Submitted by Hon. Robert Menendez
Question. In the President's drug price plan, American Patients
First, one of the accomplishments is creating incentives to lower list
prices.
Given recent announcements by several pharmaceutical companies that
they were increasing list prices, would you consider existing
incentives to lower prices failures?
Will there be follow up measures taken to refine the incentives to
ensure that list prices decrease?
How will savings from lower list prices trickle down to consumers?
Answer. Among efforts by the administration to address high list
prices, one is addressing the role of PBM practices under the Part D
program. As pointed out in the President's blueprint to lower drug
prices, because health plans, pharmacy benefit managers (PBMs), and
wholesalers receive higher rebates and fees when list prices increase,
there is little incentive to control list prices. Consumers, however,
pay higher copayments, coinsurance, or pre-deductible out-of-pocket
costs when list prices rise.
The President's blueprint recognizes the major role played by PBMs
to widen the gap between list prices and net prices. Such recognition
is a starting point for debating and considering potential policy
alternatives to ameliorate these misaligned incentives in the Part D
program. In releasing the blueprint, the Department issued a Request
for Information (RFI) on issues raised by the blueprint, including
comment from stakeholders on possible changes to the Part D benefit
structure.
Further, CMS issued a RFI as part of the 2019 Parts C and D rule
(CMS-4182-P) which sought feedback from stakeholders regarding issues
relating to Part D drug prices in which PBMs play a major role.
Comments received in response to the RFI will be used for possible
consideration in future rulemaking. Additionally, the President's FY
2019 budget contains several policies to modernize the Part D drug
benefit to improve plans' ability to deliver affordable drug coverage
for seniors and reduce their costs at the pharmacy counter, including
efforts to address the misaligned incentives of the Part D drug benefit
structure, such as requiring Medicare Part D plans to apply a
substantial portion of rebates at the point of sale.
Question. The President's plan calls for Part D plan sponsors to
provide information about drug price increases and lower-cost
alternatives in the Explanation of Benefits they send to their
beneficiaries. What protections can be included to ensure beneficiaries
aren't steered toward alternatives that may be unsuitable for their
particular medical needs in an effort to save money by the plan?
Answer. As indicated by the blueprint, the Department sought
comment from stakeholders in the recently proposed Part C and D rule
(CMS-4182-P) on ways to improve the usefulness of the Part D
Explanation of Benefits by including information about drug price
increases and lower cost alternatives. Additionally, as we designed
these proposed changes to Medicare Advantage (MA) and Part D, foremost
in our minds was the impact on beneficiaries and ensuring affordability
and access to medications. The changes we are proposing bring tools to
Medicare that are widely used in private plans. However, it's important
to remember that if seniors don't like a plan that takes advantage of
these new flexibilities, they are in the driver's seat. They have the
option to choose a different plan that better meets their needs. These
new tools will only become as common as beneficiaries want them to be.
Further, CMS reviews plan formularies to guard against discriminatory
practices, and the agency has in place an expedited appeals process for
cases in which a physician recommends an exception to prior
authorization or other forms of management. There are also additional
requirements for plans to cover at least two drugs per class, including
in the protected classes. Ultimately, the changes we are proposing
would reduce costs for protected class medicines and therefore expand
access to these important medicines.
Question. The President's plan calls for shifting some drugs from
Medicare Part B to Part D.
What will the impact be for consumers in what their out-of-pocket
costs will be for their medications if all medicines are moved over?
Do you anticipate an increase in Medicare Part D premiums due to
the shift of drugs from Part B to Part D?
Do you have concerns about rising list prices impacting out-of-
pocket costs for beneficiaries?
Answer. I look forward to working with Congress to explore ways
that we can bring the negotiation strategies that are currently working
in Medicare Part D, into Part B, where prices are modestly negotiated.
I hope to work with you and your colleagues to develop legislation that
will provide us with the authority to re-classify Part B drugs into
Part D, when appropriate, while taking into consideration the projected
impacts on beneficiary access and cost-sharing, as well as costs to the
Medicare program.
Question. Some older generic drugs have increased in price, what
proposals are possible to incentivize companies to keep older generics
in production to prevent monopoly suppliers who are then able to
increase costs without the fear of market share loss?
Answer. I understand the importance of having multiple generic
applications approved, including for older generics, to help provide
American consumers with lower cost medicines. Under the FDA
Commissioner's Drug Competition Action Plan (DCAP), FDA has taken
substantial steps to facilitate increased competition through the
approval of lower-cost generic medicines. In the coming months, FDA
will continue to take actions to enhance the efficiency of the generic
drug review process, to maximize scientific and regulatory clarity with
respect to generic drugs, and to reduce ``gaming tactics'' by brand
name drug companies that delay the generic competition Congress
intended when it enacted the Hatch-Waxman Amendments. All these actions
are intended to help ensure consumers can get the medicines they need
at affordable prices.
FDA cannot determine the precise amount of funding that will go
toward older generics, as it does not ultimately control for which
drugs the generics industry chooses to submit marketing applications,
but the actions it is taking should help encourage industry to invest
in the development of older generics that have minimal competition.
family reunification
Question. On July 6, 2018, the Department of Health and Human
Services (HHS) sent a press release entitled ``HHS is executing on its
mission with care and compassion.'' \6\ In particular, HHS states there
are under 3,000 children who are currently in ORR care where HHS has
evidence that they could possibly have been separated from a parent,
with approximately 100 of those children under the age of 5. The
Department of Justice attorneys provided additional information during
a recent court proceedings regarding the children under age 5: 83 kids
have been linked to 86 parents; 16 kids have not yet been linked with
parents; 46 of those parents remain in the custody of ICE; and 19 of
those parents having been deported from the United States.\7\
---------------------------------------------------------------------------
\6\ https://www.hhs.gov/about/news/2018/07/06/hhs-executing-its-
mission-care-and-compassion.html.
\7\ http://m.cnn.com/en/article/h_a05a00c0075bb46ed2c485af560667c3.
Do the statistics provided by the Department of Justice include
children who have been reunified with a sponsor who is not the parent
from whom they were separated? If so, how many of those children have
---------------------------------------------------------------------------
been reunified with a close relative, legal guardian, or other sponsor?
Answer. Yes, statistics provided to the Department of Justice
included children who were reunified to sponsors other than their
separated parents. Based on February 20, 2019 joint filing report,
there were 580 children reunified with sponsors who were not their
separated parents.
Question. If not, what are the number of children who have been
identified to have close relatives, legal guardians, or other sponsors
instead of parents--as DOJ asserts that 16 kids have not yet been
linked to parents?
Answer. All children in the Ms. L class are linked to the parent
from whom they were separated.
Question. For the parents who have been deported, what actions is
HHS taking to ensure that the child will be reunited with his or her
parent? Are there plans for the parent to return to the United States
and be reunified with his or her child? Please outline in detail the
plan for reunifying deported parents whose children remain in the
United States.
Answer. The court-approved Federal interagency plan for
reunification of minors with parents who are no longer in the United
States provides information responsive to this question and was
submitted to the Court in a filing dated August 16, 2018.
Question. Have the parents who have been deported been notified of
their child's whereabouts/condition/status? Have the parents who have
been deported had any communication with his or her child since their
deportation?
Answer. There are no separated minors in ORR care for whom HHS or
the child's grantee shelter program has not made contact with the
parent. Children are routinely in contact with parents.
dna testing
Question. HHS notes that it is using DNA testing to expedite
verification of parentage. HHS also notes that a DNA test will only be
done when there is a specific parent-child relationship that needs to
be validated.
What is the criteria that is required for HHS to conclude that a
specific parent-child relationship needs validation?
Answer. Initially, HHS attempted to meet the parent-child
relationship verification standard for sponsorship by a parent under
the TVPRA-governed process for safe and timely discharge to a sponsor.
This standard would require birth certificates validated by the
consular authorities of the issuing country, or, if such documents
could not be obtained, DNA biological maternity or paternity
validation. Subsequently, Judge Sabraw ordered that HHS should assume
the putative parentage established at apprehension was accurate unless
there was specific reason to doubt parentage, and that DNA would only
be permitted to be used if required in circumstances where there were
such specific doubts about parentage.
Question. What actions are you taking to ensure that these
requirements are met--and that all other avenues for parent-child
relationship validation are exhausted--before DNA testing is used?
Answer. As of November 2018, all outstanding questions about
parentage are resolved, and there are no separated minors in ORR care
with red flags for doubts about parentage.
Question. Once the DNA tests and the reunification of the family is
complete, is HHS destroying the DNA record?
Answer. All DNA data, samples, and results were ordered destroyed
by the judge in Ms. L, and they have been certified destroyed by the
DNA laboratory.
Question. If so, how long does HHS wait to destroy the DNA record,
and is the information shared with other agencies?
Answer. The information was allowed to be used only for matching of
a child with a parent, and for no other purpose. It was not shared with
any other agencies. All data, samples, and results were ordered
destroyed within 7 days.
Question. If the DNA record is not destroyed, where is it stored
and who has access to it?
Answer. All DNA data, samples, and results were destroyed.
unmatched children
Question. The information regarding the number of children who have
not been linked to his or her parent is concerning. How is HHS working
with DHS to determine the parentage of unmatched children? How many
total children under the age of 5 years old and above the age of five
remain unmatched to his or her parent?
Answer. There are no separated minors in ORR care who are not
matched to a separated parent.
______
Questions Submitted by Hon. Thomas R. Carper
Question. The HHS OIG recently issued a troubling report on drug
prices in Medicare Part D in the period from 2011 to 2015. In
particular, the OIG's findings that the number of seniors paying $2,000
or more almost doubled, and that the 20 drugs with the highest cost
increases have almost no alternatives. Have you reviewed this HHS OIG
report? How will your proposals to introduce value-based pricing to
Medicare Part D bring down these costs for patients?
Answer. As the President's blueprint to lower prescription drug
costs notes, the Department is considering use of value-based
purchasing in Federal programs. For example, the Department is
reviewing comments solicited in the blueprint on the relationship
between programs such as the Medicaid Best Price requirement and
efforts to promote value-based arrangements in the States.
Question. Physician and patient groups have expressed great
concerns with your proposal to shift drugs from Medicare Part B to Part
D. They are especially concerned that this shift could increase
beneficiary cost-sharing and out-of-pocket costs, such as for patients
suffering from cancer. Beneficiaries with supplemental coverage for
Part B but no Part D coverage might pay much higher out-of-pocket costs
under this change. On recent Avalere study found that Medicare
patients' out-of-pocket costs for new cancer drugs were about 33
percent higher for Part D-covered new cancer therapies than for cancer
therapies covered in Part B. Do you agree that any policy change that
moves covered drugs from Medicare Part B to Part D should be
accompanied by reforms to reduce patients' out-of-pocket costs and co-
payments in Medicare Part D?
Answer. I look forward to working with Congress to explore ways
that we can bring the negotiation strategies that are currently working
in Medicare Part D into Part B, which modestly negotiates prices by
providers though Medicare does not have a role in these negotiations. I
hope to work with you and your colleagues to develop legislation that
will provide us with the authority to re-classify Part B drugs into
Part D when appropriate, while taking into consideration the projected
impacts on beneficiary access and cost-sharing, as well as costs to the
Medicare program.
Question. Like most of my colleagues, I was deeply troubled by the
administration's policies that led to separating children from their
parents at the U.S. southern border. On June 20, 2018, the president
signed an executive order that would end his own policy. However, the
solution he seeks to put in place is costly and flawed. I believe that
without addressing the root causes of migration to the U.S. southern
border, we will continue to see this problem. The Department of Health
and Human Services is charged with housing and care of unaccompanied
migrant children after they arrive at the border. As you are aware, HHS
already had difficulty keeping track of the children it was charged
with before the administration put its zero tolerance policy in place,
which added hundreds of additional children in to ORR's care. What
steps is HHS taking to improve its oversight of these facilities?
Answer. ORR conducts oversight visits at least monthly to ensure
that care providers meet minimum standards for the care and timely
release of unaccompanied alien children, and that they abide by all
Federal and State laws and regulations, licensing and accreditation
standards, ORR policies and procedures, settlement agreements, and
child welfare standards. ORR increases the frequency of monitoring if
it is warranted by issues identified at a facility. In addition, if ORR
monitoring finds a care provider to be out of compliance with
requirements, ORR issues corrective action findings and requires the
care provider to resolve the issue within a specified time frame. ORR
also provides technical assistance, as needed, to ensure that
deficiencies are addressed.
These ORR monitoring and compliance activities are divided among
various Federal ORR teams. The teams work collaboratively, but also
independently in order to provide a higher level of scrutiny and
focused attention on various tasks. HHS updates and improves the
monitoring tools, processes, and resources regularly to meet changing
procedures and regulations.
Question. It's my understanding that the Joint Concept of
Operations between the Office of Refugee Resettlement (ORR), and the
Department of Homeland Security is supposed to be completed soon. This
Joint Concept of Operations would outline how the agencies keep track
of children transferred into HHS custody from DHS. Are you on track to
meet that deadline? What have your communications been like with Scott
Lloyd, the Director of the Office of Refugee Resettlement? Do you
believe his office is prepared to meet the deadline? If not, what needs
to be changed?
Answer. The Joint Concept of Operations (JOC) was finalized on July
31, 2018, and addresses intersecting responsibilities between HHS's ORR
and DHS as it relates to transporting, processing, and caring for UAC,
including during an influx.
Question. Recent reporting by The New Yorker indicated that the
Office of Refugee Resettlement, a part of the Department of Health and
Human Services, did not have adequate plans in place to reunite parents
with children who are being held at the border. Nonprofit agencies,
such as Kids in Need of Defense, have stepped up to fill the void,
making phone calls to ICE and HHS to try to find out the location of
parents and children in order to make sure they can keep track of each
other. Over the weekend of June 23-24, Customs and Border Protection
stated that it had reunited 538 children in its custody with their
parents, and that it had halted referring all border crossers to the
Department of Justice. How many children has HHS reunited with their
families? When do you expect this process to be completed?
Answer. Of the 2,816 minors identified as potentially separated
from parents in the Ms. L vs. ICE class, as of December 12, 2018, 2,149
have been reunified with the parent from whom they were separated. An
additional 508 have been discharged under other appropriate
circumstances--most through discharge to family member sponsors based
on parents' waiving reunification. There are 79 children who were
subsequently determined not to have been separated from a parent by the
government. There were 123 children who were separated from parents and
were still in care who were on a pathway to standard sponsorship
because their parents had waived reunification or a final determination
had been made that they could not safely be reunified with their
parent. As of December 12, there were 8 children remaining to be
reunified with parents. HHS anticipates prompt completion of the
reunification of children with parents from whom they were separated.
______
Questions Submitted by Hon. Benjamin L. Cardin
drug pricing
Question. While the administration has come up with a number of
proposals to address the cost of drugs, in reality none of these
policies address the core problem which is that the prices for
prescription drugs continue to sky rocket. Particularly, drug
manufacturers continue to increase the prices of their drugs despite
President Trump's promise that the opposite would occur. Under your
blueprint, I see nothing that changes the status quo or discourages
drug manufacturers from exponentially increasing prices. For example,
what consequences would a drug maker face if they raise their price of
a Part D drug under the administration's blueprint?
Answer. The President's blueprint to lower prices acknowledges that
a growing number of complex high-cost drugs account for a growing
percentage of health-care spending, and that the pharmaceutical
industry has shifted its attention to high-cost drugs that face little
to no competition, because they offer the freedom to set high launch
prices and increase them over time. In an effort to address the problem
of high-cost drugs, the Trump administration believes it is time to
realign the system in four ways, outlined in the President's blueprint
to lower drug prices: increasing competition, improving government
negotiation tools, creating incentives for lower list prices, and
bringing down out-of-pocket costs for consumers. The Department has
solicited, and is currently reviewing, comments on these ideas for
consideration in actions to address high drug prices.
drug shortages
Question. Drug shortages pose a threat to an individual's access to
care. These shortages can occur due to range of issues from problems in
drug quality, to unforeseen events such as natural disasters. For
instance, Hurricane Maria impacted Puerto Rican drug manufacturing
facilities, which worsened shortages of IV fluids. Drug shortages lead
to delays in or rationing of care, difficulties finding alternative
drugs, risk associated with medication errors, higher costs, reduced
time for patient care, and hoarding or stockpiling of drugs in
shortage.
I have been contacted by providers in Maryland regarding the
dangers and prevalence of these shortages, and believe we must do
everything possible to assist them, so they have the resources to care
for their patients. I was disappointed to see that the Trump
administration's drug pricing blueprint did not address drug shortages.
Does the Trump administration have a plan to tackle the issue of
drug shortages? If so, what actions can Congress take in order to
assist in that plan?
Answer. In July 2018, FDA announced the formation of a new Drug
Shortages Task Force charged with delving more deeply into the reasons
behind some of the more persistent shortages and looking for solutions
to address these ongoing challenges. While FDA is directed to convene
the group, we are working with our partners across the administration
and seeking input from industry and other members of the public to
evaluate the current authorities to consider how we might better help
prevent and mitigate shortages. The new task force includes Federal
partners on the shortage issues, including the Centers for Medicare and
Medicaid Services, the Department of Defense, the Department of
Veterans Affairs, the Office of the Assistant Secretary for
Preparedness and Response, and the Federal Trade Commission.
The task force expands upon the work of a group that was created by
FDASIA, which gave the FDA new authorities to help address drug
shortages. This includes creating the requirements that manufacturers
of certain drugs that are life-supporting, life-sustaining, or intended
for use in the prevention or treatment of a debilitating disease or
condition notify us of a permanent discontinuation or temporary
interruption in manufacturing that is likely to lead to a meaningful
disruption in the supply of such drugs in the United States.
naloxone negotiation
Question. An effective way to save those who are suffering from an
opioid overdose is to provide them with naloxone, which can quickly
restore normal respiration to a person whose breathing has slowed or
stopped as a result of overdosing with opioids. The city of Baltimore
has been aggressive in combatting the opioid crisis.
Since 2015, everyday Baltimore residents have saved more than 1,800
lives with naloxone. Baltimore first responders have saved more than
10,000 lives over the same time period. However, the city cannot afford
all the naloxone needed, so it is having to ration its supply,
prioritizing distribution to individuals at highest risk of overdose.
No police officer, no firefighter, no public health provider, and
no person should be unable to save a life because of the high price. By
bringing down the cost of naloxone, we can get this life-saving drug in
the hands of more people. Doing so will save countless lives. One way
to help bring down the cost is to allow CMS to negotiate lower prices
for naloxone under Medicare Part D.
Do you support allowing CMS to negotiate lower prices for naloxone
under Medicare Part D?
Answer. The administration's drug pricing strategy is intended to
address the price of all prescription drugs, including naloxone.
Question. Additionally, the Federal Government has the authority
under 28 U.S.C. Sec. 1498, to make or purchase a patented invention,
including medication, without the permission of the patent holder in
exchange for reasonable compensation. The government could then either
produce or contract with generic producers to make naloxone, which
would drastically reduce its price. This would allow localities and
first responders the ability to have enough access to the medication to
save more lives.
What is the Trump administration's position on using its
``government use authority'' to help drive down the cost of naloxone?
Answer. The administration's drug pricing strategy is intended to
address the price of all prescription drugs, including naloxone.
children separated at the border
Question. President Trump purposely chose to use children as
leverage to try to keep parents from crossing the border. He
underestimated the universal opposition to such a callous and inhumane
policy. Signing an executive order that changes policy from keeping
toddlers in jails and cages to keep families in jail, is not a
solution. The damage he has done to our country, to these children, and
to America's standing in the world is incalculable.
Our Maryland Attorney General, Brian Frosh, has written to you and
asked for data on the children being held at Maryland facilities that
are under the custody of the Office of Refugee Resettlement, under the
Administration for Children and Families, which you oversee.
Can you provide me now with the number of children and their ages
separated from their parents that are placed in Maryland under ORR
custody, the number of locations being used in Maryland, and the
timeline for reunification of these children with their parents?
Answer. There are at least 21 UAC that were possible children of
potential class members that were placed in the State of Maryland. Out
of 21 children, 18 were 5 years and older and 3 were below 5. There are
two programs in Maryland namely Bethany Christian Services Maryland and
Board of Child Care Shelter. The 21 UAC have all been discharged.
Question. Are parents provided with information on the status of
their children?
Answer. Yes. All parents of separated children have been contacted
by the case manager working with the child.
Question. Why shouldn't the State be told about the number of
children within ORR custody in their State?
Answer. This information is routinely available to the State. State
licensure authorities license ORR shelter facilities to provide
residential care to children, and can inspect the sites at will.
teen pregnancy prevention program
Question. I'd like to ask you about the future of the evidence-
based Teen Pregnancy Prevention (TPP) Program. As you may know, this
program has been recognized by independent experts as a stellar example
of how to implement evidence-based policymaking--something that should
be expanded, not cut short. Last fall, the bipartisan Commission on
Evidence-Based Policymaking, established by House Speaker Paul Ryan,
highlighted the TPP Program as an example of a Federal program
``developing increasingly rigorous portfolios of evidence.''
Baltimore City's teen pregnancy rate is three times as high as the
national average. Last summer, your agency terminated the existing TPPP
grants. There were three Maryland entities that stood to lose funding:
the Baltimore City Health Department, Health Teen Network, Inc., and
Johns Hopkins University's Center for American Indian Health. Maryland
grantees were set to lose over $6.7 million in funding.
This spring HHS released two new funding opportunity announcements
for the TPP Program that prioritize ideology over evidence. Thankfully,
five Federal courts, including a class action, have ruled in favor of
the health and well-being of American teens, parents, and families--
stating that the Trump-Pence administration's early termination of Teen
Pregnancy Prevention Program (TPPP) grants is unlawful.
These important programs have a growing body of evidence-based
approaches that meet the diverse needs of young people. Moving forward,
will HHS rely on the agency's own high quality research on evidence-
based programs?
In making decisions about TPPP in FY18, please share what body of
evidence did HHS rely on to justify the shift toward funding to
emphasize risk reduction or returning to abstinence-only regardless of
the actual needs of young people?
Answer. HHS relied on findings from the rigorous evaluation of 37
TPP-funded studies for a 2016 longitudinal study of TPP Program
Grantees (FY 2010-2014). Overall, 73 percent of the evaluated projects
either had no impact or had a negative impact on teen behavior. Though
there were some positive effects on teens' knowledge, attitudes, and
intentions, changes in attitude are of limited value in measuring the
success of a program that seeks to change behavior. Moving forward, HHS
will continue to comply with the applicable appropriations statute(s).
Decisions by the Department are being guided by science and a firm
commitment to giving all youth the information and skills they need to
improve their prospects for optimal health outcomes.
______
Questions Submitted by Hon. Sherrod Brown
transparency
Question. As part of your written testimony, you mentioned that one
of HHS's initial actions to address drug pricing is ``working to
require drug companies to include their list price on their television
commercials.''
Why is this one of your first priorities?
How will this effort lower the cost of lifesaving prescription
drugs?
Answer. We aim to reduce the price to consumers of prescription
drugs and biological products. HHS has proposed a rule which would
require direct-to-consumer (DTC) television advertisements for
prescription drug and biological products for which payment is
available, directly or indirectly, through or under Medicare or
Medicaid to include the list price of that product. We are proposing
this regulation to improve the efficient administration of the Medicare
and Medicaid programs by ensuring that beneficiaries are provided with
relevant information about the costs of prescription drugs and
biological products so they can make informed decisions that minimize
not only their out-of-pocket costs, but also unreasonable expenditures
borne by Medicare and Medicaid, both of which are significant problems.
Markets operate more efficiently and competitively when consumers
have relevant information about a product, including its price, as well
as alternative products and their prices, before making an informed
decision whether to buy that product or, instead, a competing one.
Consumers price shop when looking to purchase a new car, a new house,
or even a new coffee maker. Price shopping is the mark of rational
economic behavior. To facilitate price shopping, sellers invariably
provide potential buyers with the prices of their products; consumers
gauge the reasonableness of these prices against alternatives. Even
automobile dealerships, as result of Federal law, post the retail or
``sticker'' price on the side window of each new car offered for sale.
That has not been the case with prescription drugs or biological
products, where consumers often need to make decisions without
information about a product's price. Price transparency is a necessary
element of an efficient market that allows consumers to make informed
decisions when presented with relevant information, but for consumers
of prescription drugs, including those whose drugs are covered through
Medicare or Medicaid, both the list price and actual price to the
consumer remain hard to find.
drug importation
Question. Following your confirmation hearing, I submitted a
question for the record (QFR) on drug importation and whether or not
you would support the safe importation of prescription drugs from
countries with rigorous safety standards, like Canada.
More than 25,000 Ohioans currently rely on Canadian pharmacies for
more affordable prescription drugs.
In response to my question, you answered: ``If confirmed, I commit
to exploring whether any pilots or demonstrations might be utilized to
see if a system could be set up in a way such that public health
officials would support a determination of no additional risk to the
public's health and safety and of a significant reduction in costs for
American consumers, when appropriately scaled up to represent the
likely level of importation.''
Have you explored any pilots or demonstrations to test safe
importation as described in your answer to my QFR?
Do you have plans to do so prior to the end of the year?
Answer. One thing that President Trump and I have been clear about
on drug pricing is that we consider this a serious issue, in need of
serious solutions. The Congressional Budget Office has assessed full-
scale reimportation multiple times and has said it would have no
meaningful effect.
One of the main reasons is that Canada's drug market is simply too
small to bring down prices here. Canada simply doesn't have enough
drugs to sell them to us for less money, and drug companies won't sell
to Canada or Europe more just to have them imported here.
On top of that, the last four FDA Commissioners have said there is
no effective way to ensure drugs coming from Canada really are coming
from Canada, rather than being routed from, say, a counterfeit factory
in China. The United States has the safest regulatory system in the
world. Opening our borders to potentially unsafe drugs in search of
savings is too great a risk.
We know, however, that for certain critical medicines, where there
are no blocking patents or exclusivities associated with the drugs, and
where there is only a single manufacturer (sole-source), conditions may
develop that create significant barriers to, and ultimately threaten,
patient access.
The FDA is presently examining whether--for certain critical
medicines, where there are no blocking patents or exclusivities
associated with the drugs, but where there is only a single
manufacturer (sole-source)--sudden, significant price increases have
created significant barriers to, and ultimately threaten, patient
access. To pursue these considerations, FDA has formed a work group to
explore various policy frameworks that, through the exercise of
enforcement discretion or otherwise, would involve the importation of
drugs under circumstances that meet these criteria and that would be
suitable substitutes for the FDA-approved version of the medically-
necessary drugs. We will consider whether and how the foreign versions
of these medicines can be imported with adequate assurances of safety
and effectiveness.
______
Questions Submitted by Hon. Robert P. Casey, Jr.
on delivery system reform in rural areas
Question. You have identified value-based care are one of your four
priorities. As you know, rural providers face unique challenges in
undertaking value-based payment models. What specific options are you
exploring and steps are you taking to help rural providers pursue
delivery system reform?
Answer. We are committed to bringing a rural health-care focus to
health-care delivery and payment reform initiatives. This includes
engaging stakeholders and rural health-care providers on delivery
system reform and innovation opportunities. One example of our focus on
rural health care is CMS's Pennsylvania Rural Health Model, which seeks
to increase rural Pennsylvanians' access to high-quality care and
improve their health, while also reducing the growth of hospital
expenditures across payers, including Medicare, and increasing the
financial viability of rural Pennsylvania hospitals to ensure continued
access to care.
on drug pricing
Question. I have heard concerns that your proposal to move drugs
from Medicare Part B into Medicare Part D could result in increased
out-of-pocket costs for Medicare beneficiaries. Have you done any
analysis on the direct impact this change will have on patients with
cancer and other serious illnesses? What are you doing to protect these
beneficiaries?
Answer. I look forward to working with Congress to explore ways
that we can bring the negotiation strategies that are currently working
in Medicare Part D into Part B, where prices are modestly negotiated,
by providers though Medicare does not have a role in these
negotiations. I hope to work with you and your colleagues to develop
legislation that will provide us with the authority to re-classify Part
B drugs into Part D, when appropriate, while taking into consideration
the projected impacts on beneficiary access and cost-sharing, as well
as costs to the Medicare program.
on family separation and reunification
Question. Secretary Azar, during your testimony you said several
times that Congress or the courts should change the requirement that
children not be kept in detention facilities for more than 20 days
under most circumstance. You said that the 20-day requirement impedes
the ability of the administration to re-unify families and keep
families together, and so it was really a problem for the Courts and
Congress. Are you suggesting that HHS should have the ability to
indefinitely keep children in detention? Do you disagree with the
American Academy of Pediatrics that ``even brief detention can cause
psychological trauma and induce long-term mental health risks for
children'' and that the government should ``[e]liminate exposure to
conditions or settings that may retraumatize children, such as those
that currently exist in detention, or detention itself,'' http://
pediatrics.aappublications.org/content/early/2017/03/09/peds.2017-0483.
Do you believe that keeping children and families in immigrant
detention facilities, which are a prison-like environment, is in the
best interest of children?
Answer. HHS defers to ICE to respond to questions about conditions
in ICE Family Residential Centers. Family Residential Centers are not
the same as adult detention facilities.
Question. What efforts were made by the Trump administration to
ensure that children who were forcibly separated from their parents
were able to remain together with their siblings in detention?
Answer. In accordance with ORR Policy Guide, Section 1.2.7, ORR
routinely keeps sibling groups together, except in highly unusual
circumstances. UAC are placed in the least restrictive setting that is
in the child's best interest in accordance with the law. Generally, the
vast majority of UAC are placed in non-secure State-licensed
residential child care facilities or transitional foster care homes or
group homes.
Question. Are there cases in which a parent had more than one of
their children forcibly separated from them and the children were sent
to different detention centers? If this occurred, are children being
held in detention facilities able to regularly contact their sibling(s)
who is being held in a different detention center(s)? Please provide
the total number of siblings who were separated from their families,
the number of siblings who remained together in detention, and the
number who were separated. Please break these numbers down by age
group.
Answer. In accordance with ORR Policy Guide, Section 1.2.7, ORR
routinely keeps sibling groups together, except in highly unusual
circumstances. From the 2,816 possible children of potential Ms. L
class members, there are 328 with siblings. Out of 328 children, 316
children were placed together and 12 children were placed in a
different program.
Question. The American Academy of Pediatrics recently released a
statement opposing the detention of immigrant children, saying that:
``In 2017, the AAP published a policy statement that immigrant children
seeking safe haven in the United States should never be placed in
detention facilities. Studies of detained immigrants have shown that
children and parents may suffer negative physical and emotional
symptoms from detention, including anxiety, depression and
posttraumatic stress disorder. Conditions in U.S. detention facilities,
which include forcing children to sleep on cement floors, open toilets,
constant light exposure, insufficient food and water, no bathing
facilities, and extremely cold temperatures, are traumatizing for
children. No child should ever have to endure these conditions.'' Are
you aware that the American Academy of Pediatrics released this
statement opposing the detention of immigrant children? Do you disagree
with the American Academy of Pediatrics statement? Were statements like
this from medical experts taken into consideration before the Trump
administration's policy of ``zero tolerance,'' and thus de facto family
separation, was implemented? If yes, please state which medical experts
or organization were consulted.
Answer. All UAC receive a high standard of medical care while in
the government's custody. UAC receive an initial screening for visible
and obvious health issues when they first arrive at U.S. Border Patrol
facilities. Children must be considered ``fit to travel'' before they
are moved from a border patrol station to an HHS-funded care provider.
UAC are medically screened and receive initial vaccinations within 48
hours of arriving at a HHS-funded care provider. The initial screening
includes a general health assessment, including a mental health
screening and a review of vaccination history. If a vaccination record
is not located or a child is not up-to-date, the child receives all
vaccinations recommended by the Centers for Disease Control and
Prevention (CDC). Some health conditions may manifest after the UAC is
transferred to an influx care facility. If a health issue arises, the
UAC will receive prompt attention and medical care is provided.
Question. Has HHS, DHS, or DOJ consulted with medical experts and
child welfare experts when implementing their policies pertaining to
the forced separation, detention, and care of children? If yes, which
groups were consulted and what issues were discussed? Did the groups
support the administration proposal?
Answer. Care of children in ORR custody is informed by child
welfare and medical expertise, including that of social workers and
physicians on the ORR staff. When ORR receives a child that another
Federal agency has referred to its care, ORR performs several different
clinical assessments. These include:
The UAC Assessment, which covers biographic, family, legal/
migration, medical, substance abuse, and mental health history.
A trafficking assessment, which is part of the UAC
Assessment and identifies whether a child has been trafficked.
An educational assessment, which determines academic level.
A medical assessment, which occurs within 48 hours of
arrival in the ORR care provider facility.
The Assessment for Risk, which occurs within 72 hours of
admission and every 30 days thereafter to reduce the risk that
a child is sexually abused or abuses someone else in ORR care.
The UAC Case Review, which updates the child's file
initially on the child's 30th day in care and subsequently
every 30 days (or 90 days for children in long-term foster
care).
Question. Do HHS, DHS, or DOJ have plans to consult with medical
experts and child welfare experts now and in the future regarding the
detention of children and the care that is provided for these children?
If yes, which experts will be consulted and how?
Answer. HHS provision of care to children in the Unaccompanied
Alien Children program is routinely informed by evidence and practice
models in child welfare.
Question. What policies and resources do you have in place to
provide long-term services and supports for children who will suffer
ongoing trauma and possible mental health issues as a result of being
forcibly separated from their parents?
Answer. All children in ORR care receive mental health services
while in care. Every child in care has a mental health clinician. ORR
is not appropriated or authorized to provide long-term mental health or
other medical services to minors who are discharged from ORR care, but
referrals and resource connections to available services are provided
at discharge.
Question. Do you know, does HHS know, where all of the children
separated from their parent(s) since the implementation of this zero
tolerance policy are, including their names and locations and the names
and locations of their parent(s)?
Answer. HHS is continuously aware of the locations of all children
in ORR care, including those minors who were separated. HHS identified
2,816 children who are or were in ORR care who were potentially
separated, and all of these children have been linked to a parent. HHS
or the ORR shelter program case manager has established contact with
all parents of separated children.
Question. Can you, with 100-percent accuracy, link a child held in
a facility to the location of his or her parent(s)?
Answer. HHS is continuously aware of the locations of all children
in ORR care, including those minors who were separated. HHS identified
2,816 children who are or were in ORR care who were potentially
separated, and all of these children have been linked to a parent. HHS
or the ORR shelter program case manager has established contact with
all parents of separated children. For parents who are outside the
United States, the government provides the ACLU with contact
information for the parents, and the wishes of parents are conveyed to
the government by the ACLU Steering Committee.
Question. How many unaccompanied immigrant minors are currently
residing in Pennsylvania? Where are these children currently residing?
Answer. As of November 19, 2018, there were 164 unaccompanied alien
children in ORR care in Pennsylvania.
Question. In addition, please provide a list of all Office of
Refugee Resettlement contracted facilities with unaccompanied children
(UACs) in Pennsylvania, as well as a description of the vetting and
oversight conducted by your department over these facilities.
Answer. There are three Pennsylvania-based ORR residences for
unaccompanied children: (1) Holy Family Institute, (2) KidsPeace
Shelter, and (3) KidPeace Long Term Foster Care. All ORR residences in
Pennsylvania must to comply with Pennsylvania licensing requirements
and the ORR Policy Guide located at https://www.acf.hhs.gov/orr/
resource/children-entering-the-united-states-unaccompanied. Their
compliance is monitored by periodic on and off site review by ORR
monitors, program officers, and Federal field staff.
Question. What efforts have you made to comply with the court order
requiring that all children under 5 be reunited with their parent or
guardian by 2 weeks from the order and that all additional children be
reunited within the month of the order? Will you comply with the order?
When will you have reunited all of the children with their families?
Answer. As of December 12, 2018, there were 103 children under the
age of 5 identified as potentially separated in the Ms. L case. Of
these, 99 were discharged from ORR care, 80 of them through
reunification with the parent from whom they were separated. Two
children under the age of 5 remain in care who were subsequently
determined not to have been separated, and two children remain in care
who cannot be reunified with the parent due to a final determination by
the government that reunification with the parent would pose a risk to
child safety and well-being. The efforts of the government to reunify
the children with their parents, consistent with the safety needs of
the child, has elicited positive comments from Judge Sabraw.
Question. The Attorney General made the zero tolerance policy
(i.e., defacto child separation policy) announcement on May 7th. When
did you know you would be responsible for the care of these children?
When were you told you would need to provide the physical, emotional,
and other necessary support for these children?
Answer. Though HHS has been involved in interagency discussions
related to a myriad of options for responding to increasing migration
numbers, HHS was informed of the zero tolerance policy when it was
announced by the Attorney General. HHS has a strong history of
providing excellent care to all UAC referred from DHS.
Question. I understand that HHS contracts with private residential
facilities to care for Unaccompanied Alien Children (UACs). Please
provide a list of entities that have been contracted for these
services. In addition, provide documentation of the requirements for
each of these facilities, including the background and training
requirements for those providing care.
Answer. An accompanying document lists the residential facilities
in the UAC Care Provider Network. Each facility must comply with the
licensing requirements for the State in which it is located, as well as
the guidelines set forth in the ORR Policy Guide. Staff who are
required to have professional certifications must maintain licensure
through continuing education requirements. In addition, all care
provider staff must complete 40 hours of training annually. Foster care
providers and foster families are subject to all ORR training and
documentation requirements.
Question. What training do the staff who care for these children
have to address the trauma the children have experienced?
Answer. HHS prioritizes the physical and emotional safety and well-
being of all children in ORR care and custody. ORR works to ensure that
care provider staff are trained in techniques for child-friendly and
trauma-informed interviewing, assessment, observation and other
techniques, and are also trained to identify children who have been
smuggled (i.e., transported illegally over a national border) and/or
trafficked in the United States. Furthermore, staff who are required to
have professional certifications (i.e., mental health clinicians) must
maintain licensure through continuing education requirements.
Question. Please describe what, if any, protocols and training are
in place to ensure adequate care for the needs of children that have
been separated from their families, including those with disabilities,
those with chronic health conditions, those with emotional support
needs and the services and treatments you are providing to them.
Answer. All children in ORR care receive mental health services
while in care. Every child in care has a mental health clinician.
Children in the UAC Program often have severe trauma histories, and the
program is trauma-focused to respond to those needs.
Question. Are there any children in your care who have
disabilities? Please describe, without personally identifiable
information, the number of separated children in your care with Down
syndrome, autism, or any other type of disability. In addition, please
provide these numbers grouped by age as well as a description of the
services available and being provided to them.
Answer. Within ORR's Unaccompanied Alien Children (UAC) Program,
the Division of Health for Unaccompanied Children (DHUC) oversees
public health screening and the provision of health services to UAC.
DHUC monitors for serious medical conditions and infectious diseases of
public health importance. DHUC responds to ORR-funded programs caring
for UAC 24 hours a day, 7 days a week and provides management guidance
on infectious diseases and complex medical cases.
Each ORR-funded program that cares for UAC, including UAC with
special health-care needs, has an established network of health-care
providers, including specialists, emergency care services, mental
health practitioners, and dental providers. ORR-funded programs are
required to facilitate an initial medical examination (IME) within 2
business days of admission into ORR custody. The IME is administered by
an MD, DO, NP, or PA, who must review and assess specific components
such as current health complaints, family history, mental health
issues, sexual and physical abuse, and infectious disease screening. If
the provider feels a health condition, including conditions identified
among children with special health-care needs, warrants additional
follow-up, a referral is made. Once approval from ORR is obtained, the
ORR-funded program schedules the soonest available appointment.
The requested information of separated children with special
health-care needs is not captured in a currently accessible format.
Children with special health-care needs, regardless of circumstances,
are medically managed in a manner consistent with current medical best-
practices.
Question. What have been your recommendations to the President
regarding the care and treatment of the children who have been
separated from their families?
Answer. HHS is continuing a strong history of providing excellent
care to unaccompanied alien children (UAC) referred to us from the
Department of Homeland Security. Our goal is, and always has been, to
return these children to the care of a parent or, if a parent is not
available, to safely release the child to a close relative or an
unrelated sponsor designated by a parent. In this mission, we are
carrying out the responsibilities given to HHS by Congress in the
Homeland Security Act of 2002 and further developed in the William
Wilberforce Trafficking Victims Protection Reauthorization Act of 2008
(TVPRA). We are protecting and providing care for these UAC.
Question. Have you shared with the President and Attorney General
information about the trauma that separation and detention causes to
these children and their parents?
Have you shared with the President the recommendations of the
American Academy of Pediatrics that separation of children from their
parents and family detention can ``cause serious dangers to children's
health and can result in lifelong consequences for educational
achievement, economic productivity, health status, and longevity''
itself?
Have you shared with the President the recommendations of the over
230 child welfare organizations that have condemned the separation and
detention of children?
Answer. The Unaccompanied Alien Children (UAC) Program at HHS was
created by Congress in the Homeland Security Act of 2002. In the past
16 years, HHS has seen more than 250,000 children who have experienced
the sadness and loss of absent parents. These parents may have left
their children behind in their home country when they came to the
United States, resulting in years of separation during which the
children were often left in the care of relatives, or sent the children
to the United State for work or education. The President and the
Attorney General know the trauma that the decisions of parents, such as
committing a crime, can have on their children.
Question. What has been your recommendation, as the
administration's leader on health and human services, regarding
separation of children from families and long-term detention of
children?
Answer. HHS has made reunification of separated children,
consistent with the President's executive order and the orders of the
U.S. District Court for the Southern District of California, a priority
for the Department.
Question. HHS has been caring for some of these children for
months. How is the administration paying for this care? Where are the
funds coming from? What is the total cost of this policy? Please
provide a full accounting of how HHS is paying for the facilities and
services necessary to care for these children, and to the extent
applicable their families, and where those funds are diverted from.
Answer. Funding for care of all Unaccompanied Alien Children in FY
2018 came from appropriations for that year, carryover funding from
prior years, reprogramming within the Refugee and Entrant Assistance
account, and transfers from other sources within the Secretary's
transfer authority.
The estimate of expenditures in FY 2018 and FY 2019 related to the
care and reunification (or other appropriate discharge) of possible
children of potential Ms. L. class members is below. ORR estimates the
shelter costs, including clothing, education, recreation, and food at
$58,800,000. The estimated DNA screening costs are $1,400,000. The
estimated medical services are $2,670,000. The estimated legal services
are $4,010,000. The estimated case management and program support costs
are $13,470,000. As of November 1, 2018, the total estimated cost is
$80,350,000, or four percent of the total amount of funds obligated for
the UAC program in FY 2018. This cost is only a small part of total UAC
costs in FY 2018. The costs incurred are ongoing as separated children
remain in ORR custody.
______
Questions Submitted by Hon. Sheldon Whitehouse
Question. Secretary Azar, I have heard from hospitals in my State
about the effect that drug shortages are having on the ability to
safely and effectively practice medicine in emergency rooms and
throughout the hospital. While I have been pleased to see the progress
on addressing the shortage of saline after Hurricane Maria, that is far
from the only drug shortage problem our country is facing. Hospitals in
my State report shortages of local anesthetics, injectable opiates,
epinephrine, sodium bicarbonate, parenteral nutrition, and more. One
hospital system in my State has noted the need to use ``creative''
purchasing practices, changing up the products and dosages it buys, and
thus increasing the risk of providers making errors when needing to get
up to speed on a new product.
In 2017, we know there were 39 new and 41 ongoing shortages,
despite what the FDA is already doing. What else is the FDA going to do
to alleviate these shortages, and prevent future shortages from
disrupting the practice of medicine? Does FDA have all the authority it
needs to intervene in the case of a potential or ongoing drug shortage?
Many of the drugs in shortage are low-margin, generic products with
limited competition. How can the FDA and Congress prevent instances of
limited competition from jeopardizing access to needed medications?
Answer. In July 2018, FDA announced the formation of a new Drug
Shortages Task Force charged with delving more deeply into the reasons
behind some of the more persistent shortages and looking for solutions
to address these ongoing challenges. FDA is directed to convene the
group, we are working with our partners across the administration and
seeking input from industry and other members of the public to evaluate
the current authorities to consider how we might better help prevent
and mitigate shortages. The new task force includes FDA's Federal
partners on the shortage issues, including the Centers for Medicare and
Medicaid Services, the Department of Defense, the Department of
Veterans Affairs, the Office of the Assistant Secretary for
Preparedness and Response, who collectively provide or pay for health-
care services and prescription medicines for millions of Americans, and
the Federal Trade Commission.
The task force expands upon the work of a group that was created by
FDASIA, which gave the FDA new authorities to help address drug
shortages. This includes creating the requirements that manufacturers
of certain drugs that are life-
supporting, life-sustaining, or intended for use in the prevention or
treatment of a debilitating disease or condition notify us of a
permanent discontinuation or temporary interruption in manufacturing
that is likely to lead to a meaningful disruption in the supply of such
drugs in the United States.
______
Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a hearing on drug
pricing and innovation with Health and Human Services (HHS) Secretary
Alex Azar.
We are pleased to have Secretary Azar appear before the committee
today, and I know members on both sides of the aisle are eager to hear
from him on the Trump administration's plans to lower prescription drug
costs.
I was in the Rose Garden when the President announced his plan to
put patients first by lowering prescription drug and out-of-pocket
costs to consumers.
I commend the President and the Secretary for their focus in this
area and for releasing this comprehensive blueprint.
I also appreciate that HHS is seeking feedback from the public on
the policy ideas in the blueprint. The administration is prudent to
work through options by properly consulting those affected by these
policies first.
As we continue to develop policy options, it is imperative to
understand the impact on patient access, affordability and innovation
before taking any specific action.
To that end, today is a golden opportunity for members to discuss
policy proposals and ideas in the blueprint, which contemplates many
weighty issues that would seriously change the current way of doing
things.
And on that note, I believe that those who have criticized the
blueprint as insufficient are either responding from a lack of
knowledge or purely for political gain.
Now, I bring to the table decades of experience of working on drug
pricing. That's why we've titled today's hearing in a way that clearly
explains the heart of these issues: ``Prescription Drug Affordability
and Innovation.''
This hearing title references a concept that has been very
important to me throughout my time in the Senate.
After all, the goal is to help consumers, and the best way to do
that is to balance both affordability and innovation.
Over 3 decades ago, I championed the Drug Price Competition and
Patent Term Restoration Act, what has since become known as Hatch-
Waxman.
As I noted in an editorial that ran in Roll Call yesterday, the
Hatch-Waxman law established a system for regulating drugs that rewards
new products while encouraging generic competitors.
Around that same time, I sponsored the Orphan Drug Act.
And I am proud to say that law has resulted in new treatment
options that have enhanced care and dramatically improved the quality
of life for hundreds of thousands, if not millions, of people who live
with rare diseases.
Those two bills are just the tip of the iceberg though. I have
since spearheaded numerous other legislative initiatives to address
shortcomings in the system and to capitalize on opportunities for
improvement.
I brokered the agreement that allowed physician-administered
biologics to flourish--providing effective treatment for many cancers
and other serious medical conditions.
More recently, I have successfully advocated for policies that
promote development of biosimilars as a way to foster competition and
lower costs.
I do not bring up this history to boast, but to point out that the
pursuit of the balance of affordability and innovation has served us
well.
Now, nearly 90 percent of prescription drugs dispensed to patients
are generics. Yet, we also have realized life-altering breakthroughs in
treatment.
Maintaining this balance must be a part of the conversation here
today and as we move forward. And any lasting solution must continue to
be market-driven.
The Medicare Part D prescription drug program is built on a system
of private entities competing on price and service. This private-sector
approach is ingrained in the design of the Part D program, which wisely
forbids the government from interfering with the negotiations between
these private entities.
For Part B drugs and biologics, Medicare pays based on the average
price that the manufacturer charges to other payers. This effectively
represents a rate negotiated in the private sector.
Don't take this to mean the way Medicare pays for prescription
drugs is perfect. There is certainly room for improvement.
But the fact that the United States continues to be a
pharmaceutical research and development powerhouse is in large part
because we have long preserved the
market-based approach.
It is vastly superior to the alternative of direct government
involvement and price-setting.
After all, the private sector has proven time and again that it is
far better suited to identifying challenges and turning them into
opportunities.
One persistent challenge is that certain key drugs and items are in
such short supply that hospitals and other providers can't even
purchase them in sufficient quantity. These drug shortages, which
include generic medications, threaten patient care and demonstrate a
weakness in our system.
I am proud to say that my home State of Utah is taking a leadership
role by creating a market-based response.
Utah-based Intermountain Healthcare has joined with other like-
minded systems across the country to form a generic drug company.
This new venture will fill a market need by producing and
distributing drugs that are in short supply.
This new company will also provide more competition that will
improve prices and opportunities for consumers.
There are others, too, like some commercial health plans that have
responded to market demand by offering prescription drug coverage
options that pass along the negotiated discounts and rebates to their
enrollees at the point of sale, rather than only through lower
premiums.
Turning back to the President's blueprint, it contains policy ideas
related to Medicare and Medicaid that merit serious consideration. For
example, the idea of paying for a drug based on its success in
achieving the intended patient benefit holds promise, especially for
novel, breakthrough therapies that do not yet have competition.
We should explore how these value-based arrangements can work
within our Federal health programs.
We should also assess how we can modernize the popular Part D
program, because it is now more than 10 years old.
And a review of the Part D program should involve action to
mitigate the change in the bipartisan budget deal enacted earlier this
year that increased the discount that manufacturers are required to
provide on drugs in the coverage gap.
This misguided change has only dampened some of the competitive
forces that have made the program so successful.
We will soon hear from Secretary Azar on the policy ideas in the
blueprint. It will be important to understand how the policies in the
blueprint would impact not only the list price but patient access,
beneficiary premiums and other cost-sharing, as well as innovation.
As the vast majority of the blueprint's policies are in the
jurisdiction of the Finance Committee, this engagement with the
secretary will inform how we move forward.
Before I conclude my opening remarks, I must say that I suspect
that some of my colleagues may want to talk about other pressing issues
that touch on HHS's jurisdiction.
To head off just one such issue, I have made my position on the
situation at our southern border known: we must keep families together
as we work to avoid illegal border crossings.
We also need to ensure that children who have been separated from
their parents are reunited, and I know the Secretary is working
aggressively to do so.
However, my experience tells me that our time at this hearing will
be best spent discussing the issues we all have prepared for weeks to
talk about with Secretary Azar.
After all, the cost, innovation and availability of prescription
drugs is a deeply important and often life-or-death issue for millions
of our constituents each day.
My hope is that we can all take advantage of the opportunity before
us today and stay focused on the agreed upon subject matter of this
hearing.
______
Submitted by Hon. Claire McCaskill,
a U.S. Senator From Missouri
Agent Eligibility and Underwriting Guide
HumanaOne Health and Life Products
e-Query service (Ask an Underwriter)
e-Query is a service which allows you to assess your client's insurance
eligibility more accurately with the assistance of a Humana
underwriter. It directly links you to a dedicated team of underwriters
by means of an electronic form hosted on HumanaOne agent workbench.
e-Query does not replace the Underwriting Guidelines herein, but rather
compliments it. To access the e-Query form you will need to log onto
the HumanaOne Agent Workbench from the Agent Portal on www.humana.com,
and click on the ``e-Query/Ask an Underwriter'' link under the
questions section. e-Query is not currently available in the state of
Wisconsin.
Eligibility requirements
For health coverage
> Issue ages: 2 weeks--64\1/2\ years
Newborns on family and child only applications will be eligible for
coverage when they have had a two week well baby exam with normal
results.
Please Note: This applies to full term babies. If they are born
premature or with complications, we will underwrite as necessary.
> Maximum issue age of a dependent child varies by state.
> Dependents may include stepchildren, and/or legally adopted
children. (Dependent definitions vary by state.)
Children-only health coverage
Children can be insured alone. The custodial parent or legal guardian
who can attest to child's health history must complete the application.
If an underwriting interview is required, the person that completed the
application will be interviewed. The youngest child will be the primary
applicant, and any others will be listed as dependents. Newborns
applying for coverage require a two week well baby exam with normal
results. Medical records are required for any child that is 2 weeks to
2 months of age. A child only health policy is ineligible, if any
family member of the applicant(s) is pregnant or currently an expectant
parent. See the terms indicated under Current/Pregnancy/Expectant
parent.
Application scenarios:
(1) Parent A has custody and resides in a state in which Humana offers
coverage. Parent B will be paying for the health insurance. Parent A
must complete and sign the application to verify the health history.
Parent B must sign the payer portion of the application.
(2) Parent A has custody and resides in a state in which Humana does
NOT offer coverage. Parent B will be paying for the health insurance.
Because benefits are based on the applicant's primary resident, Humana
will not be able to accept an application for the child(ren).
(3) Both parents share custody and reside in a state in which Humana
offers coverage. Either parent can complete and sign the application.
(4) Both parents share custody and reside in a state in which Humana
offers coverage, however, their dependent student attends school in a
state where Humana does not offer coverage. Coverage may be extended to
the parents and their dependent college student(s).
Current pregnancy/expectant parent
For family applications, before applying for coverage, the mother must
be two weeks postpartum, with no adverse findings, and the newborn must
be two weeks old and have had a normal two week baby exam.
For child-only health policies, if any family member of the child is
currently an expectant parent, the application is ineligible. Before
applying for coverage, the mother must be two weeks postpartum, with no
adverse findings, and the newborn must be 2 weeks of age, and have had
a normal 2 week well baby exam with normal results.
Other coverage
A person who is currently covered by another plan must replace that
coverage with Humana. However, it is important that he or she does not
cancel existing coverage until written notification is received from
Humana that coverage will be issued. Some states may require a
replacement form.
U.S. citizenship
The applicant's primary residence must be in a state where the product
is approved for sale. If the applicant is not a U.S. citizen, he or she
must have lived in the U.S. for a minimum of one year, plans to remain
in the U.S. for over 3 years, has had a normal physical exam with blood
work from a U.S. physician, and has no plans of foreign travel of
greater than three months continuously. An immigration physical does
not meet the criteria for an acceptable physical exam.
Foreign travel
An applicant who lives in a foreign country is not eligible for
coverage, nor is an applicant who has plans for extended foreign travel
of three consecutive months at a time or longer. (May vary by state.)
Exceptions: An applicant who, for the purpose of Missionary Work, has
plans for extended foreign travel for 0-2 years from the time of the
application is eligible for coverage. An applicant with foreign travel
plans exceeding 2 years for Missionary Work would not be eligible.
An applicant who, for the purpose of studying abroad or occupational/
business travel has plans for extended foreign travel for 0-2 years
from the time of the application is eligible for coverage. An applicant
with foreign travel plans exceeding 2 years for studying abroad or
occupational/business travel would not be eligible.
Tobacco usage--health
Humana has two tobacco classes:
1. Non-user: Does not use ANY form of tobacco currently or has not
used ANY tobacco cessation products in the last 12 months.
2. Tobacco user
People who do not smoke or use any form of tobacco have their premium
discounted. Humana conducts random nicotine testing during underwriting
review.
Health underwriting guidelines
The following circumstances may result in a person not being eligible
for health coverage:
(1) Currently pregnant, an expectant parent (including fathers and/or
other family members)--entire application is ineligible;
(2) Health history that includes one of the ineligible health
conditions:
(3) Height/weight that exceeds the limits identified in the health
build chart; or
(4) Employment in an ineligible occupation. Not applicable in Florida.
(5) Non-U.S. citizen who has not consulted a physician in the U.S.
(6) Health history that includes 3 or more risk factors (build/
overweight, elevated cholesterol/elevated triglycerides, hypertension,
tobacco use).
(7) Hypertension with 50% rateable build.
(8) Hypertension with current treatment for Sleep Apnea.
A ``yes'' answer to any one of these circumstances may result in a
declination of coverage. However, this information only provides their
potential eligibility; it is not a final determination. All final
coverage decisions are made by our Underwriting department upon receipt
of an application. This assessment is not an offer of coverage or a
notice of declination for your client.
Ineligible occupations (applicable to Florida for applications 2/2/2010
and after)
> Air traffic controllers
> Asbestos and toxic chemical workers
> Commercial fishermen who do not return to port every day
> Divers (professional scuba or skin)
> Explosive workers
> High-risk aviation (experimental and test pilots, crop dusters)
> Jockeys
> Oil and natural gas workers, including offshore operations
> Professional auto racers
> Professional rodeo participants
> Professional and semi-professional athletes (Note: Golfers are
acceptable)
> Structural steel workers, iron workers and steeplejacks
> Underground miners
Health build charts
Use this table as a guide to determine if an applicant is rateable
because of his or her build. Humana may request a paramedical exam (at
our expense) to confirm an applicant's height and weight. An applicant
must have maintained an acceptable build within the 12 months prior to
applying to be considered eligible. If an individual's weight exceeds
our ``Standard'' class but less than our ``Decline'' limit, they will
be subject to a premium increase of 25-50%.
To qualify for the lower build rating, an applicant must lose the
weight to reach the lower range and maintain the weight loss for 12
months.
Applicants who have applied for individual insurance and who have been
offered a rating due to build may also have an obesity rider added to
his or her offer. Any diagnostic procedure, treatment, or surgery for
obesity including any complications thereof, will be excluded from
coverage. In states where riders are not offered, coverage may be
declined.
If an applicant is applying for both a Humana One health plan as well
as for HumanaOne Term Life Insurance, the Health Build Chart will be
followed during the underwriting process. (May vary by state.)
Female
------------------------------------------------------------------------
Standard Decline
------------------------------------------------------------------------
411" 88-151 lbs. 175 lbs.
------------------------------------------------------------------------
50" 90-155 lbs. 180 lbs.
------------------------------------------------------------------------
51" 93-160 lbs. 187 lbs.
------------------------------------------------------------------------
52" 97-167 lbs. 193 lbs.
------------------------------------------------------------------------
53" 100-172 lbs. 199 lbs.
------------------------------------------------------------------------
54" 102-178 lbs. 206 lbs.
------------------------------------------------------------------------
55" 106-183 lbs. 212 lbs.
------------------------------------------------------------------------
56" 110-189 lbs. 219 lbs.
------------------------------------------------------------------------
57" 113-195 lbs. 225 lbs.
------------------------------------------------------------------------
58" 116-200 lbs. 232 lbs.
------------------------------------------------------------------------
59" 119-206 lbs. 239 lbs.
------------------------------------------------------------------------
510" 123-212 lbs. 246 lbs.
------------------------------------------------------------------------
511" 127-219 lbs. 253 lbs.
------------------------------------------------------------------------
60" 130-224 lbs. 260 lbs.
------------------------------------------------------------------------
61" 134-232 lbs. 266 lbs.
------------------------------------------------------------------------
Male
------------------------------------------------------------------------
Standard Decline
------------------------------------------------------------------------
52" 97-177 lbs. 198 lbs.
------------------------------------------------------------------------
53" 100-182 lbs. 205 lbs.
------------------------------------------------------------------------
54" 102-189 lbs. 211 lbs.
------------------------------------------------------------------------
55" 106-194 lbs. 218 lbs.
------------------------------------------------------------------------
56" 110-200 lbs. 224 lbs.
------------------------------------------------------------------------
57" 113-206 lbs. 232 lbs.
------------------------------------------------------------------------
58" 116-212 lbs. 238 lbs.
------------------------------------------------------------------------
59" 119-219 lbs. 245 lbs.
------------------------------------------------------------------------
510" 123-225 lbs. 252 lbs.
------------------------------------------------------------------------
511" 127-232 lbs. 260 lbs.
------------------------------------------------------------------------
60" 130-238 lbs. 267 lbs.
------------------------------------------------------------------------
61" 134-245 lbs. 274 lbs.
------------------------------------------------------------------------
62" 138-252 lbs. 282 lbs.
------------------------------------------------------------------------
63" 141-259 lbs. 289 lbs.
------------------------------------------------------------------------
64" 145-266 lbs. 298 lbs.
------------------------------------------------------------------------
Ineligible health conditions
A series of medical questions will be asked of each of the proposed
insured. Any applicant age 18 and older must review and attest to the
questions individually (age requirements vary by state). Below is a
partial listing of conditions that may cause Humana to decline
coverage. The list is not all-inclusive.
Please note that if your client is applying for both a health plan and
a life policy at the same time, and they are denied a health plan based
on their health status, the process will discontinue as well for the
life policy.
Below conditions are permanent declines, unless otherwise indicated.
Handling of the below conditions may vary by state.
A
_______________________________________________________________________
Achalasia, cardio spasm Achondroplasia
Acromegaly Addison's disease
Adrenal disorders AIDS, ARC, or HIV
Alcohol dependence or abuse--
individual consideration after 5
years of recovery Alport syndrome
Alzheimer's disease Amyloidosis
Amyotrophic lateral sclerosis (ALS
or Lou Gehrig's disease) Anemia--aplastic Cooley's, B-12
deficiency, hemolytic,
Mediterranean, pernicious, sickle
cell or Thalassemia Major
Anencephaly Aneurysm--if present or within 5
years
Angina Angioplasty
Ankylosing spondylitis Anorexia nervosa--individual
consideration, after 8 years of
recovery
Anticoagulant therapy Antiphospholipid syndrome
Anticardiolipin antibody syndrome Aortic arch arteritis
Aortic insufficiency/stenosis/
regurgitation--moderate or severe Aortic Stenosis, Aortitis
Arnold-Chiari malformation Arterial embolism (clot)
Arterial occlusion Arteriosclerosis, atherosclerosis
Arteriosclerosis obliterans (ASO) Arteriovenous malformation (A-V
malformation)
Arteritis Artificial heart valve
Asperger's syndrome--except in
Indiana Ascites
Ataxia telangiectasia Atherosclerosis obliterans
Atherosclerosis thrombotic disease Atrial fibrillation--one event less
than 2 years ago or multiple events
or chronic or with Pacemaker or
Cardiverter
Atrial septal defect--present or if
surgically corrected with
complications Autism--varies by state
B
_______________________________________________________________________
Banti's syndrome Basal cell carcinoma--if present
Berger's disease Biliary cirrhosis
Bipolar disorders Bladder entropy--symptomatic
Blastomycosis Brachial plexus disorder
Brain attack Brain tumors
Bright's disease Bronchiectasis--if lung resection,
no residuals, no tobacco--
individual consideration
Bronchiolectasis Bruit
Buerger's disease (thromboangiitis
obliterans) Bulimia--individual consideration,
after 8 years of recovery
Burkitt's lymphoma (malignant
lymphoma) Bypass surgery
C
_______________________________________________________________________
Cachexia Cancer with lymph node involvement
or metastasis
Cardiac decompensation Cardiac defibrillator (implantable)
Cardiac or comorbidity risk
factors--3 or more (build/
overweight, elevated cholesterol/
triglyercerides, hypertension,
tobacco use) Cardiomegaly
Cardiomyopathy Cardiospasm
Celiac Disease Central serous retinopathy
Cerebral palsy Cerebrovascular accident
Cerebrovascular disease Charcot-Marie-Tooth disease
Chediak Kigaski syndrome Chondrocalcinosis
Christmas disease Chromosomal abnormalities
Chronic granulomatous disease Chronic glomerulonephritis
Chronic hepatitis Chronic obstructive pulmonary
disease (COPD)
Chronic progressive external
opthalmoplegia (CPEO) Cirrhosis of the liver
Coarctation of the aorta Cocaine abuse
Colitis (ulcerative) Collagen diseases
Congenital heart anomalies Congenital lymphedema
Congestive heart failure (CHF) Connective tissue disorder
Cor pulmonale Coronary artery bypass surgery
(CABS)
Coronary artery disease (CAD) Coronary Fistula
Coronary heart disease (CHO) CREST syndrome
Creutzfeldt-Jakob disease Crigleer-NaJaar syndrome
Curvature of the spine with
pulmonary, cardiac or spinal cord
involvement Cushing syndrome/disease
Cystic fibrosis Cystic kidney diseases
Cystic medial necrosis Crohn's disease
D
_______________________________________________________________________
Dejerine type sclerosis Delirium
Delusions Dementia
Demyelinating diseases Depressant addiction--current
history of addiction with current
usage
Dermatitis herpetiformis--with
evidence of significant immunologic
compromise Dermatomyositis
Depression--major, if
hospitalization required or with
suicidal attempt or ideation DiGeorge syndrome
Diabetes insipidus Diabetes mellitus (type 1 and type
2)
Down syndrome Drug dependence or abuse (illicit,
illegal, over the counter or
prescription)
Drug psychosis Dwarfism
E
_______________________________________________________________________
Eaton-Lambert syndrome Ebstein's malformation (Ebstein's
anomaly)
Edward's syndrome Ehlers-Danlos syndrome
Eisenmenger's complex
(Eisenmenger's syndrome) Ejection Fraction--less than 50% or
more than 75%
Embolism--arterial is permanent
decline; pulmonary depends on
frequency, treatment, etc Emphysema
Encephalocele Encephalocystocele
Encephalopathy Eosinophilic granuloma
Epidermolysis bullosa Erythema Multiforee (Stevens
Johnson syndrome)--if present or
less than one year since complete
recovery or residuals
Esophageal varices
F
_______________________________________________________________________
Fabry disease Factor V deficiency
Factor VIII or IX deficiency Familial Aadenomatous polyposis
Fanconi syndrome--fanconi anemia Fibromyalgia
Flexure-hepatic or splenic Fragile X syndrome
Fragilitas ossium
G
_______________________________________________________________________
Galactorrhea--if present Galactosemia
Gargoylism (mucopolysaccharidosis) Gastrectomy--total removal
Gastric bypass/stapling Gastroparesis
Gaucher's disease Gender identity disorder
General paresis Glycogen storage disease
Guillain-Barre Syndrome/
Polyneuritis--if present or less
than 3 years since recovered or if
residual disability/permanent
impairment
H
_______________________________________________________________________
Hallucinations Hand-Schueller-Christian disease
Heart attack or disease Heart enlargement/hypertrophy
Heart-lung transplants Heavy chain disease
Hemiplegia Hemochromatosis
Hemophilia A or B Hemophilia vascular
Henoch-Schoenlein purpura Hepatic flexure
Hepatomegaly Hepatitis (autoimmune)
Hepatitis A--if less than 6 months
after complete recovery Hepatitis B carrier
Hepatitis C Hepatitis D (HDC or delta virus)
Hepatitis E (HEV) Hepatitis G (HGV)
Hepatomegaly Hereditary angioedema
Hereditary spherocytosis--if
present Hirschsprung's disease--if
unoperated or symptomatic
Histocytosis X Histoplasmosis--if present or
disseminated and less than 3 years
since complete recovery
HIV positive Hodgkin's disease
Hughes syndrome Human T-cell leukemia virus
Human T-cell lymphotropic virus Hunner's ulcer
Huntington's chorea Hydrocephalus
Hydronephrosis--if present or
bilateral Hyperhydrosis--if present or if
surgically corrected with residual
symptoms or any complications
Hyperparathyroidism--if unoperated Hypersplenism
Hypogonadism (primary) Hypoparathyroidism
Hypoplastic anemia Hysteria
I
_______________________________________________________________________
Idiopathic thrombocytopenic purpura
(child form)--if present IgA nephropathy/Berger's Disease
IgG subclass deficiency Immune deficiency
Infectious neuritis--if present or
multiple episodes Intermittent claudication
Interstitial cystitis (chronic)/
Hunner's Ulcer Intestinal infarction/Intestinal
ischemia--unless acute with
complete recovery more than 6 weeks
ago
Intestinal obstruction--if present Iritis--if one episode, less than 6
months ago or multiple episodes
Ischemic heart disease Ischemic/ulcerative colitis
IV drug use Insulin resistance
J
_______________________________________________________________________
Jaundice (adult)--present or less
than 6 months since complete
recovery Juvenile dermatomyositis--if
present or less than 2 years since
complete recovery
K
_______________________________________________________________________
Kahler's disease Karposi's sarcoma
Kartagener's syndrome Keratoconus--present and surgery
recommended
Kidney injury--major injury with
history of dialysis Kidney failure--if chronic or acute
less than 2 months since recovery
Kidney stone--if present or if more
than 4 episodes Kidney transplant
Korsakoff's psychosis Klinefelter's syndrome
L
_______________________________________________________________________
Left bundle branch block Left ventricular hypertrophy
Legionella pneumophilia
(Legionnaire's disease) Letterer-Siwe disease
Leukemia Leukoencephalopathy
Lipidosis (Niemann Pick disease) Liver abscess with residuals
Liver cancer Liver transplant
Lobstein's disease Lou Gehrig's disease (ALS)
Lung cancer Lung transplant
Lyme's disease--if present Lymphoblastoma
Lymphoma Lymphoma, Hodgkins
Lyinphomatoid papulosis
M
_______________________________________________________________________
Malaria--more than one occurrence
with complications or frequent
disabling attacks Manic disorders
Marchiatava-Micheli syndrome Marfan's syndrome
Medullary cystic kidney Medullary sponge kidney--if present
or less than 18 years of age or if
more than 18 years of age--
bilateral
Mental retardation--severe,
emotionally unstable, seizures or
psychiatric impairments Mesenteric vascular disease
Metabolic syndrome Microcephaly
Milroy's disease Mitral insufficiency
Mitral stenosis Mixed connective tissue disease
Moebius syndrome/Mobius syndrome Mucopolysaccharidosis
Multicystic kidney Multiple myeloma
Multiple personality disorder Multiple sclerosis
Muscular dystrophy Myasthenia gravis
Myelitis--if present or less than 6
months since complete recovery Myocardial infarction (MI)
Myocardial ischemia Myotonic dystrophy
Myxedema--if present
N
_______________________________________________________________________
Nall-Patella syndrome Narcotic use/addiction
Nephritis (chronic) Nephrocalcinosis
Nephrosclerosis Nephrotic syndrome
Neuritis--if present Neurofibromatosis
Neurogenic bladder--if present Neuromuscular disorders
Niemann-Pick disease (Lipidosis)
O
_______________________________________________________________________
Occlusion Organic brain disorder/syndrome
Organ transplant recipient Osteitis fibrosa cystica
Osteitis fibrosa cystica
disseminata Osteitis fibrosa cystica
generalisata
Osteogenesis imperfecta/Lobstein's
Disease Ovarian cancer
P
_______________________________________________________________________
Pacemaker Paget's disease
Pancreatic cyst or pseudocyst Pancytopenia
Paralysis Paranoid disorder
Paraplegia Parkinson's disease
Paroxysmal nocturnal hemoglobinuria Pathological fractures
Pemphigus Percutaneous transluminal coronary
angioplasty
Periarteritis nodosa Peripheral occlusive arterial
disease (POAD)
Peripheral vascular disease or
intermittent claudication Pernicious anemia
Pick's disease Pierre Robin's syndrome
Pituitary Adenoma--if present Pituitary dwarfism/Achondroplasia
Plasmacytoma Pneumocystis carinii pneumonia
(PCP)
Pneumonitis Poliomyelitis--if present or more
than one limb involved
Polyarteritis Polycystic kidney
Polycystic ovarian syndrome (PCOS) Polycythemia vera
Polyglandular autoimmune disease Polyneuritis (Guillain-Barre
syndrome)--if present or less than
3 years since recovered or residual
disability/permanent impairment
Porphyria--diagnosed less than 5
years prior to application Portal hypertension
Post-Polio syndrome Pregnant, an expectant parent
(induding fathers and/or other
family members)--the entire
application is ineligible
Primary biliary cirrhosis Primary pulmonary hypertension
Primary sclerosing cholangitis Prinzmental's angina
Pseudocyst--if present Pseudotumor cerebri
Psittacosis--with extensive
respiratory involvement Psoriasis--if severe or use of UV
light
Psychiatric disorder--severe
including childhood and adolescence Psychosis
Pulmonary embolism/thrombosis--if
present, on anticoagulants or if
less than 1 year Pulmonary fibrosis
Pulmonary heart disease Pulmonic insufficiency--it moderate
to severe
Pulmonic stenosis Pulseless disease
Pyloric Stenosis--if present Pyogenic arthritis
Q
_______________________________________________________________________
Quadriplegia
R
_______________________________________________________________________
Reflex sympathetic dystrophy Renal failure--chronic, uremia
Renal hypertension Renal Insufficiency--chronic or
renal failure
Respiratory failure Retinal detachment--if present
Retinopathy--central serous and
diabetic Rhabdomyosarcoma
Rheumatic heart disease Rheumatoid arthritis
Russel-Silver syndrome--if less
than 24 years of age
S
_______________________________________________________________________
Sarcoidosis Schizo-affective disorders
Schizophrenia Scleroderma--generalized
Senility Severe combined immunodeficiency
Sexual deviation or disorder Shunt
Sialadenitis Sialdenosis
Sick sinus syndrome Sickle cell anemia
Silent myocardial ischemia Sjogren's disease
Sleep apnea--central or mixed sleep
apnea, or current tobacco user, or
with ratable build, or with
hypertemion or if surgery suggested
Spherocytosis/Hereditary
Spherocytosis--if present Spina bifida (Manifesta)
Splenic flexure Spondylitis
Sprue disease Spurway's disease
Status Asthmaticus Stents--artery or blood vessel
Stevens Johnson syndrome/Erythema
Multiforme--if present or less than
one year since complete recovery or
history of with residuals Still's disease
Stimulant usage Stokes-Adams syndrome
Stroke Sturge-Weber syndrome
Suicide attempt/ideation Syndrome X
Syphilis--if present or less than
one year since complete recovery or
more than 1 year since complete
recovery without two normal lab
results Syringomyelia
Systemic fibrosclerosing syndrome Systemic lupus erythematosis (SLE
or lupus)
Systemic sclerosis
T
_______________________________________________________________________
Takayasu's arteritis Tetrology of fallot
Thalassemia major Thrombocythemia
Total anomalous pulmonary venous
connection Transient ischemic attack (TIA)
Transplant (except corneal) Transposition of the great vessels
Transsexualism Tricuspid atresia
Tricuspid insufficiency/
regurgitation--moderate or severe Tricuspid stenosis
Trisomy 21 syndrome (Down syndrome) Truncus arteriosus
Tuberous sclerosis Turner's syndrome
U
_______________________________________________________________________
Ulcerative colitis/proctitis Underdeveloped left ventricle
syndrome
Urachal remnant--if present Uveitis--if chronic or less than 6
months since recovery
V
_______________________________________________________________________
Valve disorder Valve replacement
Varicose veins of the esophagus Vascular hemophilia
Ventricular arrhythmias Ventricular septal defect--present
or less than 1 year since repaired
or if surgically corrected with
complications
Von Hypple-Lindau syndrome Von Willebrand's disease/
Pseudohemophilia
W
_______________________________________________________________________
Waldenstrom's macroglobulinemia Warnick's disease
Wegener's granulomatosis (Wegener's
syndrome) Weight reduction surgery--other
than gastric banding
Williams syndrome Wilson's disease
Wiskott-Aldrich syndrome
X
_______________________________________________________________________
XYY syndrome
Z
Zollinger-Ellison syndrome
Actions for Common Medical Conditions--Rider States
These guidelines may vary due to state-specific laws and regulations but can be followed as a general outline. This is not all inclusive. Final decision
is based on underwriting review. Underwriting assessments in the below grid are based on customary and usual treatment seen for the conditions noted.
Below are examples only; Humana will be solely responsible for the final underwriting decision, which is based on the completed application and the
applicant's health history. Guidelines are subject to change without prior notice.
NOTE: If an applicant on an application requires more than three exclusion riders (two in Indiana), the applicant will be declined.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condition We reserve the right to rate for the condition
and/or medication use when appropriate. A modified rating
is determined based on the severity of the condition and $1,500 or lower $2,500-$5,000 $2,000-$5,200 $6,000 or higher
treatment and/or prescription medication cost, dosage, and deductable plus Rx deductable plus Rx deductable no Rx deductable plus Rx
premium amount.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acid Reflux/GERD/ Heartburn
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no hiatal hernia, non prescription medication Standard Standard Standard Standard
(OTC only) no recommended consultations or testing
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, prescription medication, no hiatal hernia Rider Standard or Rate Up KY Standard Standard or Rate Up
present or OH: Standard or KY or OH: Standard
Rider or Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription medication use currently, hiatal hernia Rider Rider Rider Rider
present
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acne/Rosacea
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no treatment or OTC medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription meds, or < 6 months since med use, no Rider Standard or Rating KY Standard Standard or Rating KY
Accutane or equivalent & OH. Standard or & OH. Standard or
Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription meds, completed 6 months ago, complete Standard Standard Standard Standard
recovery, no Accutane or equivalent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Accutane treatment of equivalert or 1 year since Rider Rider Rider Rider
treatment completed
--------------------------------------------------------------------------------------------------------------------------------------------------------
Accutane treatment of equivalent or > 1 yer ago since Standard Standard Standard Standard
treatment, complete recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
Allergies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recommended, pending or scheduled testing Rate 50% NV: Decline Rate 50% NV: Decline Rate 50% NV: Decline Standard
if tobacco user if tobacco user if tobacco user
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal prescription meds (3 refills or less per year Standard Standard Standard Standard
or OTC), no immunotherapy treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription meds, more than 3 refills per year, no Standard or Rating KY Standard or Rating KY Standard Standard or Rating KY
immunotherapy treatment & OH: Standard or & OH: Standard or & OH: Standard or
Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
With or without prescribed medications, current or Rider Rider Standard--for Rider
recent immunotherapy prescribed
medications Rider--
immunotherapy
--------------------------------------------------------------------------------------------------------------------------------------------------------
Amputation/Prosthesis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Finger or toes, with or without prosthesis Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eye Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
All other amputations, with or without prosthesis Rider KY, NM: Decline Rider KY, NM: Decline Rider KY, NM: Decline Rider KY, NM: Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Caused by diabetes, severe artery disease or other Decline Decline Decline Decline
disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anemia--other than anemia listed in the ineligible health
conditions list
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aneurysm
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of, more than 5 years after repaired Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anxiety
--------------------------------------------------------------------------------------------------------------------------------------------------------
Well controlled with prescription medication, no Standard or Rating KY Standard or Rating KY Standard Standard or Rating KY
counseling, no more than 2 ER visits in the last 12 & OH: Standard or & OH: Standard or & OH: Standard or
months Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Counseling only, no medication Rate 10-20% Rate 10-20% Standard Rate 10-20%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Asthma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exercise induced, no regular medication required Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medication use only Rider Standard or Rating KY Standard Standard or Rating KY
& OH: Standard or & OH: Standard or
Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medication use, steroid treatment (not including Rider Rider Rider Standard or Rating KY
Albuterol inhaler) less than 3 times and/or no more & OH: Standard or
than two emergency room visits in the past 12 months Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oral steriods required 3 times or more than 2 ER Decline Decline Decline Decline
visits in the past 12 months
--------------------------------------------------------------------------------------------------------------------------------------------------------
Attention Deficit Disorder/ADD/ADHD
--------------------------------------------------------------------------------------------------------------------------------------------------------
No medication or counseling, more than 2 years Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
One medication Rider IN: Rate only KY Rider or Rating IN: Standard Rating IN: Rate only
& OH: Standard or Rate only KY & OH: KY & OH: Standard or
Rider Standard or Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than one medication Rider IN: Rate only KY Rider or Rating IN: Standard Rating IN: Rate only
& OH: Standard or Rate only KY & OH: KY & OH: Standard or
Rider Standard or Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Atrial Fibrillation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single event, no continued medications, complete Standard Standard Standard Standard
recovery, more than 2 years ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single event, < 2 years ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple events or continued use of medication or Decline Decline Decline Decline
chronic atrial fibrillation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pacemaker or carioverter defibrillator Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Back Sprain/Strain/Whiplash
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 year ago--complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 1 year ago or not recovered Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baker's Cyst
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of no recurrence Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, symptomatic Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Basal Cell Carcinoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurences, or recurrent, removed (regardless Rider--permanent Rider--permanent Rider--permanent Standard
of time frame)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benign Prostatic Hypertrophy/BPH
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incidental finding, no symptoms, no treatment or Standard Standard Standard Standard
medication use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Well controlled on one medication Standard or Rate up OH Standard or Rate up OH Standard or Rate up Standard or Rate up
& KY Rider for med & KY Rider for med OH & KY Rider for
med
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than one medication Permanent Rider plus Permanent Rider plus Permanent Rider UT-- Permanent Rider plus
Rating for meds UT-- Rating for meds UT-- Decline Rating for meds UT--
Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prostatectomy, TURP, TUNA, TUIP, TUMT, or Lazer Standard Standard Standard Standard
surgery completed, no follow up needed, complete
recovery, no residual complications or medication use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bladder Infections (Cystitis)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 4 per year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Four to six episodes per year Decline Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 6 Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breast Cyst, Nodule or Mass
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present and benign Rider VA: Rate 25% Rider VA: Rate 25% Rider VA: Rate 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Removed and benign Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, pathology unknown Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breast Implants
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no complications, placed for cosmetic Standard Standard Standard Standard
purposes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breast Reduction/Macromastia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condition present, no surgery completed Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery completed < 1 year ago, with complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery completed < 1 year ago, with residuals Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bronchitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-3 episodes in the past year, non tobacco user, Standard Standard Standard Standard
complete recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-2 episodes in the past year, tobacco user, complete Standard Standard Standard Standard
recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 episodes a year, tobacco user, complete recovery Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 3 episodes a year or Chronic Bronchitis Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bundle Branch Block (right)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete, no tobacco use for the last 12 months, Standard Standard Standard Standard
symptoms and treatment free for last 12 months, build
not ratable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bursitis/Tendonitis/Tenosynovitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence with complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, not recovered Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Carpal Tunnel
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or residuals Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgical repair complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cataracts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Rider KY: Decline Rider KY: Decline Rider KY: Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected, fully recovered, no residuals Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chlamydia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or under treatment, no other STD history Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Colon Polyps
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 1 benign polyp removed within the past 5 Rider (permanent)--UT: Rider (permanent)--UT: Rider (permanent)-- Rider (permanent)--
years during colonoscopy, scheduled follow up is Non-tobacco--Max Non-tobacco--Max UT: Non-tobacco--Max UT: Non-tobacco--Max
every 10 years rating applies-- rating applies-- rating applies-- rating applies--
tobacco user IC CO: tobacco user IC CO: tobacco user IC CO: tobacco user IC CO:
rating rating rating rating
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single benign polyp removed during colonoscopy within Standard Standard Standard Standard
the last 5 years, no colon resection, follow up
scheduled more than 5 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single benign polyp removed during colonoscopy, within Rider (permanent)--UT: Rider (permanent)--UT: Rider (permanent)-- Rider (permanent)--
the past 5 years no colon resection, follow up Non-tobacco--Max Non-tobacco--Max UT: Non-tobacco--Max UT: Non-tobacco--Max
schedued every 3-5 years rating applies-- rating applies-- rating applies-- rating applies--
tobacco user IC CO: tobacco user IC CO: tobacco user IC CO: tobacco user IC CO:
rating rating rating rating
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 1 polyp removed within the past 5 years. Decline Decline Decline Decline
Surgically removed (not during colonoscopy) or part
of colon surgically removed or follow up scheduled
every 1-2 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-2 polyps removed within the past 5 years during Rider (permanent) UT: Rider (permanent) UT: Rider (permanent) UT: Rider (permanent) UT:
colonoscopy, only 1 colonoscopy completed within the Non-tobacco--Max Non-tobacco--Max Non-tobacco--Max Non-tobacco--Max
past 5 years. Follow up scheduled every 3-5 years rating applies-- rating applies-- rating applies-- rating applies--
tobacco user IC CO: tobacco user IC CO: tobacco user IC CO: tobacco user IC CO:
rating rating rating rating
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 2 polyps removed within the past 5 years, Decline Decline Decline Decline
follow up scheduled every 3-5 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condyloma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of--no HPV Rider UT: 55% rating, Standard Standard Standard
non tobacco users UT:
Decline tobacco users
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present of history of--with HPV Rider UT: 55% rating, Rider UT: 55% rating, Rider UT: 55% rating, Rider UT: 55% rating,
non tobacco users UT: non tobacco users UT: non tobacco users non tobacco users
Tobacco users-- Tobacco users-- UT: Tobacco users-- UT: Tobacco users--
Decline HPV Decline HPV Decline HPV Decline HPV
underwritten underwritten underwritten underwritten
separately separately separately separately
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deep Vein Thrombosis (DVT)
--------------------------------------------------------------------------------------------------------------------------------------------------------
On anticoagulants or one episode less than 3 months Decline Decline Decline Decline
ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode--3 mos-2 years with complete recovery Rider MI: 25% rating Rider MI: 25% rating Rider MI: 25% rating Standard
for non-tobacco user: for non-tobacco user: for non-tobacco
Tobacco user-- Tobacco user-- user: Tobacco user--
individual individual individual
consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recurrent Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Depression
--------------------------------------------------------------------------------------------------------------------------------------------------------
Well controlled with prescription medication, no Standard or Rating KY Standard or Rating KY Standard Standard or Rating KY
counseling & OH: Standard or & OH: Standard or & OH: Standard or
Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Counseling only, no medication Rate 10-20% Rate 10-20% Rate 10-20% Rate 10-20%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deviated Septum (nasal)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic or surgically repaired Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Symptomatic Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disc Disorder (herniated, bulging, ruptured)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, surgically repaired less than 1 year ago or Rider Rider Rider Rider
with residuals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Asymptomatic, surgically repaired more than 1 year ago Standard Standard Standard Standard
with full recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diverticulitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, No Surgery Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery within 0-2 years Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected > 2 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diverticulosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or with history of diverticulitis Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery within 0-2 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected > 2 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
DUI--Paramed exam is required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, within 5 years Rate 30%--Decline Rate 30%--Decline Rate 30%--Decline Rate 30%--Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, more than 5 years Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences, within 5 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences, more than 5 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ear Infection (Otitis Media)
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 3 in the past 12 months Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 3 in the past 12 months Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tubes Present Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tubes no longer present, no recurrence Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eczema
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or less than 2 years since symptomatic Rider Standard or Rating KY Standard Standard or Rating KY
& OH: Standard or & OH: Standard or
Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2 years since treatment or symptoms Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Endometriosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or within 5 years of treatment Rider KY: Decline Rider KY: Decline Rider KY: Decline Rider KY: Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 years since symptoms or treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery < 3 years ago Rider KY: Decline Rider KY: Decline Rider KY: Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery > 3 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Enlarged Prostate--See Benign Prostatic Hypertrophy
--------------------------------------------------------------------------------------------------------------------------------------------------------
Epilepsy, Grand Mal (Generalized)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure within past 2 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last seizure > 2 years ago Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Epilepsy, Petit Mal (Generalized)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure within past 2 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last seizure > 2 years ago Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Epilepsy, Temporal Lobe (Partial)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure < 1 year ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure > 1 year ago Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fibromyalgia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fractures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--No fixation device Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--with permanent fixation device Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--with temporary fixation device Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recovered & released from care with no fixation device Standard Standard Standard Standard
or permanent fixation device
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recovered, released from care with temporary fixation Standard Standard Standard Standard
device
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pathological Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ganglion Cyst
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present & symptomatic Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically removed or history of and resolved Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gastric banding--weight loss surgery
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band removed, no rateable build, weight maintained Standard Standard Standard Standard
for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap Band removed, rateable build, or weight loss not Decline Decline Decline Decline
maintained for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap Band present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gastric Bypass/Gastric Stapling Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
GERD (reflux)--see Acid Reflux/GERD
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gestational Diabetes
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 5 yrs ago, diet controlled during pregnancy, no Rate 25%--UT: tobacco Rate 25%--UT: tobacco Rate 25%--UT: tobacco Rate 25%--UT: tobacco
recurrence users, individual users, individual users, individual users, individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 yrs ago, diet controlled during pregnancy, no Standard Standard Standard Standard
recurrence
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 5 yrs ago, controlled with insulin during pregnancy, Rate 50%--UT: tobacco Rate 50%--UT: tobacco Rate 50%--UT: tobacco Rate 50%--UT: tobacco
no recurrence users, individual users, individual users, individual users, individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 yrs ago, controlled with insulin during pregnancy, Rate 25%--UT: tobacco Rate 25%--UT: tobacco Rate 25%--UT: tobacco Rate 25%--UT: tobacco
no recurrence users, individual users, individual users, individual users, individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of, no glucose test following pregnancy or Decline Decline Decline Decline
Glucose levels did not return to normal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Glaucoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Symptomatic, but not diagnosed Rider and rating for Rider and rating for Rider for condition, Rider and rating for
medications medications no action for medications
medications
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, well controlled Rating OH & KY: Rider Rating OH & KY: Rider Standard Rating OH & KY: Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, not controlled: with or without medications Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected both eyes, with or without If no medications: If no medications: Standard If no medications:
medications Standard; Medication Standard; Medication Standard; Medication
use: Rating OH & KY: use: Rating OH & KY: use: Rating OH & KY:
Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected in one eye: with or without Rider Rider Rider Rider
medication use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gout
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or within 2 years of symptoms or treatment Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recovered and time from last symptoms or treatment > 2 Standard Standard Standard Standard
years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grave's Disease--See Hyperthyroidism
--------------------------------------------------------------------------------------------------------------------------------------------------------
Guillain-Barre Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or < 3 years since recovered or Residual Rate 25%--UT: Tobacco Decline Decline Decline
disability/permanent impairment user--Individual
consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 3 years since recovered, no disability, minimal Rate 25% Standard Standard Standard
weakness, no relapse
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gynecomastia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgical correction > 6 months ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hashimoto's Thyroiditis--See Hypothyroidism
--------------------------------------------------------------------------------------------------------------------------------------------------------
Heartburn--see Acid Reflux
--------------------------------------------------------------------------------------------------------------------------------------------------------
Heart Murmur
--------------------------------------------------------------------------------------------------------------------------------------------------------
Functional/Innocent, Grade I or II--Systolic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Organic, Grade III or greater, continuous--Diastolic Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hemorrhoids
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, symptomatic Rider Standard or Rate up Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 1 yr since symptoms or surgery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hepatitis A
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 6 months since treatment with normal liver tests Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hepatitis B
--------------------------------------------------------------------------------------------------------------------------------------------------------
Carrier Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or < 6 months since treatment Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Others Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hernia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, all types other than Hiatal Hernia Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically repaired Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Herpes
--------------------------------------------------------------------------------------------------------------------------------------------------------
OTC medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription medication Rating or Rider KY & Rating or Rider KY & Standard Rating or Rider KY &
OH: Standard or Rider OH: Standard or Rider OH: Standard or
Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Herpes Zoster (shingles)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Standard or Rate-up Standard or Rate-up Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery, no medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hiatal Hernia--see Acid Reflux/GERD
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure/Hypertension
--------------------------------------------------------------------------------------------------------------------------------------------------------
Underwritten based on age of onset, stability and
comorbidity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stable, average readings 150/90 or less, no other Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
cardiac risk factors, controlled with medication
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + 50% Ratable Build
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + Ratable Build + Tobacco User
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + High Cholesterol controlled with
medication
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard or Rating KY Standard or Rating KY Standard Standard or Rating KY
& OH: Hypertenstion: & OH: Hypertension: & OH: Hypertension:
Standard or Rating Standard or Rating Standard or Rating
Cholesterol: Standard Cholesterol: Standard Cholesterol:
or Rider or Rider Standard or Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + Sleep Apnea
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + High Cholesterol + Ratable Build
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + High Cholesterol + Tobacco User
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Cholesterol
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lipid panel results within normal limits, compliant Standard or Rating KY Standard or Rating KY Standard Standard or Rating KY
with follow up, controlled with medication & OH: Standard or & OH: Standard or & OH: Standard or
Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Cholesterol + Ratable Build + Tobacco User
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Cholesterol + Ratable Build + Hypertension
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Human Papilloma Virus (HPV)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low risk--no condyloma Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low risk, with condyloma Rider CO, KY, & MI: Rider CO, KY, & MI: Rider CO, KY, & MI: Rider CO, KY, & MI:
Rate 100% UT: Rate Rate 100% UT: Rate Rate 100% UT: Rate Rate 100% UT: Rate
55%--non tobacco 55%--non tobacco 55%--non tobacco 55%--non tobacco
user--individual user--individual user--individual user--individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
High risk Rider CO & KY: Decline Rider CO & KY: Decline Rider CO & KY: Rider CO & KY:
UT: Rate 55%--non UT: Rate 55%--non Decline UT: Rate Decline UT: Rate
tobacco user, Decline tobacco user, Decline 55%--non tobacco 55%--non tobacco
tobacco user tabacco user user, Decline user, Decline
tabacco user tabacco user
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hyperthyroidism
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--untreated Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--treated with medication Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hypoglycemia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, follow up recommended Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, or history of, diet controlled, no follow-up Standard Standard Standard Standard
recommended
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, treated with medication Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hypothyroid
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Infertility Treatment--male and female
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current infertility drug treatment Decline--entire family Decline--entire family Decline--entire Decline--entire
family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with infertility drugs a year without Decline--entire family Decline--entire family Decline--entire Decline--entire
a live birth family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with infertility drugs with a live Standard Standard Standard Standard
birth, family planning complete
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with infertility drugs with a live Decline--entire family Decline--entire family Decline--entire Decline--entire
birth, family planning is not complete family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with IVF, ZIFT, GIFT or others, family Standard Standard Standard Standard
planning complete
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with IVF, ZIFT, GIFT or others, family Decline--entire family Decline--entire family Decline--entire Decline--entire
planning is not complete family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Insomnia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with medication Standard or Rating KY Standard or Rating KY Standard Standard or Rating KY
& OH: Standard or & OH: Standard or & OH: Standard or
Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Irritable Bowel Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with OTC medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Controlled w/prescription GI medication Rider Standard or Rating KY Standard Standard or Rating KY
& OH: Standard or & OH: Standard or
Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated w/non-GI prescription medication Rider and Rating for Standard or Rating Standard Standard or Rating
non-GI meds
--------------------------------------------------------------------------------------------------------------------------------------------------------
ITP (blood disorder)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Child form, complete recovery, platelet count returned Standard Standard Standard Standard
to normal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Child form, present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adult form or chronic, less than 40 years of age, more Rate 25% UT: tobacco Rate 25% UT: tobacco Rate 25% UT: tobacco Rate 25% UT: tobacco
than 3 years since treatment and a complete recovery user--individual user--individual user--individual user--individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adult form or chronic, more than 6 years since Standard Standard Standard Standard
treatment and a complete recovery, no current
treatment, normal platelet count
--------------------------------------------------------------------------------------------------------------------------------------------------------
Joint replacement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hip replaced Permanent Rider KY & Permanent Rider KY & Permanent rider KY & Permanent Rider KY &
NM: Decline NM: Decline NM: Decline NM: Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Knee replaced Permanent Rider KY & Permanent Rider KY & Permanent Rider KY & Permanent Rider KY &
NM: Decline NM: Decline NM: Decline NM: Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Shoulder replaced Permanent Rider KY & Permanent Rider KY & Permanent Rider KY & Standard
NM: Rate 100%-- NM: Rate 100%-- NM: Rate 100%--
Decline tobacco user Decline tobacco user Decline tobacco user
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney Infection/Pyelonephritis/Pyelitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 episode, within 0-3 years Rider UT: 25% rating, Standard Standard Standard
non tobacco users--
Tobacco users,
individual
consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 episode > 3 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 episodes, < 2 years ago Decline Decline Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 episodes, 2-5 years ago Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 episodes, > 5 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 or more episodes, regardless of time frame Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney Stones
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passed or surgically removed < 2 years ago Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passed or surgically removed > 2 years Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
5 or more episodes Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lichen Planus
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild infrequent attacks Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Frequent or severe attacks Rider plus Rate Standard or Rate-up Rider Standard or Rate-up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lipoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic, no surgery anticipated Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present and symptomatic Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lyme Disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or treatment completed less than 6 months ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 6 months since recovery, no residuals Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Macular Degeneration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dry or wet Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Meniere's Disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, confirmed diagnosis, stable, current or Standard or Rating KY Standard or Rating KY Standard Standard
history of med use, no ongoing follow-up or treatment & OH: Standard or & OH: Standard or
Rider (permanent) Rider (permanent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, confirmed diagnosis, stable, current or Rider (permanent) Rider (permanent) Rider (permanent) Rider (permanent)
history of med use, ongoing follow-up or treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Migraines
--------------------------------------------------------------------------------------------------------------------------------------------------------
Occasional ( 3 episodes yearly) treated with OTC Standard Standard Standard Standard
medication
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 episodes in the last 12 months, or severe. Workup Rider Standard or Rating KY Standard Standard or Rating KY
completed, symptoms controlled with current treatment & OH: Standard or & OH: Standard or
Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 episodes in the last 12 months. No workup completed Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Miscarriage
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-2, no underlying cause Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2, no full term deliveries Rider UT: non tobacco Rider UT: non tobacco Rider UT: non tobacco Rider UT: non tobacco
user rate 50%, user rate 50%, user rate 50%, user rate 50%,
tobacco user tobacco user tobacco user tobacco user
individual individual individual individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of with full term delivery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mitral Valve Prolapse
--------------------------------------------------------------------------------------------------------------------------------------------------------
No symptoms or treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild symptoms controlled with one med, no other heart Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
disorder
--------------------------------------------------------------------------------------------------------------------------------------------------------
Molluscum Contagiosum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or complete recovery < 1 year Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery > 1 year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
MRSA--Methicillin-Resistant Staphylococcus Aureus
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, currently under treatment Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Completed treatment, follow-up pending Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated, full recovery of over 60 days Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nephritis/Glomerulonephritis
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 episodes > 3 years ago, normal blood & urine results Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
All other scenarios Rating, individual Rating, individual Rating, individual Rating, individual
consideration or consideration or consideration or consideration or
decline decline decline decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Osteoarthritis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, only OTC meds, no PT or OT, no shoulder, hip, Standard Standard Standard Standard
pelvis, back or spine, knee or ankle involvement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, all treatment except OTC meds, no shoulder, Rider Rider Rider Standard or Rating
hip, pelvis, back or spine, knee or ankle involvement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, regardless of treatment, with shoulder, hip, Rider Rider Rider Rider
pelvis, back or spine, knee or ankle involvement and
no joint replacement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Joint replacement (see joint replacements)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Osteoporosis/Osteopenia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current use of Prophylactic medication, due to age/ Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
menopause, no diagnosis of osteoporosis or
osteopenia, no fractures or Dexa scans done
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diagnosis of Osteoporosis or Osteopenia with or Rider (permanent) Rider (permanent) Rider (permanent) Standard or Rate-up
without medication use, Dexa scans stable or improved
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, severe, history of pathologic fractures, Decline Decline Decline Decline
crippling, Dexa scans worsening
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ovarian Cyst
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Symptomatic Rider UT: Decline Rider UT: Non-tobacco Rider UT: Non-tobacco Rider UT: Non-tobacco
user 50% rating, user user 50% rating, user 50% rating,
individual user individual user individual
consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Removed Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pancreatitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of attack, no underlying cause, resolved Individual Individual Individual Individual
consideration, consideration, consideration, consideration,
medical records medical records medical records medical records
required required required required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chronic or recurrent Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pap Smear--Abnormal
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASCUS, no high risk HPV, Class II or Class III Standard Standard Standard Standard
followed by one normal pap, Class IV, treated,
followed by three normal pap smears
--------------------------------------------------------------------------------------------------------------------------------------------------------
Phlebitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current use of blood thinners Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, < 3 months, complete recovery, no Rider Rider Rider Standard
varicose veins or edema
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, 3 months-2 years, complete recovery, no Standard Standard Standard Standard
varicose veins or edema
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recurrent episodes within 0-2 years Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of 2 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Varicose Veins--(see Varicose Veins)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pneumonia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prostatitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, full recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 1 episode or chronic Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prosthesis/Prosthetics Device (See Amputation)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prostate--Enlarged (See Benign Prostatic Hypertrophy/BPH)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Psoriasis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild symptoms, OTC medications or no treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild to moderate symptoms, conservative treatments, Rider Standard or Rating KY Standard Standard or Rating KY
including prescription topical agents & OH: Standard or & OH: Standard or
Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Severe symptoms requiring Rx medication such as Decline Decline Decline Decline
Enbrel, Remicade, Sulfasalazine, gold therapy or
Methotrexate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use of tanning bed only Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use of UVA/PUVA light at a medical facility Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Psoriatic Arthritis
--------------------------------------------------------------------------------------------------------------------------------------------------------
All cases Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pyloric Stenosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected with complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Respiratory Syncytial Virus (RSV)/Bronchiolitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of, < 2 years of age, Synagis/ Decline Decline Decline Decline
Palivizumab use
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2 years of age, Last occurrence < 1 year ago and Decline Decline Decline Decline
Synagis/Palivizumab use
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2 years of age, Last occurrence > 1 year ago, No Standard Standard Standard Standard
medications for > 1 year, Complete recovery, No other
respiratory conditions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Restless Leg Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
No medication or treatment for 12 months Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Controlled with medication or treatment or no meds for Standard or Rating KY Standard or Rating KY Standard Standard or Rating KY
< 12 months & OH: Standard or & OH: Standard or & OH: Standard or
Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Follow-up not completed, or testing pending or Decline Decline Decline Decline
recommended
--------------------------------------------------------------------------------------------------------------------------------------------------------
Retinal Detachment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected < 2 years Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Scoliosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no surgery, under age of 20 Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, over age of 20 Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery completed, rod in place, full recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Any cardiac, pulmonary or spinal cord involvement Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sinusitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 3 episodes in the past year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3-6 episodes in the past 12 months Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 6 episodes in the past 12 months Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea
--------------------------------------------------------------------------------------------------------------------------------------------------------
Controlled with CPAP Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea + Ratable build Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea + Tobacco User Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea + Hypertension Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Central or Mixed Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Spina Bifida
--------------------------------------------------------------------------------------------------------------------------------------------------------
Occulta, incidental finding, asymptomatic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Occulta--symptomatic Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manifesta Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Spinal Manipulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-2 visits per year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3-5 visits per year All states Standard All states Standard Standard All states Standard
except: NV: Rider except: NV--Rider except: NV--Rider
Portrait plan only Portrait plan & Autoshare 80 plus RX
(all other plans Autoshare 80 plus RX only (all other
standard) only (all other plans plans standard)
standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
6-10 visits per year All states Ridered All states Standard Standard All states Standard
except: AZ, CO, NM & except: NV--Rider except: NV--Rider
WI: Rate 25% Portrait plan & Autoshare 80 plus RX
Autoshare 80 plus RX only (all other
only (all other plans plans standard)
standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
11-15 visits per year All states Ridered All states Standard Standard All states Standard
except: AZ, CO, NM & except: NV--Rider except: NV--Rider
WI: Rate 50% Portrait plan & Autoshare 80 plus RX
Autoshare 80 plus RX only (all other
only (all other plans plans standard)
standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
16-20 visits per year All states Ridered All states Ridered All states Ridered All states Standard
except: AZ, CO, NM & except: AZ, CO, NM & except: AZ, CO, NM & except: NV--Rider
WI: Rate 75% WI: Rate 15% WI: Rate 15% Autoshare 80 plus RX
only (all other
plans standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
21--25 visits per year All states Ridered All states Ridered All states Ridered All states Standard
except: AZ, CO, NM & except: AZ, CO, NM & except: AZ, CO, NM & except: NV--Rider
WI: Rate 100% WI: Rate 25% WI: Rate 25% Autoshare 80 plus RX
only (all other
plans standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
26-30 visits per year All states ridered All states ridered All states ridered All states Standard
except: AZ, CO, NM & except: AZ, CO, NM & except: AZ, CO, NM & except: NV--Rider
WI: Rate 125% WI: Rate 40% WI: Rate 40% Autoshare 80 plus RX
only (all other
plans standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
31-35 visits per year All states ridered All states ridered All states ridered All states Standard
except: AZ, CO, NM & except: AZ, CO, NM & except: AZ, CO, NM & except: NV--Rider
WI: Rate 150% WI: Rate 50% WI: Rate 50% Autoshare 80 plus RX
only (all other
plans standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
36+ visits per year All states ridered All states ridered All states ridered All states ridered
except: AZ, CO, NM & except: AZ, CO, NM & except: AZ, CO, NM & except: AZ, CO, LA,
WI: Decline WI: Rate 75% WI: Rate 75% MI, NM & WI: Rate
15%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stents
--------------------------------------------------------------------------------------------------------------------------------------------------------
Heart Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other locations Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tachycardia
--------------------------------------------------------------------------------------------------------------------------------------------------------
No attacks in past 12 months, maintained and well Rider + Rating for Rider + Rating for Rider + Rating for Standard or Rate-up
controlled on medications to control attacks and meds UT: tobacco meds UT: tobacco meds UT: tobacco UT: tobacco user--
symptoms, no other cardiovascular disorders user--individual user--individual user--individual individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 attacks per year, < 1 year since last attack Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 attacks per year, 1-3 years since last attack, Rider UT: tobacco Rider UT: tobacco Rider UT: tobacco Rider UT: tobacco
prompt response to treatment, no other cardivascular user--individual user--individual user--individual user--individual
disorders consideration consideration consideration; UT: consideration; MI:
individual Rate 75%
consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 3 attacks per year, > 3 years since last attack, Standard Standard Standard Standard
prompt response to treatment, no other cardiovascular
disorders
--------------------------------------------------------------------------------------------------------------------------------------------------------
Others Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgical ablation 6 months ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgical ablation > 6 months ago, no residuals Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tendonitis--see Bursitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tenosynovitis--see Bursitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tonsillitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 3 episodes per year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3-5 episodes per year Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 episodes per year Rider Rider Rider Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tourettes Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple tics, no behavioral disorders Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Controlled with medication Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disabling, behavioral issues, extensive psychotherapy Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tuberculosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
TB infection without disease, + skin test, Negative Standard Standard Standard Standard
bacteriologic studies, Negative chest x-ray, No
evidence of active disease, Prophylactic drug therapy
complete > 6 months ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
TB infection without disease, + skin test, Negative Decline Standard Standard Standard
bacteriologic studies, Negative chest x-ray, No
evidence of active disease, Current use of < 6 months
of prophylactic drugs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ulcer (Peptic)
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 1 episode, well controlled with medications Rider UT: Individual Rider UT: Individual Rider UT: Individual Standard
consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of bleeding or perforation, < 2 years after Decline Decline Decline Decline
episode, OR multiple occurrences of bleeding or
perforation
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of bleeding or perforation, > 2 years after Standard Standard Standard Standard
episode, single occurrence, no known cause OR NSAID's
discontinued, Vagotomy performed > 3 years ago, No
symptoms
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uterine Fibroids
--------------------------------------------------------------------------------------------------------------------------------------------------------
Post-menopausal, no HRT, asymptomatic or myomectomy or Standard Standard Standard Standard
hysterectomy completed
--------------------------------------------------------------------------------------------------------------------------------------------------------
Others Rider Rider Rider Rider
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vaginitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
One occurrence, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 1 occurrence, < 1 year since last occurrence Rider Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Varicose Veins of the lower extremities--UT only
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present-asymptomatic, no recommendations for treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present with ulcer Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with lazer, stripping or sclerotherapy, full Rider Standard Standard Standard
recovery no symptoms or treatment < 1 yr ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with lazer, stripping or sclerotherapy, full Standard Standard Standard Standard
recovery no symptoms or treatment > 1 yr ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Varicose Veins
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present-asymptomatic, no recommendations for treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present with ulcer Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with lazer, stripping or sclerotherapy, full Rider Standard Standard Standard
recovery no symptoms or treatment < 1 yr ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with lazer, stripping or sclerotherapy, full Standard Standard Standard Standard
recovery no symptoms or treatment > 1 yr ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ventricular Septal Defect--APS Required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Repaired > 1 year ago, complete recovery, normal Standard Standard Standard Standard
cardiac exam
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or repaired with symptoms or abnormal cardiac Decline Decline Decline Decline
exam
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weight loss medication use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use of any weight loss medication (other than Xenical) Indivdual Indivdual Indivdual Indivdual
or combination with hypertension or cardiac issues consideration--medica consideration--medica consideration--medic consideration--medic
l records required l records required al records required al records required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Continuous use of weight loss medication for more than Decline Decline Decline Decline
one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
All other scenarios or Xenical use in combination with Standard Standard Standard Standard
hypertension or cardiac disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weight loss surgery--Gastric banding
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band removed, no rateable build, weight maintained Standard Standard Standard Standard
for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band removed, rateable build, or weight loss not Decline Decline Decline Decline
maintained for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gastric Bypass/Gastric Stapling Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cancer Guidlines--APS Required for all--Mazimum
allowable rating varies by state
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actions for Common Medical Conditions--Non-Rider States (LA & MI)
Below are underwriting actions for conditions for which Humana does not place exclusion riders.
These guidelines may vary due to state-specific laws and regulations but can be followed as a general outline. This is not all inclusive. Final decision
is based on underwriting review. Underwriting assessments in the below grid are based on customary and usual treatment seen for the conditions noted.
Below are examples only; Humana will be solely responsible for the final underwriting decision, which is based on the completed application and the
applicant's health history. Guidelines are subject to change without prior notice.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condition We reserve the right to rate for the condition
and/or medication use when appropriate. A modified rating
is determined based on the severity of the condition and $1,500 or lower $2,500-$5,000 $2,000-$5,200 $6,000 or higher
treatment and/or prescription medication cost, dosage, and deductable plus Rx deductable plus Rx deductable no Rx deductable plus Rx
premium amount.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acid Reflux/GERD/ Heartburn
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no hiatal hernia, non prescription medication Standard Standard Standard Standard
(OTC only) no recommended consultations or testing
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, prescription medication, no hiatal hernia Standard or Rating Standard or Rating Standard Standard or Rating
present
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription medication use currently, hiatal hernia Decline Decline Decline Standard or Rating
present
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acne/Rosacea
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no treatment or OTC medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription meds, or < 6 months since med use, no Standard or Rating Standard or Rating Standard Standard or Rating
Accutane or equivalent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription meds, completed 6 months ago, complete Standard Standard Standard Standard
recovery, no Accutane or equivalent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Accutane treatment of equivalent or 1 year since Decline Decline Decline Decline
treatment completed
--------------------------------------------------------------------------------------------------------------------------------------------------------
Accutane treatment of equivalent or > 1 year ago since Standard Standard Standard Standard
treatment complete recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
Allergies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recommended, pending or scheduled testing Rate 50% Rate 50% Rate 50% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal prescription meds (3 refills or less per year Standard Standard Standard Standard
or OTC), no immunotherapy treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription meds, more than 3 refills per year, no Standard or Rating Standard or Rating Standard Standard or Rating
immunotherapy treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
With or without prescribed medications, current or Individual Individual Individual Individual
recent immunotherapy Consideration with Consideration with Consideration with Consideration with
Max Rating Max Rating Max Rating Max Rating
--------------------------------------------------------------------------------------------------------------------------------------------------------
Amputation/Prosthesis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Finger or toes--with or without prosthesis Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eye Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
All other amputations, with or without prosthesis Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Caused by diabetes, severe artery disease or other Decline Decline Decline Decline
disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anemia--other than anemia listed in the ineligible health
conditions list
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aneurysm
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically repaired > 5 years, no residuals Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anxiety
--------------------------------------------------------------------------------------------------------------------------------------------------------
Well controlled with prescription medication, no Standard or Rate up Standard or Rate up Standard Standard or Rate up
counseling, no more than 2 ER visits in the last 12
months
--------------------------------------------------------------------------------------------------------------------------------------------------------
Counseling only, no medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Asthma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exercise induced, no regular medication required Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medication use only Standard or Rate up Standard or Rate up Standard or Rate up Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medication use, steroid treatment (not including Standard or Rate up Standard or Rate up Standard Standard or Rate up
Albuterol inhaler) less than 3 times and/or no more
than two emergency room visits in the past 12 months
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oral steroids required 3 times or more than 2 ER Decline Decline Decline Decline
visits in the past 12 months
--------------------------------------------------------------------------------------------------------------------------------------------------------
Attention Deficit Disorder/ADD/ADHD
--------------------------------------------------------------------------------------------------------------------------------------------------------
No medication or counseling, more than 2 years Standard Standard or Rate up Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
One medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than one medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Atrial Fibrillation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single event, more than 2 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chronic or ongoing treatment Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single events less than 2 years ago or multiple events Decline Decline Decline Decline
or Pacemaker/defibrillation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Back Sprain/Strain/Whiplash
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 year ago--complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 1 year ago or not recovered Rate 50% Rate 50% Rate 50% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baker's Cyst
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present and symptomatic Decline Decline Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present and asymptomatic Decline Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of no recurrence Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Basal Cell Carcinoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence removed within 2 years Rate 25% Rate 25% Rate 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurences, or recurrent, removed (regardless Rate 25% permanent Rate 25% permanent Rate 25% permanent Standard
of time frame)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benign Prostatic Hypertrophy/BPH
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incidental finding, no symptoms, no treatment or Standard Standard Standard Standard
medication use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Well controlled on one medication Standard or Rate up Standard or Rate up Standard or Rate up Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than one medication Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prostatectomy, TURP, TUNA, TUIP, TUMT, or Lazer Standard Standard Standard Standard
surgery completed, no follow up needed, complete
recovery, no residual complications or medication use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bladder Infections (Cystitis)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 4 per year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
4-6 episodes per year Decline Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 6 per year Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breast Cyst, Nodule or Mass
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present and benign Rate 25% Rate 25% Rate 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Removed and benign Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, pathology unknown Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breast Implants
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no complications, placed for cosmetic Standard Standard Standard Standard
purposes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breast Reduction/Macromastia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condition present, no surgery completed Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery completed < 1 year ago, with complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery completed < 1 year ago, with residuals Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bronchitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-3 episodes in the past year, non tobacco user, Standard Standard Standard Standard
complete recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-2 episodes in the past year, tobacco user, complete Standard Standard Standard Standard
recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 episodes a year, tobacco user, complete recovery Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 3 episodes a year or Chronic Bronchitis Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bundle Branch Block (right)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete, no tobacco use for the last 12 months, Standard Standard Standard Standard
symptom and treatment free for last 12 months, build
not ratable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bursitis/Tendonitis/Tenosynovitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence with complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, not recovered Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences Rate 25% Rate 25% Rate 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Carpal Tunnel
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or residuals Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgical repair, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cataracts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected, fully recovered, no residuals Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chlamydia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or under treatment, no other STD history Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Colon Polyps
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 1 benign polyp removed within the past 5 Max Rating or Max Rating or Max Rating or Max Rating or
years during colonoscopy, scheduled follow up is Individual Individual Individual Individual
every 10 years Consideration Consideration Consideration Consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single benign polyp removed during colonoscopy within Standard Standard Standard Standard
the last 5 years, no colon resection, follow up
scheduled more than 5 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single benign polyp removed during colonoscopy, within Max Rating or Max Rating or Max Rating or Max Rating or
the past 5 years, no colon resection, follow up Individual Individual Individual Individual
schedued every 3-5 years Consideration Consideration Consideration Consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 1 polyp removed within the past 5 years. Decline Decline Decline Decline
Surgically removed (not during colonoscopy) or part
of colon surgically removed or follow up scheduled
every 1-2 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-2 polyps removed within the past 5 years during Max Rating or Max Rating or Max Rating or Max Rating or
colonoscopy, only 1 colonoscopy completed within the Individual Individual Individual Individual
past 5 years. Follow up scheduled every 3-5 years Consideration Consideration Consideration Consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
More than 2 polyps removed within the past 5 years, Decline Decline Decline Decline
follow up scheduled every 3-5 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condyloma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of--No HPV Rate 100%: LA: 84% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of--with HPV Rate 100%: LA: Rate Rate 100%: LA: Rate Rate 100%: LA: Rate Rate 100%: LA: Rate
84%: HPV underwritten 84%: HPV underwritten 84%: HPV 84%: HPV
separately separately underwritten underwritten
separately separately
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deep Vein Thrombosis (DVT)
--------------------------------------------------------------------------------------------------------------------------------------------------------
On anticoagulants or one episode less than 3 months Decline Decline Decline Decline
ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 episode 3 months-2 years Rate: 25% Rate: 25% Rate: 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recurrent Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Depression
--------------------------------------------------------------------------------------------------------------------------------------------------------
Well controlled with prescription medication, no Standard or Rate up Standard or Rate up Standard Standard or Rate up
counseling
--------------------------------------------------------------------------------------------------------------------------------------------------------
Counseling only, no medication Rate 10-20% Rate 10-20% Rate 10-20% Rate 10-20%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deviated Septum (nasal)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic or surgically repaired Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Symptomatic Rate 100%: LA: 84% Rate 100%: LA: 84% Rate 100%: LA: 84% Rate 100%: LA: 84%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disc Disorder (herniated, bulging, ruptured)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, surgically repaired less than 1 year ago or Decline Decline Decline Decline
with residuals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Asymptomatic for more than 1 year without surgery or Standard Standard Standard Standard
surgically repaired more than 1 year ago with full
recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diverticulitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, No Surgery Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery within 0-2 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected > 2 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diverticulosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or with history of diverticulitis. No surgery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery within 0-2 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected > 2 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
DUI--Paramed exam is required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, within 5 years Rate 30%--Decline Rate 30%--Decline Rate 30%--Decline Rate 30%--Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, more than 5 years Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences, within 5 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences, more than 5 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ear Infection (Otitis Media)
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 3 in the past 12 months Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 or more in the past 12 months Decline Decline Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tubes Present Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tubes no longer present, no recurrence Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eczema
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or less than 2 years since symptomatic Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2 years since treatment or symptoms Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Endometriosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or within 5 years of treatment Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 years since symptoms or treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery < 3 years ago Decline Decline Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery > 3 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Enlarged Prostate--See Benign Prostatic Hypertrophy
--------------------------------------------------------------------------------------------------------------------------------------------------------
Epilepsy, Grand Mal (Generalized)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure within past 2 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last seizure > 2 years ago Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Epilepsy, Petit Mal (Generalized)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure within past 2 years Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last seizure > 2 years ago Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Epilepsy, Temporal Lobe (Partial)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure < 1 year ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seizure > 1 year ago Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fibromyalgia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fractures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--No fixation device Rate 75% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--with permanent fixation device Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--with temporary fixation device Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recovered & released from care with no fixation device Standard Standard Standard Standard
or permanent fixation device
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recovered, released from care with temporary fixation Decline Decline Decline Decline
device
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pathological Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ganglion Cyst
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present & symptomatic Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically removed, asymptomatic or history and Standard Standard Standard Standard
resolved
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gastric banding--weight loss surgery
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band removed, no rateable build, weight maintained Standard Standard Standard Standard
for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap Band removed, rateable build, or weight loss not Decline Decline Decline Decline
maintained for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap Band present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gastric Bypass/Gastric Stapling Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
GERD (reflux)--see Acid Reflux/GERD
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gestational Diabetes
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 5 yrs ago, diet controlled during pregnancy, no Rate 25% Rate 25% Rate 25% Rate 25%
recurrence
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 yrs ago, diet controlled during pregnancy, no Standard Standard Standard Standard
recurrence
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 5 yrs ago, controlled with insulin during pregnancy, Rate 50%--UT: tobacco Rate 50%--UT: tobacco Rate 50%--UT: tobacco Rate 50%--UT: tobacco
no recurrence users, individual users, individual users, individual users, individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 yrs ago, controlled with insulin during pregnancy, Rate 25% Rate 25% Rate 25% Rate 25%
no recurrence
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of, no glucose test following pregnancy or Decline Decline Decline Decline
glucose levels did not return to normal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Glaucoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Symptomatic, but not diagnosed Rate 25% for condition Rate 25% for condition Rate 25% for Rate 25% for
and additional rating and additional rating condition and condition and
for meds for meds additional rating additional rating
for meds for meds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, well controlled Rating Rating Standard Rating
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, not controlled: with or without medications Decline 50-75% rating for Rate 50% no actions Rate 50% and
condition, and for meds additional rating
additional rating for for meds
medications
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected both eyes, with or without If no medications: If no medications: Standard If no medications:
medications Standard Medication Standard Medication Standard Medication
use: Rating use: Rating use: Rating
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected in one eye: with or without Decline 50-75% rating for Rate 50% no actions Rate 50% and
medication use condition, and for meds additional rating
additional rating for for meds
medications
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gout
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or within 2 years of symptoms or treatment Rate 25% Rate 25% Rate 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recovered and time from last symptoms or treatment > 2 Standard Standard Standard Standard
years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grave's Disease--See Hyperthyroidism
--------------------------------------------------------------------------------------------------------------------------------------------------------
Guillain-Barre Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or < 3 years since recovered or Residual Decline Decline Decline Decline
disability/permanent impairment
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 3 years since recovered, no disability, minimal Rate 25% Standard Standard Standard
weakness, no relapse
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gynecomastia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hashimoto's Thyroiditis--See Hypothyroidism
--------------------------------------------------------------------------------------------------------------------------------------------------------
Heartburn--see Acid Reflux
--------------------------------------------------------------------------------------------------------------------------------------------------------
Heart Murmur Diastolic
--------------------------------------------------------------------------------------------------------------------------------------------------------
Functional/Innocent, Grade I or II--Systolic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Organic, Grade III or greater, continuous--Diastolic Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hemorrhoids
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, symptomatic Rate 50% Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 1 year since symptoms or surgery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hepatitis A
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 6 months since treatment with normal liver tests Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hepatitis B
--------------------------------------------------------------------------------------------------------------------------------------------------------
Carrier Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or < 6 months since treatment Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Others Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hernia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, all types other than Hiatal Hernia Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically repaired, with complete recovery and no Standard Standard Standard Standard
residuals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hiatal Hernia--see Acid Reflux/GERD
--------------------------------------------------------------------------------------------------------------------------------------------------------
Herpes
--------------------------------------------------------------------------------------------------------------------------------------------------------
OTC medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Herpes Zoster (shingles)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Standard or Rate up Standard or Rate up Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery, no medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure/Hypertension
--------------------------------------------------------------------------------------------------------------------------------------------------------
Underwritten based on age of onset, stability and
comorbidity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stable, average readings 150/90 or less, no other Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
cardiac risk factors, controlled with medication
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + 50% Ratable Build
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + Ratable Build + Tobacco User
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + High Cholesterol controlled with
medication
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + High Cholesterol + Ratable Build
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + High Cholesterol+ Tobacco User
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + Rateable Build + Tobacco User
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Blood Pressure + Sleep Apnea
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Cholesterol
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lipid panel results within normal limits, compliant Standard or Rate up Standard or Rate up Standard Standard or Rate up
with follow up
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Cholesterol + Ratable Build + Tobacco User
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Cholesterol + Ratable Build + Hypertension
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Human Papilloma Virus (HPV)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low risk--no condyloma Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
High risk Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hyperthyroidism
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--untreated Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present--treated with medication Rate 25% or higher Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hypoglycemia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, follow up recommended Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, or history of, diet controlled, no follow-up Standard Standard Standard Standard
recommended
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, treated with medication Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hypothyroid
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Infertility Treatment--male and female
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current infertility drug treatment Decline--entire family Decline--entire family Decline--entire Decline--entire
family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with infertility drugs a year without Decline--entire family Decline--entire family Decline--entire Decline--entire
a live birth family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with infertility drugs with a live Standard Standard Standard Standard
birth, family planning complete
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with infertility drugs with a live Decline--entire family Decline--entire family Decline--entire Decline--entire
birth, family planning is not complete family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with IVF, ZIFT, GIFT or others, family Standard Standard Standard Standard
planning complete
--------------------------------------------------------------------------------------------------------------------------------------------------------
Last treatment with IVF, ZIFT, GIFT or others, family Decline--entire family Decline--entire family Decline--entire Decline--entire
planning is not complete family family
--------------------------------------------------------------------------------------------------------------------------------------------------------
Insomnia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with medication Standard or Rating up Standard or Rating up Standard Standard or up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Irritable Bowel Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with OTC medication Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with non-GI prescription medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
ITP (blood disorder)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Child form, complete recovery, platelet count returned Standard Standard Standard Standard
to normal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Child form, present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adult form or chronic, less than 40 years of age, more Rate 25% Rate 25% Rate 25% Rate 25%
than 3 years since treatment and a complete recovery
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adult form or chronic, more than 6 years since Standard Standard Standard Standard
treatment and a complete recovery, no current
treatment, normal platelet count
--------------------------------------------------------------------------------------------------------------------------------------------------------
Joint replacement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hip replaced Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Knee replaced Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Shoulder replaced Rate 100%: LA: Rate Rate 100%: LA: Rate Rate 100%: LA: Rate Standard
84% 84% 84%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney Infection/Pyelonephritis/Pyelitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 episode, within 0-3 years Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 episode > 3 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 episodes, < 2 years ago Decline Decline Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 episodes, 2-5 years ago Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 episodes, > 5 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 or more episodes, regardless of time frame Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney Stones
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passed on its own or surgically > 2 years Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 episodes Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lichen Planus
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild infrequent attacks Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Frequent or severe attacks Rate 25% or higher Rate Rate 25% Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lipoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic, no surgery anticipated Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present and symptomatic Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lyme Disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or treatment completed less than 6 months ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 6 months since recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Macular Degeneration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dry or wet Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Meniere's Disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, confirmed diagnosis, stable, current or Standard or Rating Standard or Rating Standard Standard
history of med use, no ongoing follow-up or treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, confirmed diagnosis, stable, current or Decline Decline Decline Decline
history of med use, ongoing follow-up or treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Migraines
--------------------------------------------------------------------------------------------------------------------------------------------------------
Occasional ( 3 episodes yearly) treated with OTC Standard Standard Standard Standard
medication
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 episodes in the last 12 months, or severe. Workup Rating Rating Standard Rating
completed, symptoms controlled with current treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 episodes in the last 12 months. No workup completed Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prescription medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Miscarriage
--------------------------------------------------------------------------------------------------------------------------------------------------------
1-2, no underlying cause Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2, no full term deliveries Rate 50% Rate 50% Rate 50% Rate 50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of with full term delivery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mitral Valve Prolapse
--------------------------------------------------------------------------------------------------------------------------------------------------------
No symptoms or treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild symptoms controlled with one med, no other heart Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
disorder
--------------------------------------------------------------------------------------------------------------------------------------------------------
Molluscum Contagiosum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or complete recovery < 1 year Rate 50% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery > 1 year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nephritis/Glomerulonephritis
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode > 3 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode < 3 years ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Osteoarthritis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, only OTC meds, no PT or OT, no shoulder, hip, Standard Standard Standard Standard
pelvis, back or spine, knee or ankle involvement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, all treatment except OTC meds, no shoulder, Rating Rating Rating Rating
hip, pelvis, back or spine, knee or ankle involvement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, regardless of treatment, with shoulder, hip, Decline Decline Decline Decline
pelvis, back or spine, knee or ankle involvement and
no joint replacement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Osteoporosis/Osteopenia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current use of Prophylactic medication, due to age/ Standard or Rate-up Standard or Rate-up Standard Standard or Rate-up
menopause, no diagnosis of osteoporosis or
osteopenia, no fractures or Dexa scans done
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diagnosis of Osteoporosis or Osteopenia with or Minimum rate of 25% + Minimum rate of 25% + Rate 25% Standard or Rate-up
without medication use, Dexa scans stable or improved Pharmacy rating if on Pharmacy rating if on
meds or 50% Rate if meds or 50% Rate if
not on meds not on meds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, severe, history of pathologic fractures, Decline Decline Decline Decline
crippling, Dexa scans worsening
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ovarian Cyst
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, asymptomatic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Symptomatic Decline Rate 50% Rate 50% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Removed Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pancreatitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of attack, no underlying cause, resolved Individual Individual Individual Individual
consideration, consideration, consideration, consideration,
medical records medical records medical records medical records
required required required required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chronic or recurrent Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pap Smear--Abnormal
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASCUS, no high risk HPV, Class II or Class III Standard Standard Standard Standard
followed by one normal pap, Class IV, treated,
followed by three normal pap smears
--------------------------------------------------------------------------------------------------------------------------------------------------------
Phlebitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current use of blood thinners Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, < 3 months, complete recovery, no Rate 25% Rate 25% Rate 25% Standard
varicose veins or edema
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, 3 months-2 years, complete recovery, no Standard Standard Standard Standard
varicose veins or edema
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recurrent episodes within 0-2 years Rate 25% Rate 25% Rate 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of 2 years ago Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Varicose Veins--(see Varicose Veins)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pneumonia
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prostatitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, full recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 1 episode or chronic Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prosthesis/Prosthetics Device (See Amputation)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prostate--Enlarged (See Benign Prostatic Hypertrophy/BPH)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Psoriasis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild symptoms, OTC medications or no treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild to moderate symptoms, conservative treatments, Standard or Rate up Standard or Rate up Standard Standard or Rate up
including prescription topical agents
--------------------------------------------------------------------------------------------------------------------------------------------------------
Severe symptoms requiring Rx medication such as Decline Decline Decline Decline
Enbrel, Remicade, Sulfasalazine, gold therapy or
Methotrexate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use of tanning bed only Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use of UVA/PUVA light at a medical facility Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Psoriatic Arthritis
--------------------------------------------------------------------------------------------------------------------------------------------------------
All cases Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pyloric Stenosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected with complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Respiratory Syncytial Virus (RSV)/Bronchiolitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or history of, < 2 years of age, Synagis/ Decline Decline Decline Decline
Palivizumab use
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2 years of age, Last occurrence < 1 year ago and Decline Decline Decline Decline
Synagis/Palivizumab use
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 2 years of age. Last occurrence > 1 year ago, no Standard Standard Standard Standard
medications for > 1 year. Complete recovery, no other
respiratory conditions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Restless Leg Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
No medication or treatment for 12 months Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Controlled with medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diagnosis not confirmed, secondary condition not ruled Decline Decline Decline Decline
out
--------------------------------------------------------------------------------------------------------------------------------------------------------
Retinal Detachment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected < 2 years Rate 50% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rheumatoid Arthritis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Scoliosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, no surgery, under age of 20 Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present, over age of 20 Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgery completed, rod in place, full recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Any cardiac, pulmonary or spinal cord involvement Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sinusitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 3 episodes in the past year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3-6 episodes in the past 12 months Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 6 episodes in the past 12 months Rate 25% Rate 25% Rate 25% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea
--------------------------------------------------------------------------------------------------------------------------------------------------------
Controlled with CPAP Rate 150%: LA Decline Rate 150%: LA Decline Rate 150%: LA Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgically corrected Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea + Ratable build Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea + Tobacco User Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sleep Apnea + Hypertension Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Central or Mixed Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Spina Bifida
--------------------------------------------------------------------------------------------------------------------------------------------------------
Occulta, incidental finding, asymptomatic Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Occulta--symptomatic Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manifesta Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Spinal Manipulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
0-5 visits per year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
6-10 visits per year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
11-15 visits per year Rate 50% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
16-20 visits per year Rate 25% Rate 15% Rate 15% Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
21--25 visits per year Rate 75% Except: LA: Rate 15% Except: LA: Rate 15% Except: LA: Standard
Rate 84% Rate 84% Rate 84%
--------------------------------------------------------------------------------------------------------------------------------------------------------
26-30 visits per year Rate 75% Except: LA: Rate 15% Except: LA: Rate 15% Except: LA: Standard
Rate 84% Rate 40% Rate 40%
--------------------------------------------------------------------------------------------------------------------------------------------------------
31-35 visits per year Rate 75% Except: LA: Rate 15% Except: LA: Rate 15% Except: LA: Standard except: NV--
Rate 84% Rate 50% Rate 50% Rider Autoshare 80
plus Rx only (all
other plans
standard)
--------------------------------------------------------------------------------------------------------------------------------------------------------
36+ visits per year Rate 75% Except: LA: Rate 75% Except: LA: Rate 15% Except: LA: Rate 15%
Decline Decline Rate 75%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stents
--------------------------------------------------------------------------------------------------------------------------------------------------------
Heart Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other locations Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tachycardia
--------------------------------------------------------------------------------------------------------------------------------------------------------
No attacks in past 12 months, maintained and well Rate 25% or higher Rate 25% or higher Rate 25% Standard Rate
controlled on medications to control attacks and
symptoms, no other cardiovascular disorders
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 attacks per year, < 1 year since last attack Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 attacks per year, 1-3 years since last attack, Rate 75% Rate 75% Rate 75% Rate 75%
prompt response to treatment, no other cardivascular
disorders
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 3 attacks per year, > 3 years since last attack, Standard Standard Standard Standard
prompt response to treatment, no other cardiovascular
disorders
--------------------------------------------------------------------------------------------------------------------------------------------------------
Others Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgical ablation 6 months ago Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surgical ablation > 6 months ago, no residuals Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tendonitis--see Bursitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tonsillitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 3 episodes per year Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
3-5 episodes per year Decline Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 episodes per year Decline Decline Decline Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tourettes Syndrome
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple tics, no behavioral disorders Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Controlled with medication Standard or Rate up Standard or Rate up Standard Standard or Rate up
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disabling, behavioral issues, extensive psychotherapy Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tuberculosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
TB infection without disease, + skin test, negative Standard Standard Standard Standard
bacteriologic studies, negative chest x-ray, no
clinical evidence of active TB disease, prophylactic
drug therapy complete > 6 months ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
TB infection without disease, + skin test, negative Decline Standard Standard Standard
bacteriologic studies, negative chest x-ray, no
clinical evidence of active TB disease, current use
of < 6 months of prophylactic drugs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ulcer (Peptic)
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
History of bleeding or perforation less than 2 years Decline Decline Decline Decline
ago or multiple occurrences of bleeding or
perforation
--------------------------------------------------------------------------------------------------------------------------------------------------------
One episode of bleeding or perforation > 2 years ago, Standard Standard Standard Standard
no symptoms or vagotomy completed > 3 years ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uterine Fibroids
--------------------------------------------------------------------------------------------------------------------------------------------------------
Post-menopausal, no HRT, asymptomatic or myomectomy or Standard Standard Standard Standard
hysterectomy completed
--------------------------------------------------------------------------------------------------------------------------------------------------------
Others Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vaginitis
--------------------------------------------------------------------------------------------------------------------------------------------------------
One occurrence, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 1 occurrence, < 1 year since last occurrence Rate 25% Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Varicose Veins
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present-asymptomatic, no recommendations for treatment Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present with ulcer Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with lazer, stripping or sclerotherapy, full Rate 25% Standard Standard Standard
recovery no symptoms or treatment < 1 year ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Treated with lazer, stripping or sclerotherapy, full Standard Standard Standard Standard
recovery no symptoms or treatment > 1 year ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ventricular Septal Defect--APS Required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Repaired > 1 year ago complete recovery, normal Standard Standard Standard Standard
cardiac exam
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present or repaired with symptoms or abnormal cardiac Decline Decline Decline Decline
exam
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weight loss medication use
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use of any weight loss medication (other than Xenical) Individual Individual Individual Individual
in combination with hypertension or cardiac issues consideration, consideration, consideration, consideration,
medical records medical records medical records medical records
required required required required
--------------------------------------------------------------------------------------------------------------------------------------------------------
Continuous use of any weight loss medication for more Decline Decline Decline Decline
than one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
All other scenarios or Xenical use in combination with Standard Standard Standard Standard
hypertension or cardiac disease
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weight loss surgery--Gastric banding
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band removed, no rateable build, weight maintained Standard Standard Standard Standard
for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band removed, ratable build, or weight loss not Decline Decline Decline Decline
maintained for one year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lap band present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actions for Cancer
The following grid includes possible underwriting actions for applicants with cancer history. This is not an all-inclusive list. Medical records are
required for all cancer history, regardless of the original diagnosis date.
Eligibility is determined based on the underwriter assessment of complete medical records, confirmation of compliance with all physician recommended
follow-up, a current physician assessment of the condition, supporting stability and no recurrence of the condition. Treatment for cancer may be defined
as: office visits, preventive maintenance medication, screenings, monitoring, diagnostics, and lab work.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condition We reserve the right to rate for the condition
and/or medication use when appropriate. A modified rating
is determined based on the severity of the condition and $1,500 or lower $2,500-$5,000 $2,000-$5,200 $6,000 or higher
treatment and/or prescription medication cost, dosage, and deductible plus Rx deductible plus Rx deductible no Rx deductible plus Rx
premium amount.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Basal Cell Carcinoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurences, or recurrent, removed (regardless Rate 25%--permanent Rate 25%--permanent Rate 25%--permanent Standard
of time frame)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breast
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage 0, > 4 years from treatment All states except FL All states except FL All states except FL All states except FL
and UT: Rate 25% UT: and UT: Rate 25% UT: and UT: Rate 25% UT: and UT: Rate 25% UT:
tobacco user-- tobacco user-- tobacco user-- tobacco user--
individual individual individual individual
consideration FL: see consideration FL: see consideration FL: consideration FL:
below below see below see below
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage 0, 2 yrs from treatment FL only: Rating if FL only: Rating if FL only: Rating if FL only: Rating if
cancer free for 2 cancer free for 2 cancer free for 2 cancer free for 2
years years years years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, > 11 yrs from treatment All states: Rate 25- All states: Rate 25- All states: Rate 25- All states: Rate 25-
50% 50% 50% 50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, 2 years from treatment FL only: Rating if FL only: Rating if FL only: Rating if FL only: Rating if
cancer free for 2 cancer free for 2 cancer free for 2 cancer free for 2
years years years years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage II, III, IV Decline FL only: Decline FL only: Decline FL only: Decline FL only:
Exception 2 years Exception 2 years Exception 2 years Exception 2 years
cancer free, 150% cancer free, 150% cancer free, 150% cancer free, 150%
rating applies rating applies rating applies rating applies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bladder
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage 0, 10+ years from treatment Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, > 10 years from treatment Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cervical
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage 0 (carcinoma in situ), > 3 years from treatment Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, IA1, IA2, IB1, IB2 (lymph node removed), > 10 Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
years from treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage IA, IIA, IIIA, IBA & IVB, > 10 years ago Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Colon
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage 0 or Carcinoma in situ, 3+ years from treatment Rate 25-50% Rate 25-50% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I or Duke's A, > 5 years from treatment Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage II or Duke's B, > 12 years from treatment Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage III or IV, Duke's C or D, > 10 years from Individual Individual Individual Individual
treatment consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I & II, normal kidney function, > 10 years from Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
treatment:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I & II, abnormal kidney function, > 10 years Individual Individual Individual Individual
from treatment consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage III & IV, > 10 years from treatment Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Melanoma, localized
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clark's Level I, II & III--.76-1.5 mm thick, > 5 years Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clark's Level I, II & III, > 1.5 mm thick, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clark's Level I, II & III, < .75 mm thick, > 3 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clark's Level I, II & III, unknown thickness, > 10 Individual Individual Individual Individual
years consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clark's level IV or V, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Melanoma In Situ, > 2 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple Malignant Melanoma, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Osteoid Osteoma
Removed with complete recovery Standard Standard Standard Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prostate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I or Gleason score 2-4, > 2 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gleason Score 5, > 3 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage II or Gleason Score 6, > 5 years Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gleason score 7, > 5 years Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage III or Gleason Score 8-10, > 10 years Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage IV or Recurrent, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Skin, Sarcoma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adult
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, G1 or G2, T1, > 3 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, G1 or G2, T2, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage II, III or IV, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Under age 20:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Group I, > 3 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Group II, > 5 years Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Group II, IV or Recurrent, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Skin, Squamous Cell
--------------------------------------------------------------------------------------------------------------------------------------------------------
Present Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single occurrence, complete recovery--margins free of Standard Standard Standard Standard
tumor
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences or recurrent, last removal < 3 Rider--permanent Rider--permanent Rider--permanent Rider--permanent
years ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple occurrences or recurrent, last removal 3 Rider--permanent Rider--permanent Rider--permanent Standard
years ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deep Tumor: invaded muscle, cartilage or bone, no Decline Decline Decline Decline
metastasis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Metastasis Decline Decline Decline Decline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stomach
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Testicular
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nonseminoma & Seminoma combination, Stage I, > 3 years Rate 25% Rate 25% Rate 25% Rate 25%
ago
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nonseminoma & Seminoma Combination Stage II or Stage Individual Individual Individual Individual
III > 10 years consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nonseminoma Stage I, > 3 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nonseminoma, Stage II or III, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seminoma State I, > 3 years Rate 25% Rate 25% Rate 25% Rate 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seminoma Stage II or III, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Throat
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tongue--oropharyngeal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage 0, > 5 years Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, no alcohol or tobacco use within the past 2 Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
years, > 5 years from treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, current alcohol or tobacco use, > 10 years Individual Individual Individual Individual
from treatment consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage II, no alcohol or tobacco use within the past 2 Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
years, > 10 years from treatment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage II, current alcohol or tobacco use, > 10 years Individual Individual Individual Individual
from treatment consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage III, IV or Recurrent, > 10 years from treatment Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Thyroid, Papillary
--------------------------------------------------------------------------------------------------------------------------------------------------------
> 5 years from treatment Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uterine
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage I, II, > 5 years from treatment Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage III, > 10 years from treatment Rate 25-50% Rate 25-50% Rate 25-50% Rate 25-50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stage IV, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uterine sarcoma, > 10 years Individual Individual Individual Individual
consideration consideration consideration consideration
--------------------------------------------------------------------------------------------------------------------------------------------------------
HumanaOne Short Term Medical Plans
HumanaOne's Short Term Medical Plans are not subject to complete
underwriting like other HumanaOne plans. Instead, applicants will be
asked four or five eligibility and health questions to determine their
eligibility. The following questions must be answered fully and
truthfully; including information related to spouse and/or dependents
applying for coverage:
>
No
Yes Are you or is any immediate family member (whether or not named in
this application) pregnant, an expectant parent, in the process of
adopting a child, or undergoing infertility treatment?
>
No
Yes Have/Are you, your spouse, or any person applying for coverage
resided in the U.S. for less than 6 months?
>
No
Yes Are you, your spouse, or any person applying for coverage over 300
pounds if male, or over 250 pounds if female?
>
No
Yes For any of the following conditions, has any person to be insured
received, in the past 5 years, any abnormal test results; medical or
surgical consultation, treatment, or advice; consulted a health care
professional; or taken medication for: diabetes, emphysema, cancer or
tumor, stroke, heart disorder including but not limited to heart attack
or chest pain, AIDS or tested positive for HIV, kidney disorder
(excluding kidney stones), alcoholism, chemical dependency, drug or
alcohol abuse?
In Colorado, an additional question will be asked of the applicants:
>
No
Yes Have you or any other person to be insured been covered under two
or more non-renewable short term plans during the past 12 months?
Eligibility
If ``no'' is answered to all of the following questions, your client
will be eligible for coverage. If ``yes'' is answered to any of the
following questions, your client will need to provide the name of the
person the answer applies to. The person(s) named will not be covered
under the policy. If your client is not eligible for coverage, they may
choose to apply for a different HumanaOne plan that is fully
underwritten.
If you have any questions about HumanaOne's Short Term Medical plans,
please contact your local sales representative.
______
Submitted by Hon. Sheldon Whitehouse,
a U.S. Senator From Rhode Island
Hospital Association of Rhode Island (HARI)
&
Lifespan
June 21, 2018
Seema Verma
Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-1694-P
P.O. Box 8011
Baltimore, MD 21244-1850
RE: CMS-1694-P, Medicare Program; Hospital Inpatient Prospective
Payment Systems for Acute Care Hospitals and the Long-Term Care
Hospital Prospective Payment System and Proposed Policy Changes and
Fiscal Year 2019 Rates; Proposed Quality Reporting Requirements for
Specific Providers; Proposed Medicare and Medicaid Electronic Health
Record (EHR) Incentive Programs (Promoting Interoperability Programs)
Requirements for Eligible Hospitals, Critical Access Hospitals, and
Eligible Professionals; Medicare Cost Reporting Requirements; and
Physician Certification and Recertification of Claims (Vol. 83, No.
88), May 7, 2018
Dear Administrator Verma:
On behalf of the ten acute care hospitals in Rhode Island, the Hospital
Association of Rhode Island (HARI) and Lifespan appreciate the
opportunity to comment on the Centers for Medicare and Medicaid
Services' (CMS) proposal to not extend the imputed rural floor wage
index policy for federal fiscal year (FY) 2019.
We would like to express our disappointment that CMS proposes to not
extend the imputed rural floor provision past the September 30, 2018
expiration date. This payment policy is critical to address a hospital
wage index reclassification system that does not reflect the unique
size and location of Rhode Island. Specifically, since Rhode Island is
just 1,000 square miles, many Rhode Island residents commute to and
from jobs in nearby Massachusetts and Connecticut every day. The fiscal
condition of hospitals in Rhode Island will be severely impacted if
this policy is discontinued, and a competitive disadvantage will be
created for the state's entire healthcare system. Many hospitals in our
state are located very close to hospitals in neighboring states that
are benefitting from a higher reimbursement rate due to their state's
rural floor. The imputed rural floor policy provides Rhode Island with
the same protections that Massachusetts and Connecticut currently
benefit from.
In the FY 2005 IPPS, CMS proposed, then finalized, an imputed ``rural
floor'' policy for all-urban states. Part of the agency's rationale was
that hospitals in all-urban states did not have any protection, or
``floor,'' from declines in their wage index (69 FR 49110), which all
other states have through the traditional rural floor. However, this
imputed rural floor methodology was not beneficial to Rhode Island due
to the entire state being located in one core-based statistical area
(CBSA). In the FY 2013 IPPS, CMS amended the policy to establish an
alternative methodology for computing the imputed floor wage index and
address this concern (77 FR 53368 through 53369). The hospitals in
Rhode Island have strongly supported the policy ever since, as it
creates wage index consistency and equity between states with rural
areas and states that are entirely urban.
In addition, we would like to address the following policy views in
favor of maintaining the imputed floor policy and the alternative
calculation that was established in the FY 2013 IPPS.
Wage Index System Reform
In both the FY 2014 and FY 2015 inpatient PPS final rules, CMS extended
the imputed floor for an additional year, during which time the agency
would continue to explore potential wage index reform. While
recommendations for wage index reform continue to be researched and
evaluated, no comprehensive reform of the Medicare wage index system
has been established nor have plans to do so been announced. CMS should
maintain the status quo for the entirety of the Medicare wage index
system--including the imputed floor policy and alternative calculation
current in place--until such reform is achieved.
Elimination of the Rural Floor Reinstates the Anomaly
Part of CMS' reasoning for eliminating the imputed floor provision is
that it creates ``a disadvantage in the application of the wage index
to hospitals in States with rural hospitals but no urban hospitals
receiving the rural floor'' (83 FR 20363). However, those urban
hospitals in states with rural hospitals retain all future wage index
protections associated with the rural floor. Eliminating the imputed
rural floor ultimately reinstates the disadvantages that existed prior
to its inclusion, where all-urban states have no protections from
declines in the wage index.
There is precedent for CMS to restore, in the final rule, policies or
provisions that were scheduled for elimination or discontinuation in
the proposed rule. Last year, CMS proposed to allow the imputed rural
floor to expire in FY 2018. That decision was reversed in the final
rule and the policy was extended through FY 2018. Additionally, in the
FY 2012 inpatient PPS proposed rule, CMS stated that the imputed floor
would expire on Sept. 30, 2011. However, in the final rule CMS
announced that the imputed floor provision was extended (and every year
after), during which time the agency would continue to explore
potential wage index reform.
HARI and Lifespan, on behalf of the hospitals in Rhode Island, advocate
that maintaining the imputed floor wage index policy and the
alternative calculation creates equity and consistency in the Medicare
reimbursement process. We are committed to working with you to ensure
that Rhode Island and other all-urban states benefiting from the
imputed rural floor continue to have the same protections provided to
states with rural areas and hospitals. Thank you for your consideration
of this matter.
Sincerely,
M. Teresa Paiva Weed David A. Balasco
President, Vice President of Government
Relations,
Hospital Association of Rhode
Island Lifespan
______
State of Rhode Island and Providence Plantations
State House
Providence, Rhode Island 02903-1196
401-222-2080
Gina M. Raimondo
Governor
June 13, 2018
The Honorable Seema Verma
Administrator
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244
Dear Administrator Verma:
I am writing to request your assistance in helping to reinstate the
imputed rural floor provision in the FY 2019 Inpatient Prospective
Payment System (IPPS) final rule promulgated by the Centers for
Medicare and Medicaid Services (CMS).
Last year, we had the opportunity to discuss this issue in Rhode Island
during the National Governor's Association Conference. Specifically,
the IPPS proposed rule for FY 2019, recently released by CMS,
eliminates the imputed rural floor and its alternative calculation for
``all-urban'' states. The ``imputed'' rural floor policy was first
created by CMS in FY 2005 because CMS believed that there was merit to
the concept that all-urban states were disadvantaged by the wage index
system. Since FY 2013, the IPPS rules have included an alternative
methodology for calculating the imputed rural floor in Rhode Island,
which has been key for our state's hospitals to preserve access to care
for Rhode Islanders. The elimination of this provision will reduce
hospital Medicare payments in our state by approximately $28.6 million
in FY 2019.
Hospitals are among Rhode Island's top employers and the impact of the
discontinuation of this policy would adversely impact this important
sector of our economy. This loss of funding will put Rhode Island at a
competitive disadvantage for recruiting and maintaining staff.
Hospitals in Rhode Island must compete with our neighboring states,
which are located just miles away and are benefitting from a much
higher reimbursement rate.
I want to thank you again for continuing this long-standing policy in
the FY 2018 IPPS final rule, which addresses a wage index disparity for
hospitals in Rhode Island and ask for your consideration of restoring
this provision in the final rule again this year.
Sincerely,
Gina M. Raimondo
Governor
______
Congress of the United States
Washington, DC 20515
June 20, 2018
The Honorable Seema Verma
Administrator
Centers for Medicare and Medicaid Services
7500 Security Blvd.
Baltimore, MD 21244
Dear Administrator Verma:
We write to express grave concern that your proposed Fiscal Year
(FY) 2019 Inpatient Prospective Payment System (IPPS) rule ends a
longstanding policy correcting a wage index disparity for hospitals in
Rhode Island. Since FY 2013, the IPPS rules have included an
alternative methodology for calculating the imputed rural floor in
Rhode Island, which has been key to improving the overall fiscal
condition of Rhode Island's health care system and maintaining access
to care for Rhode Islanders.
The alternative methodology for calculating the imputed rural floor
has been in place for many years to address the disadvantages faced by
all-urban states, like Rhode Island, which do not benefit from any
other payment programs for rural areas. This policy protects our
hospitals from falling to some of the lowest reimbursement rates in the
country, all the while competing with some of the most highly
reimbursed urban and academic hospitals in New England.
If the alternative methodology for calculating the imputed rural
floor is not reinstated in the IPPS final rule later this summer, we
expect Medicare reimbursement rates for hospitals in Rhode Island to be
cut by $28 million. These cuts will also have a ripple effect
throughout the insurance market in the state, because private insurance
reimbursement rates under the Medicare Advantage program are based on
underlying Medicare reimbursements. This would effectively double down
on cuts to hospitals in Rhode Island, which already have some of the
lowest operating margins in the country.
The alternative methodology for calculating the imputed floor has
been a crucial lifeline for hospitals in our state, many of which
continue to report operating losses each year. Hospitals are often the
economic backbone in a community, providing well-paying jobs for health
care workers, researchers, laboratory technicians, as well as
maintenance and administrative workers. A cut of this magnitude to
hospitals in Rhode Island would have a devastating impact throughoutour
economy.
We urge you to reverse your decision to end this payment policy for
hospitals in Rhode Island and reinstate the alternative methodology for
calculating the imputed rural floor in the final FY 2019 IPPS rule.
Thank you for your consideration of this important request and we look
forward to working with you to see this policy extended.
Sincerely,
Jack Reed Sheldon Whitehouse
United States Senator United States Senator
James R. Langevin David N. Cicilline
Member of Congress Member of Congress
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
There's a lot to cover this morning. I'll get to rescuing Americans
who are getting mugged by their prescription drug bills, as well as the
administration gutting safeguards for those with preexisting
conditions. But first, the American people are owed an answer about
what's going to be done to protect the thousands of children the Trump
administration separated from their mothers and fathers and put in the
custody of the witness.
As of this morning, HHS, Homeland Security, and the Justice
Department seem to be doing a lot more to add to the bedlam and deflect
blame than they're doing to tell parents where their kids are.
According to new reports, the government is ransoming these children by
telling their parents they can have their kids back if they agree to
leave the country. The president tweeted that the U.S. should forget
about due process rights for immigrants, essentially an endorsement of
judging people by the color of their skin.
The White House chief of staff floated their family-shredding
policy in the press more than a year ago. It wasn't conjured out of
thin air this spring. But with news reports that HHS is scrambling to
collect resumes of individuals with experience in child care, it's
clear the Department was woefully unprepared.
This committee has oversight of the child welfare system. Members
have worked hard on bipartisan child welfare policies that keep
families together whenever it's possible and safe. That's because
unnecessarily ripping children away from their families and putting
them in institutions is harmful. It's harmful to their health. It's
scarring to their emotional well-being. It's detrimental to their
growth. That is a fact, and your department knows it. You should know
it.
Secretary Azar, I'd be ready for a lot of questions about this
today. An administration that has traumatized thousands of child
refugees, dehumanized these kids and their parents, and tried to
normalize this behavior through deception has a lot to answer for.
Now let's shift to discuss Americans getting hit with enormous
bills when they walk up to the pharmacy window. When the President said
in early 2017 that drug companies were ``getting away with murder,'' he
offered his diagnosis of the prescription drug cost problem. A year and
a half later, it sure looks like he's decided not to treat the problem.
The President made prescription drug costs a key part of his pitch
to the American people on health care. But the party in power hasn't
done any legislating on it. The White House put out a 44-page, so-
called ``blueprint''--essentially a collection of the same questions
people have been asking about this issue for a decade or more. To me,
it looks less like a blueprint than it looks like blue smoke and
mirrors.
A lot of what the President and his team have said is head-
scratching stuff. For example, the President labeled European countries
``freeloaders.'' He said that if drugs got more expensive overseas,
fattening big pharma's wallets, prices would fall here at home. You've
got to be living in fantasy land to buy that theory.
First of all, I don't know what magic wand the administration is
planning on using to hike drug prices in other countries, but that's
not a power the U.S. has today.
Second, even if drug companies did come into a windfall from
overseas, it's naive and laughable to expect that they'd take that as a
reason to slash prices in America. Look at the Trump tax law. Huge
amounts of cash were showered onto these multinational drug companies.
They funneled it into stock buybacks that benefit shareholders, not
consumers.
Another trip to fantasyland: on May 30th, the President said that
in 2 weeks, drug companies would be announcing, quote, ``voluntary
massive drops in prices.'' Two weeks went by, then 3 weeks, and now
it's been nearly a month. No massive drops in prices to report.
As long as Americans are getting mugged at the pharmacy counter,
this situation demands serious, bipartisan action. That's why today I
am releasing a comprehensive report that looks at exactly what makes
this industry so complicated, and why it seems like prices only ever go
up.
It's not just a look at the drug manufacturers. There are a lot of
pieces to the puzzle of holding drug prices down, including the
middlemen, the distributors, the misplaced incentives, and broken, out-
of-date policies on the law books. This report is all about getting a
comprehensive look under the hood of the entire drug industry in
America for the first time. That information is key to having a full
debate.
Otherwise, what Americans are getting from the Trump
administration, and the president in particular, is mostly a lot of
empty talk. The fact is, many of the questions raised in the
administration's 44 page document are important. They reflect an
interest in some of the challenges I've worked on with respect to drug
costs. But it's discouraging to see the Trump administration pretend
that repeating the same questions is equivalent to getting results.
There's a big gap between the triumphant headlines the Trump
administration tries to grab on prescription drugs and the lack of
serious proposals they've put forward. I want to see that gap close,
starting today.
I'll wrap up on this last issue. The Trump administration announced
recently that it was going to get out of the business of defending
protections for Americans with preexisting conditions--protections
which are the law of the land.
This isn't some narrow regulation that only applies to a handful of
people. There are more than 150 million Americans who get insurance
through their employers, and I'd wager most of them would be surprised
to learn this Trump decision hurts them too. If you don't have a pre-
existing condition, I guarantee you know somebody who does. And the
Trump administration decided it isn't going to protect them.
______
Communications
----------
America's Health Insurance Plans (AHIP)
601 Pennsylvania Avenue, NW, Suite 500, South Building
Washington, DC 20004
America's Health Insurance Plans (AHIP) appreciates this opportunity to
comment on challenges in the pharmaceutical market and solutions that
are needed to help millions, of Americans who are burdened by out-of-
control prescription drug prices. We thank the committee for calling
attention to these important issues and for inviting Secretary Azar to
testify on the Trump Administration's proposals.
AHIP is the national association whose-members provide coverage for
health care and related services to millions of Americans every day.
Through these offerings, we improve and protect the health and
financial security of consumers, families, businesses, communities, and
the nation. We are committed to market-based solution and public-
private partnership that improve affordability, value access, and well-
being for consumers.
As the committee addresses concern about rising drug prices, we urge
you to recognize that the entire pricing process is driven entirely by
the original list price of a branded drug--which is determined solely
by the drug company, not by the market or. Any other participant in the
pharmaceutical supply chain. Congress needs to address this reality--
the problem is the price--as part of any strategy for reducing
pharmaceutical costs for the people.
Out-of-control prescription drug prices are a direct consequence of
pharmaceutical companies taking advantage of a broken market for their
own financial gain at the expense of patients. The lack of competition,
transparency and accountability in the prescription drug market has
created extended, price-dictating monopolies with economic power that
exist nowhere else in the U.S. economy. The end result is that everyone
pays more-from patients, businesses and taxpayers to hospitals,
doctors, and pharmacists.
Bold steps are needed, at both the legislative and regulatory levels,
to ensure that people have access to affordable medications. With
solutions that deliver real competition, create more consumer choice,
and ensure open and honest drug prices, we can deliver more affordable
pharmaceutical products--while at the same time protecting and
supporting innovations to deliver new treatments and cures for
patients. Accessible, affordable medicines are the cornerstone to
keeping patients with chronic disease healthier and out of emergency
rooms. Reducing the price of medicines is a necessary step toward
achieving this goal.
Our statement focuses on the following topics:
Our initial perspectives on the Trump Administration's
``Blueprint to Lower Drug Prices,'' including policies that address the
role of Medicare and Medicaid in providing access to affordable
medications;
The consequences that out-of-control prescription drug prices
have on consumers; and
How health plans work hard on behalf of all consumers to
negotiate lower prescription drug costs.
The Trump Administration's ``Blueprint to Lower Drug Prices''
We commend President Trump and his Administration for focusing on out-
of-control prescription drug prices by releasing a ``Blueprint for
Lower Drug Prices'' and publishing a request for information (RFI) that
solicits comments from stakeholders and interested parties on policy
proposals to lower prescription drug prices and reduce out-of-pocket
costs.
We are working closely with AHIP members to develop a formal response
to the Administration's RFI and we will submit comments and
recommendations by the July 16 deadline. In the meantime, we want to
emphasize that we share the Administration's goal of getting the most
clinically effective drugs into the hands of patients at the lowest
cost. Several of the President's proposed solutions will have a real
impact on lowering drug prices for Americans.
We support the Administration's overall goals of:
Stopping the pharmaceutical industry from gaming the patient and
the regulatory systems to keep drug prices high;
Keeping drug prices from increasing at out-of-control rates;
Increasing flexibility for insurance providers to negotiate
lower prices;
Encouraging doctors to prescribe lower-priced medications; and
Getting patients clear information about costs as they consider
treatments.
To provide consumers relief from high prescription drug costs, AHIP has
developed recommendations for effective, market-based solutions in
three areas: (1) delivering real competition; (2) ensuring open and
honest drug pricing; and (3) delivering value to patients. Specific
solutions in each of these areas are outlined in an appendix to our
statement.
Various elements of the Administration's Blueprint are aligned with
AHIP's policy recommendations. Below we highlight several examples that
offer significant promise for putting downward pressure on prescription
drug prices.
Promote Generic Competition: We support the Administration's efforts to
prevent brand name drug manufacturers from using risk evaluation and
mitigation strategies (REMS) to block competition front generic drug
makers. The Food and Drug Administration (FDA) recently issued two
draft guidance documents addressing this priority.
Promoting Biosimilars: We support the Administration's efforts to
improve the availability, competitiveness, and adoption of biosimilars
as affordable alternatives to branded biologics. We appreciate that
these efforts will include steps to educate clinicians, patients, and
payors about biosimilar and interchangeable products to increase
awareness about these treatments.
Benefit Flexibility: We support the Administration's consideration of a
proposal to allow Medicare Part D plans to address price increases for
a sole source generic drug through changes to their formulary or
benefit design during the coverage year. This flexibility would allow
plan sponsors to quickly respond to price increases imposed by the only
manufacturer of a generic drug.
Negotiation Tools: We support the Administration's consideration of a
proposal to provide Medicare Part D plans with ``full flexibility'' in
using formulary management tools for high-cost drugs for which rebates
are often limited or unavailable (e.g., protected class drugs, drugs
without competition). These tools, which are widely used in the private
sector outside of the Medicare program would allow plan sponsors to
negotiate better drug prices on behalf of Medicare beneficiaries.
Increased Transparency: We support the Administration's release of
enhanced CMS Drug Pricing Dashboards for Medicare Part B, Medicare Part
D, and Medicaid. The Dashboards can provide patients, families, and
caregivers with additional information to make informed decisions and
predict their cost-sharing. By increasing transparency the updated
Dashboards have the potential to help hold pharmaceutical manufacturers
accountable for drug price increases, highlight drugs that have not
increased in price, and recognize when competition is working.
Star Ratings: We support the Administration's consideration of a
proposal to update the methodology used to calculate Drug Plan Customer
Service Star Ratings for Medicare Part D plans that are appropriately
managing the utilization of high-cost drugs. This would be an important
step toward ensuring that Star Rating measures are aligned with the
goal of reducing unnecessary use of high-cost drugs.
While the Blueprint and RFI offer mostly positive steps for addressing
out-of-control drug prices, we have concerns that several other ideas
the Administration appears to be considering would actually lead to
higher costs for Americans by weakening the ability of plans to
negotiate lower prices. For example, health insurance providers already
share the savings from negotiations with drug manufacturers by lowering
premiums and cost-sharing for all consumers. However, requiring drug
rebates to be passed through the point-of-sale to individual
beneficiaries at the pharmacy counter, rather than be distributed to
all enrollees, would likely lead to higher drug prices from
manufacturers, higher Part D premiums for all seniors, greater cost-
sharing for non-rebated drugs, as well as over $40 billion in
additional costs for hardworking taxpayers.\1\ Similarly, policies that
would eliminate or make it more difficult for plans to negotiate lower
prices through rebates without replacing the rebating process with an
alternative would similarly drive up costs for all beneficiaries.
---------------------------------------------------------------------------
\1\ FY 2019 Budget in Brief (page 61), Department of Health and
Human Services, https://www.hhs.gov/sites/default/files/fy-2019-budget-
in-brief.pdf.
On a host of other issues, we are continuing to hold discussions and
solicit feedback from AHIP work groups to develop detailed
recommendations for HHS. We look forward to working together with the
Administration, Congress, and other stakeholders to lower drug prices
through market-based solutions that deliver real competition, create
more consumer choice, and ensure open and honest drug prices that are
driven by their value to patients.
The Impact of Out-of-Control Prescription Drug Prices
Rising prescription drug prices and costs impose a heavy burden on all
Americans. From patients who cannot afford life-saving medications, to
consumers who pay higher and higher premiums because of higher and
higher drug prices, to employers who must divert dollars that could be
used for salaries to pay for more expensive prescriptions, to
hardworking taxpayers who fund public programs like Medicaid and
Medicare, the consequences are profound.
It is important to understand the unambiguous root causes of this
problem: lack of real market competition due to the extension and
distortion of government-granted exclusivity and patent protections,
opaque pharmaceutical pricing practices, questionable sales and
marketing practices, and limited correlation between drug prices and
the value they deliver to patients.
A May 2018 AHIP analysis concluded that 23.2 cents out of every premium
dollar goes to pay for prescription drugs--making this the largest
component of health care spending.\2\ Our analysis found that
prescription drug spending outpaces the amount spent on physician
services, office and clinic visits, and hospital stays. These costs
impose a heavy burden on consumers, employers, government programs,
taxpayers, and the entire health care system. When prescription drug
prices go up, the cost of health insurance goes up. That is a
fundamental economic reality: rising health care costs, including drug
costs, are driving increases in the cost of health coverage.
---------------------------------------------------------------------------
\2\ Where Does Your Health Care Dollar Go?, AHIP, May 22, 2018,
https://www.ahip.org/where-does-your-health-care-dollar-go-ahip-has-
the-answer/.
Even for products that have been on the market for decades, sharp price
increases are not uncommon. One study shows that the price of insulin
has increased more than 240 percent over the past decade; for example,
the price of Lantus increased from $88.20 per vial in 2007 to $307.20
per vial in late 2017, while the price of Levemir increased from $90.30
per vial to $322.80 per vial during the same time period.\3\ These
sharp price increases harm patients and reduce the affordability of
coverage for all consumers and payers who must bear the cost through
higher insurance premiums.
---------------------------------------------------------------------------
\3\ Several Probes Target Insulin Drug Pricing, Kaiser Health News,
October 28, 2017, https://www.nbcnews.com/health/health-news/several-
probes-target-insulin-drug-pricing-n815141.
A June 2018 report from the Department of Health and Human Services'
(HHS) Office of Inspector General (OIG) found that unit costs for
brand-name drugs in the Medicare Part D program rose nearly six times
faster than inflation from 2011 to 2015, with the average Part D unit
cost increasing 29 percent over this time frame.\4\
---------------------------------------------------------------------------
\4\ Increases in Reimbursement for Brand-Name Drugs in Part D,
Department of Health and Human Services' (HHS) Office of Inspector
General (OIG), June 2018, https://oig.hhs.gov/oei/reports/oei-03-15-
00080.pdf.
The HHS OIG report identifies 20 brand-name drugs that experienced the
largest percentage increases in Part D unit costs from 2011 to 2015.
This includes six drugs with unit cost increases of more than 4,000
percent and four other drugs with unit cost increases exceeding 2,000
---------------------------------------------------------------------------
percent. For example:
Isordil Titradose, used to treat angina, increased by 6,112
percent from 2011 to 2015;
Timentin, used to treat infections, increased by 4,661 percent;
Levsin, used to treat irritable bowel syndrome, increased by
4,212 percent;
Salex, used to treat shin disorders, increased: by 4,202
percent;
Miacalcin, used to treat osteoporosis, increased by 2,771
percent;
Thiola, used for kidney stone prevention, increased by 2,465
percent; and
Cuprimine, used to treat rheumatoid arthritis, increased by
2,143 percent;
The pharmaceutical cost crisis is clearly demonstrated by numerous
other research findings:
Price Inflation is a Primary Cost Driver: Segal Consulting, a
prominent benefits consulting firm, estimates that prescription drug
spending for
employer-sponsored plans will increase by 10.3 percent in 2018--with a
17.7 percent cost increase in specialty drugs and biologics.\5\
Prescription drug spending trends are primarily driven by price
inflation (8.8%) as opposed to increases in utilization (2.1%)
according to the Segal Consulting study.\6\
---------------------------------------------------------------------------
\5\ High Rx Cost Trends Projected to Be Lower for 2018, Segal
Consulting, Fall 2017.
\6\ Ibid.
Financial Burden on Hospitals and Providers: An October 2016
study commissioned by the American Hospital Association and the
Federation of American Hospitals cautioned that hospitals ``bear a
heavy financial burden when the cost of drugs increases and must make
tough choices about how to allocate scarce resources.'' This study
highlighted an example of one hospital for which the price increases of
four common drugs (which ranged between 479 and 1,261 percent) cost the
same amount in 2015 as the salaries of 55 full-time nurses.\7\
---------------------------------------------------------------------------
\7\ Trends in Hospital Inpatient Drug Costs: Issues and Challenges,
NORC, October 11, 2016, http://www.aha.org/content/16/aha-fah-rx-
report.pdf.
Unfair Burden of High Drug Prices for American Consumers,
Businesses and Taxpayers: In a March 2017 Health Affairs blog,
researchers at the Memorial Sloan Kettering Center for Health Policy
and Outcomes analyzed the 15 companies selling the top 20 drugs (by
sales) in the United States. Researchers reported that: (1) list prices
in other developed countries averaged just 41 percent of U.S. net drug
prices; and (2) the additional income generated by higher U.S. net drug
prices totaled $116 billion in 2015.\8\ The authors further stated:
``We found that the premiums pharmaceutical companies earn from
charging substantially higher prices for their medications in the U.S.
compared to other Western countries generates substantially more than
the companies spend globally on their research and development. This
finding counters the claim that the higher prices paid by U.S. patients
and taxpayers are necessary to fund research and development. Rather,
there are billions of dollars left over even after worldwide research
budgets are covered.''
---------------------------------------------------------------------------
\8\ R&D Costs for Pharmaceutical Companies Do Not Explain Elevated
U.S. Drug Prices, Nancy Yu, Zachary Helms, and Peter Bach, March 7,
2017, http://healthaffairs.org/blog/2017/03/07/rd-costs-for-
pharmaceutical-companies-do-not-explain-elevated-us-drug-prices/.
Higher Prices Often Do Not Mean Better Outcomes: While some
recent high-priced, breakthrough medications have improved patient
outcomes, this is not always the case. For example, an April 2015 study
by researchers from the National Institutes of Health (NIH) in JAMA
Oncology examined 51 oncology drugs approved by the Food and Drug
Administration (FDA) from 2009 through 2013. Researchers concluded that
current pricing models were irrational and had no connection to better
patient outcomes. Remarkably, the NIH researchers found that prices had
no significant correlation to improvements in progression-free survival
or overall survival.\9\ With new cancer drugs now often costing well
over $100,000 annually, manufacturers appear to be setting the price of
new therapies based on the highest-priced oncology treatment approved
most recently by the FDA--a practice known as ``shadow-pricing''--
rather than the value or the improved outcomes they deliver to
patients.
---------------------------------------------------------------------------
\9\ ``Five Years of Cancer Drug Approvals: Innovation, Efficacy,
and Costs,'' Sham Mailankody, MB, BS; Vinay Prasad, MD, MPH, JAMA
Oncology, July 2015, http://oncology.jama
network.com/article.aspx?articleid=2212206.
``Unreasonable'' Drug Prices Forcing Tradeoffs Between Taking
Medicines and Other Necessities: A September 2016 tracking poll from
the Kaiser Family Foundation found that 77 percent of Americans believe
that prescription drug costs are ``unreasonable.'' \10\ The difficulty
in affording unreasonably priced prescription drugs can lead to
treatment non-adherence, which can harm patient health, creating
adverse outcomes, and lead to expensive complications. According to a
survey by Consumer Reports, many respondents took ``potentially
dangerous'' steps to limit the impact of high drug costs: not filling a
prescription (17 percent), skipping a scheduled dose (14 percent); or
taking an expired medication (14 percent). This survey also found that
19 percent of respondents spent less on groceries, and 15 percent
postponed paying other bills so they could afford their prescription
drugs.\11\
---------------------------------------------------------------------------
\10\ Kaiser Health Tracking Poll: September 2016, http://
www.kff.org/health-costs/report/kaiser-health-tracking-poll-september-
2016/.
\11\ ``Some Americans take risks with needed drugs due to high
costs,'' Consumer Reports, September 2014, http://
www.consumerreports.org/cro/2014/09/some-americans-take-risks-with-
needed-drugs-due-to-high-costs/index.htm.
These facts paint a clear picture of the crisis we face: drug companies
exploit a broken market to set seemingly unbounded prices for seemingly
unlimited periods while consumers, businesses, and taxpayers bear the
---------------------------------------------------------------------------
staggering costs.
While some have tried to divert attention away from high prescription
drug prices and, instead, point to others in the supply chain--namely,
pharmacy benefit managers (PBMs) and rebates--as the source of the
problem, we should focus on how the supply chain actually functions and
the true root of the cost crisis when evaluating polity options.
The Role of Health Plans in Negotiating Lower Costs for All Consumers
AHIP's members negotiate with health care providers and pharmaceutical
manufacturers on behalf of consumers and other health care purchasers
(e.g., employers, government) to provide coverage for high-quality
treatments and services at the most competitive prices possible. Health
insurance providers offer comprehensive coverage under the pharmacy
benefit for prescription drugs delivered through retail mail order and
specialty pharmacies. Health plans also provide coverage under the
medical benefit for physician-administered drugs, biologics, and
devices in outpatient and inpatient settings. This gives health plans a
unique perspective into the pharmaceutical supply chain and a 360-
degree view of the broader U.S. health care system--working with PBMs
and negotiating with drug and device manufacturers, pharmacies,
physicians, and hospitals to ensure that enrollees have coverage for
the treatments and services they need.
While prescription drug pricing and the pharmaceutical supply chain are
complex, health plans are still, on the whole, able to successfully
navigate the system and provide significant savings. Health plans
aggressively negotiate with drug manufacturers for lower prices--and
then pass those savings directly on in the form of both lower out-of-
pocket costs and lower premiums for all consumers.
Health plans negotiate for price concessions from manufacturers, just
as they do with providers. Health plans leverage competition between
manufacturers to drive deeper discounts in exchange for preferred
formulary placement and lower cost-sharing for their products, just as
they do with providers. However, in discussing how plans obtain
discounts from manufacturers, it is important to understand the role
rebates play within the broader system and why the rebate structure is
used to obtain cost savings for pharmaceuticals rather than the
``negotiated rates'' typically used to obtain savings for health
services.
Though not broadly understood, plans do not directly reimburse
pharmaceutical manufacturers for their products even though they do
negotiate directly for price concessions. Instead, distributors and
some large pharmacies and health systems directly purchase drugs from
manufacturers. The price paid by these entities is highly correlated to
the list price set by the manufacturer with only modest discounts based
on volume or prompt pay. Distributors resell pharmaceutical products to
smaller and mid-sized pharmacies and providers after a small markup
above the discounted price.\12\ Finally, plans directly reimburse
pharmacies or providers (depending on where the drug is obtained) once
a claim is filed and any consumer cost-sharing obligations are
accounted for.
---------------------------------------------------------------------------
\12\ Prescription Drug Pricing in the Private Sector, Congressional
Budget Office, 2007, https://www.cbo.gov/.sites/default/files/11Oth-
congress-2007-2008/reports/01-03-prescriptiondrug.pdf.
Since pharmacies and providers obtain drugs at or near the list price,
plans must also reimburse them at (or very close to) this rate, plus an
additional negotiated add-on fee to ensure these entities are not
``underwater'' for their purchase. Because there is no interaction
between plans and manufacturers at the point-of-sale, all price
concessions must come after the fact through rebates. These rebate
amounts are typically calculated and paid by a manufacturer to a health
plan on an aggregate basis, accounting for all fulfilled claims for a
---------------------------------------------------------------------------
product long after an individual prescription is filled by a consumer.
Since drug costs comprise a significant portion of a health plan's
total costs, plans may use these estimated discounts to reduce the
premiums they charge for the overall benefit. They also incorporate the
savings into the overall cost-sharing design for the benefit, including
for individual rebated drugs. Plan benefit design and premiums are
heavily regulated by state departments of insurance and/or the Centers
for Medicare and Medicaid Services (CMS). By contrast, pharmaceutical
manufacturers are not subject to any governmental oversight or
regulation before setting list prices or pushing through price
increases.
It is important to understand that while plans are able to negotiate
significant price concessions from manufacturers, this only applies to
a subset of drugs that have therapeutic alternatives. For most branded
drugs and biologics without therapeutic alternatives, manufacturers'
wi1lingness to negotiate on price is small or nonexistent and they have
no rebates. Evidence shows that the percentage of rebated drugs is
decreasing and that list prices are also consistently rising whether
drugs are rebated or not. In fact, the recent HHS OIG report states:
``Total reimbursement for all brand-name drugs in Part D increased 77
percent from 2011 to 2015, despite a 17-percent decrease in the number
of prescriptions for these drugs. . . . After accounting for
manufacturer rebates, reimbursement for brand-name drugs in Part D
still increased 62 percent from 2011 to 2015. . . . In addition, the
percentage of brand-name drugs for which manufacturers paid rebates
decreased [over this period].'' \13\ Further, rebates are not commonly
found for physician-administered drugs, which account for 30 percent of
prescription drug spending.\14\
---------------------------------------------------------------------------
\13\ Increases in Reimbursement for Brand Name Drugs in Part D,
Department of Health and Human Services' (HHS) Office of Inspector
General (OIG), June 2018, https://oig.hhs.gov/oei/reports/oei-03-15-
00080.pdf.
\14\ Trends in Specialty Drug Benefits, Pharmacy Benefit Management
Institute, 2017.
The bottom line is that whether a drug is rebated or not, the original
list price of a drug drives costs in the entire system. This price is
solely determined and controlled by the drug company, and if the
original list price is high, the final cost that a consumer pays will
be high. It is that simple: the problem is the price.
Conclusion
Thank you for considering our perspectives on these important issues.
We are strongly committed to solving the pharmaceutical cost crisis.
With the right solutions that deliver real competition and create more
consumer choices, we can bring down the cost of prescription drugs. We
look forward to working with the committee to advance market-based
solutions to ensure that consumers have access to affordable
medications.
Appendix: AHIP Recommendations to Reduce Drug Prices and Costs
Rising prescription drug costs hurt everyone. From patients who cannot
access breakthroughs and consumers who pay higher and higher premiums
to taxpayers who fund public programs like Medicaid and Medicare, the
consequences are profound. Pharmacy now accounts for approximately 23
percent of all medical spending. We need effective market-based
solutions that deliver real competition, create more consumer choice,
and ensure that open and honest drug prices are driven by the value
they bring to patients.
Solution #1: Real Competition
3 Create a Robust Biosimilars Market: Ensure that providers and
patients have unbiased information available to them about the benefits
of biosimilars. Address anti-competitive strategies, such as the
development of ``patent estates,'' and tactics aimed at delaying the
availability of biosimilars. Policies for labeling, naming, and
interchangeability should provide clarity, ensure safety, and avoid
unnecessary regulatory hurdles.
3 Reduce Rules and Red Tape to Generic Entry: Provide FDA with the
necessary resources to clear the backlog of generic drug applications,
particularly for classes of drugs with no or limited generic
competition. Anti-competitive tactics such as ``pay for delay''
settlements and ``product hopping'' should be prohibited, and the Inter
Partes Review (IPR) process should be preserved. Legislation requiring
brand manufacturers to share needed information and samples to promote
generic development should be advanced.
3 Revisit and Revise Orphan Drug Incentives: Ensure that the Orphan
Drug Act's incentives are used by those developing medicines to treat
rare diseases--not as a gateway to premium pricing and blockbuster
sales beyond orphan indications. In cases of rare diseases for which no
effective therapy yet exists, ensure that newly approved drugs are
priced in accordance with their efficacy.
Solution #2: Open and Honest Price Setting
3 Publish Rx Prices, True R&D Costs, and Price Increases: As part of
the FDA approval process, require that manufacturers disclose
information regarding intended launch price, use, and direct and
indirect R&D costs. After approval, require manufacturer reporting of
list price increases over a percentage threshold amount that explains
why such price increases are justified.
3 Limit Third-Party Schemes That Raise Costs: Examine and address the
impact of drug coupons and co-pay card programs--and related charitable
foundations--on overall pharmaceutical cost trends. Ensure that
existing protections aimed at prohibiting their use in all federal
programs are sufficient.
3 Evaluate DTC Advertising Impact: Assess impacts of the growth in
direct-to-consumer (DTC) advertising, particularly broadcast
advertising, and evaluate the best approaches for conveying information
to consumers.
Solution #3: Delivering Value to Patients
3 Inform Patients on Effectiveness and Value: Increase funding for
private and public efforts to provide information on the comparative
and cost-effectiveness of different treatments to physicians and their
patients. These tools can help them make appropriate assessments about
the value and effectiveness of different treatment approaches,
particularly those with very high costs.
3 Expand Value-Based Formulary Programs: Promote value-based payments
in public programs like Medicare for drugs and medical technologies,
based on agreed-upon standards for quality and outcomes.
3 Reduce Regulatory Barriers to Value-Based Pricing: Address existing
statutory and regulatory requirements (e.g., Medicaid best price) that
may inhibit the development of pay-for-indication and other value-based
strategies in public programs.
______
American Hospital Association
800 10th Street, NW
Two CityCenter, Suite 400
Washington, DC 20001-4596
(202) 638-1100
www.aha.org
On behalf of our nearly 5,000 member hospitals, health systems and
other health care organizations, and our clinician partners--including
more than 270,000 affiliated physicians, 2 million nurses and other
caregivers--and the 43,000 health care leaders who belong to our
professional membership groups, the American Hospital Association (AHA)
appreciates the opportunity to submit for the record our comments on
the out of control cost of medications.
America's hospitals rely on innovative drug therapies to save lives
every day. Without them, more lives would be lost to diseases like
cancer and AIDS, and others who now can live comfortably while managing
their chronic conditions would see their quality of life deteriorate.
In short, modern pharmaceuticals play a critical role in getting and
keeping patients healthy. Hospitals are major purchasers and dispensers
of pharmaceuticals; they also play a crucial role in the development of
new drug therapies.
Spending on pharmaceuticals has increased dramatically over the past
several years. The burden of this increase falls on all purchasers,
including patients and the providers who treat them. For example,
hospitals frequently see patients show up in the emergency department
or return for follow up care sicker than when they left because they
were unable to afford their medications. As drug purchasers, hospitals
and health systems face significant resource constraints and trade-offs
as spending on drugs increases.
The primary driver behind increased drug spending is higher prices, not
increases in utilization. Within the health care field,
``pharmaceuticals'' was ``the fastest growing category'' in terms of
pricing for every month of 2016 and for most months of 2017.\1\ We see
both higher launch prices for new drugs and increases in prices for
existing drugs. Drug manufacturers have full control over the initial
price for a drug and any subsequent price increases. They are
responsible for setting the price of a drug at $89,000,\2\ $159,000,\3\
or even $850,000 \4\ for a course of treatment. They also solely decide
whether to increase that price by 20 percent,\5\ 948.4 percent,\6\ or
1,468 percent.\7\ Limited competition and drug shortages have
facilitated this price growth.
---------------------------------------------------------------------------
\1\ Altarum Institute, ``Price Briefs,'' October 2017 (https://
altarum.org/sites/default/files/uploaded-related-files/CSHS-Price-
Brief_October_2017.pdf), September 2017 (https://altarum.
org/sites/default/files/uploaded-related-files/CSHS-Price-
Brief_Sept_2017.pdf), August 2017 (https://altarum.org/sites/default/
files/uploaded-related-files/CSHS-Price-Brief_Aug_2017.
pdf), July 2017 (https://altarum.org/sites/default/files/uploaded-
related-files/CSHS-Price-Brief_July_2017.pdf), June 2017 (https://
altarum.org/sites/default/files/uploaded-related-files/CSHS-Price-
Brief_June_2017.pdf).
\2\ Triblle, S.J., ``Duchenne Drug Delayed After Outrage Over
Price,'' National Public Radio, February 14, 2017, https://www.npr.org/
sections/health-shots/2017/02/14/515046376/duchenne-drug-delayed-after-
outrage-over-price.
\3\ Szabo, L., ``As Drug Costs Soar, People Delay or Skip Cancer
Treatments,'' National Public Radio, March 15, 2017, https://
www.npr.org/sections/health-shots/2017/03/15/520110742/as-drug-costs-
soar-people-delay-or-skip-cancer-treatments.
\4\ Fox, M., ``Luxturna gene therapy for blindness to cost
$850,000,'' NBC News, January 3, 2018, https://www.nbcnews.com/health/
health-news/luxturna-gene-therapy-blindness-cost-850-000-n834261.
\5\ Herman, B., ``Drug prices are still going through the roof,''
Axios, March 21, 2018, https://www.axios.com/drug-prices-exploding-
2017-1521564090-aa025591-9e50-491d-b3e2-c981e85adb60
.html.
\6\ Tirrell, M., ``Martin Shkreli's legacy: Putting a `fine point'
on the drug pricing debate,'' CNBC, March 9, 2018, https://
www.cnbc.com/2018/03/09/martin-shkrelis-legacy-shaping-the-drug-
pricing-debate.html.
\7\ Herman, B., ``Drug prices are still going through the roof,''
Axios, March 21, 2018, https://www.axios.com/drug-prices-exploding-
2017-1521564090-aa025591-9e50-491d-b3e2-c981e85adb60
.html.
We explore these challenges in more detail below.
HOSPITALS AND HEALTH SYSTEMS AND DRUG INNOVATION
Hospitals and health systems rely on continued innovation in drug
therapies, and they play an important role in the development of new
drugs. Academic medical centers play a leading role in both the
development of the underlying science supporting new drug therapies
(basic science research), as well as the development and testing of new
therapies (applied or translational research). A combination of public
and private funding supports this work, including grants from the
National Institutes of Health, philanthropy and biopharmaceutical
companies.
A report from Tufts University underlined that ``a close and
synergistic relationship between [the biopharmaceutical and academic
medical center] sectors is critical to ensuring a robust national
capacity.'' \8\ The report noted that more than 50 percent of
researchers at academic medical centers contribute to drug and device
medical trials, and partnerships between biopharmaceutical companies
and academic hospitals have increased in recent years.
---------------------------------------------------------------------------
\8\ Milne, Christopher-Paul, et al., ``Academic-Industry
Partnerships for Biopharmaceutical Research and Development: Advancing
Medical Science in the U.S.,'' Tufts Center for the Study of Drug
Development, April 2012, http://csdd.tufts.edu/files/uploads/
tuftscsdd_academic-industry.pdf.
A New England Journal of Medicine report underscored the benefits
provided by public-sector research institutions (PSRI), which include
academic medical centers and their affiliated universities.
Specifically, the study's authors found that PSRI were responsible for
153 drugs, vaccines or new indicators for existing drugs approved by
the Food and Drug Administration (FDA) between 1970 and 2009. They also
found that hospitals and PSRIs were predisposed to discover drugs that
have a disproportionately important clinical effect \9\ and those that
could be used for widespread public health concerns, including the
treatment of cancer and infectious diseases, as well as vaccination
development.\10\
---------------------------------------------------------------------------
\9\ Forty-six percent of drugs developed by PSRIs received priority
reviews from the FDA--an indication that the drugs offered a
substantial improvement over existing treatments. Only 20 percent of
new drugs from the private sector received a priority review
designation.
\10\ Stevens, Ashley J., et al., ``The Role of Public-Sector
Research in the Discovery of Drugs and Vaccines,'' New England Journal
of Medicine 364: 535-541, February 2011.
---------------------------------------------------------------------------
HOSPITAL EXPERIENCE WITH DRUG PRICES AND SPENDING
Hospitals purchase drugs that clinicians use to treat patients in their
facilities. Nearly all hospitals work with group purchasing
organizations (GPOs) to negotiate prices with manufacturers. GPOs
enable hospitals to achieve the best price as they benefit from the
negotiating power of aggregate purchasing volume over many hospitals.
They can save hospitals 10 to 18 percent on the cost of drugs.\11\ And
one report found that GPOs save the health care system between $25
billion and $55 billion per year.\12\
---------------------------------------------------------------------------
\11\ DeBenedette, V., ``The Evolution of Group Purchasing
Organizations,'' Modern Medicine, October 10, 2016, http://
drugtopics.modernmedicine.com/drug-topics/news/evolution-group-
purchasing-organizations?page=0,3.
\12\ Ibid.
Most hospitals do retain some direct contracting with drug
manufacturers. This is primarily true for branded therapies for which
there is no competition. In these instances, manufacturers are not
compelled to negotiate with GPOs. Hospitals may directly negotiate with
the manufacturer and contract with the wholesaler for delivery. Only a
handful of hospitals directly contract for all of their drug supply.
These are larger organizations that have both the patient volume and
the staff capacity to make one-on-one negotiations worthwhile. A
significant challenge arises for small hospitals that have neither the
staff capacity nor the volume to enter into direct negotiations with
manufacturers. In some instances, small, rural hospitals have been
---------------------------------------------------------------------------
unable to obtain access to certain therapies.
Whether hospitals are contracting directly or relying on GPOs, the
pharmaceutical manufacturers set the starting price in negotiations.
The ability of the GPO or hospital to obtain a discount off this
initial price largely has to do with volume and whether, and how much,
competition for such a therapy exists. In instances where no
competition exists, such as for many of the new, high-cost specialty
drugs, large discounts are not available.
Like other purchasers, hospitals and health systems have faced
significant increases in spending over the past several years.
Recently, the Centers for Medicare and Medicaid Services (CMS) released
updated National Health Expenditures (NHE) data that showed that retail
drug spending increased by 1.3 percent in 2016. While this level of
growth may appear low, it follows two consecutive years of expansive
growth in retail drug spending: 12.4 percent in 2014 and 8.9 percent in
2015. In other words, the lower growth comes on top of a much higher
spending base for drugs. In addition, these figures capture retail drug
spending only; they do not include spending on drugs purchased by
providers, such as hospitals. Detailed non-retail drug spending data is
not publicly available, as it is not easily collected.
In order to explore the experience of non-retail drug purchasers, the
AHA and the Federation of American Hospitals worked with the NORC at
the University of Chicago to collect and evaluate data on inpatient
drug spending. The NORC found that increases in drug spending for
inpatient care outpaced what the NHE reported for retail drug spending.
Specifically, the NORC found that, while retail spending on
prescription drugs increased by 10.6 percent between 2013 and 2015,
hospital spending on drugs in the inpatient space rose 38.7 percent per
admission during the same period.\13\, \14\
---------------------------------------------------------------------------
\13\ National Health Expenditure Data for 2013-2015.
\14\ ``Trends in Hospital Inpatient Drug Costs: Issues and
Challenges,'' American Hospital Association and the Federation of
American Hospitals, October 11, 2016, http://www.aha.org/content/16/
aha-fah-rx-report.pdf.
Drug prices, not volume, are the primary driver of this increased
spending. After examining data from two GPOs that collectively purchase
drugs for more than 1,400 hospitals, the NORC was able to track changes
in price, utilization, and total spending for a select group of drugs.
Consistently, changes in pricing drove increases in spending. These
price increases, from the hospitals' perspective, appeared to be
random, inconsistent and unpredictable: large unit price increases
occurred for both low- and high-volume drugs and for both branded and
---------------------------------------------------------------------------
generic drugs.
Our members were not surprised to learn that their purchasing
experience differs from what the NHE reports for retail drugs. In
testimony to the Committee on Oversight and Government Reform of the
U.S. House of Representatives, one drug manufacturer acknowledged
targeting hospital-administered drugs for price increases. Howard
Schiller, then-interim CEO and director of Valeant Pharmaceuticals,
stated: ``Because these drugs are hospital-administered, and not
purchased by patients directly, increasing the cost of the drugs to
hospitals would affect the hospital's profits on these procedures, but
it should not reduce patient access.'' \15\
---------------------------------------------------------------------------
\15\ Statement of Howard B. Schiller, Interim Chief Executive
Officer and Director, Valeant Pharmaceuticals International, Inc.
before the Committee on Oversight and Government Reform of the U.S.
House of Representatives, February 4, 2016, https://
oversight.house.gov/wp-content/uploads/2016/02/Statement-of-Howard-
Schiller-2016-02-04.pdf.
While the NORC study supports Mr. Schiller's admission that
manufacturers target hospitals for price increases, we challenge his
assessment that such practices do not reduce patient access.
Researchers at the Cleveland Clinic found that patient access to
Valeant drugs nitroprusside and isoproterenol declined after the
company increased the prices for both substantially. From 2012 to 2015,
53 percent fewer patients were treated with nitroprusside and 35
percent less were treated with isoproterenol.\16\ This is because
hospitals bear a heavy burden when the cost of drugs increases, in
large part due to how hospital reimbursement it structured, and this
has direct implications for the availability of certain drug therapies.
---------------------------------------------------------------------------
\16\ Khot, U.N., et al., ``Nitroprusside and Isoproterenol Use
After Major Price Increases,'' New England Journal of Medicine, August
10, 2017, http://dx.doi.org/10.1056/NEJMc1700244.
Most payments to hospitals for inpatient care are made on a bundled
basis--either per discharge (Diagnostic Related Group or DRG) or per
diem. In other words, all input costs are reimbursed under a single,
predetermined reimbursement. Hospitals are responsible for managing
input costs within that fixed payment amount and reimbursement does not
necessarily increase as input costs, such as those for drugs, increase.
Medicare, which is one of the largest payers for most hospitals and on
which many commercial insurers base their rates, cannot keep up with
new and frequently changing drug prices. The program relies on drug
pricing data collected and reported by the Bureau of Labor Statistics,
which does a full ``refresh'' of drug pricing information only every
five to seven years. This data lag means that hospital reimbursement
does not necessarily increase proportionally to drug price increases.
As a result, hospitals must divert resources to cover the cost, which
also has implications for other hospital costs. Managing skyrocketing
prescription drug costs forces difficult choices between providing
adequate compensation to employees, many of whom are highly skilled in
professions facing shortages; upgrading and modernizing facilities;
---------------------------------------------------------------------------
purchasing new technologies to improve care; or paying for drugs.
A number of factors contribute to the increase in drug spending, and
those factors have evolved over time. In the past several years,
hospital have faced widespread price increases on existing drugs. While
drug manufacturers have increased some prices by multiple hundreds or
even thousands of percent, hospitals report that the 10 to 20 percent
increases on widely used generic drugs often have a greater impact on
their budgets given the high volumes of these drugs that hospitals
purchase.
Increasingly, our members report that high launch prices and increased
spending due to drug shortages are new challenges they face, as well as
budget pressures associated with the ancillary service costs associated
with highly complex and potent drugs. Launch prices are the basis for
negotiations with purchasers. Examples of recent launch prices include:
Talz (Eli Lilly), used for treating psoriasis, costs $50,000 a
year.\17\
---------------------------------------------------------------------------
\17\ Waxman, H., et. al., ``Getting to the Root of High
Prescription Drug Prices: Drivers and Potential Solutions,''
Commonwealth Fund, July 2017, http://www.commonwealthfund.org//media/
files/publications/fund-report/2017/jul/
waxman_high_drug_prices_drivers_solutions_
report.pdf?la=en.
---------------------------------------------------------------------------
Keytruda (Merck), used for treating melanoma, costs $152,400 a
year.\18\
---------------------------------------------------------------------------
\18\ Szabo, L., ``As Drug Costs Soar, People Delay or Skip Cancer
Treatments,'' National Public Radio, March 15, 2017, https://
www.npr.org/sections/health-shots/2017/03/15/520110742/as-drug-costs-
soar-people-delay-or-skip-cancer-treatments.
---------------------------------------------------------------------------
Kymriah (Novartis), used for treating leukemia, costs $475,000
for a course of treatment.\19\
---------------------------------------------------------------------------
\19\ Sagonowsky, E., ``At $475,000, is Novartis' Kymriah a
bargain--or another example of skyrocketing prices?'', FiercePharma,
August 31, 2017, https://www.fiercepharma.com/pharma/at-475-000-per-
treatment-novartis-kymriah-a-bargain-or-just-another-example-
skyrocketing.
---------------------------------------------------------------------------
Spinraza (Biogen), used to treat spinal muscular atrophy, costs
$750,000 for the first year of treatment and $375,000 per year
thereafter.\20\
---------------------------------------------------------------------------
\20\ Picci, A., ``The cost of Biogen's new drug: $750,000 per
patient,'' CBS News, December 16, 2016, https://www.cbsnews.com/news/
the-cost-of-biogens-new-drug-spinraza-750000-per-patient/.
Many new drug therapies are highly potent and come with significant
side effects. A recent example is Kymriah, a new blood cancer drug
using ``CAR-T cell therapy'' through which patients' own genes are
extracted, modified and reinjected to kill leukemia cells. The
potential side effects require extensive ancillary services to monitor
patients and prevent infections and other adverse events for a
prolonged period of time. While these services do not directly increase
---------------------------------------------------------------------------
the cost of the drug, they do impact the overall cost of care.
According to the FDA, ``Treatment with Kymriah has the potential to
cause severe side effects. It carries a boxed warning for cytokine
release syndrome (CRS), which is a systemic response to the activation
and proliferation of CAR T-cells causing high fever and flu-like
symptoms, and for neurological events. Both CRS and neurological events
can be life-threatening. Other severe side effects of Kymriah include
serious infections, low blood pressure (hypotension), acute kidney
injury, fever, and decreased oxygen (hypoxia). Most symptoms appear
within 1 to 22 days following infusion of Kymriah. Since the CD19
antigen is also present on normal B-cells, and Kymriah will also
destroy those normal B cells that produce antibodies, there may be an
increased risk of infections for a prolonged period of time'' \21\
(emphasis added).
---------------------------------------------------------------------------
\21\ Food and Drug Administration, ``FDA approval brings first gene
therapy to the United States,'' August 30, 2017, https://www.fda.gov/
NewsEvents/Newsroom/PressAnnouncements/ucm574058.htm.
Drug shortages also are a major contributor to increases in drug
spending. Medications that experience shortages are largely injectable
products that are off patent and have few suppliers; shortages
typically arise from quality concerns that cause a halt to production.
If a product has few competitors, this disruption cannot be absorbed by
other companies and demand outpaces supply. This not only results in a
shortage, but also causes prices to rise. For drugs with a sole
manufacturer, shortages are exacerbated--since there is no alternative,
clinicians must scramble to find the drug or compound the drug in cases
where it is possible. They also may recommend an alternative (often
less effective) therapy, if one exists. This, in turn, can result in
higher spending because manufacturers often capitalize on the situation
by increasing the price of the alternative therapy. For example, a 2017
study that examined how drug prices change during supply disruptions
\22\ found that after quality-control issues forced a manufacturer of
glycopyrrolate--an injectable agent commonly used before surgery to
reduce secretions--to suspend production, the remaining manufacturer
increased the price of its product by 855 percent. The list price
remained at the new level even after production capacity was restored.
---------------------------------------------------------------------------
\22\ Davies, B., Hwang, T., and Kesselheim, A., ``Ensuring Access
to Injectable Generic Drugs--The Case of Intravesical BCG for Bladder
Cancer,'' New England Journal of Medicine, April 13, 2017.
---------------------------------------------------------------------------
HOSPITALS' APPROACH TO REDUCING DRUG COSTS
Hospitals and health systems are committed to ensuring patients receive
high-value care. Hospital pharmacists continually work to reduce the
costs of drug therapies in order to maintain and expand access to care.
Specific examples of approaches taken by hospitals include:
Identifying equally effective and safe alternative therapies
that may be less costly;
Ongoing monitoring of pricing changes to anticipate upcoming
needs;
Improving inventory management, including by changing how and
where medicines are stocked and how they are delivered to clinicians;
Reducing waste by identifying safe approaches to splitting
excessively large single dose vials into multiple doses; and
Compounding therapies in-house.
Despite these efforts, increased drug spending remains a challenge and
one which we believe requires legislative and regulatory intervention.
We urge Congress and the Administration to support patients and
providers by taking immediate action to reign in the rising cost of
drugs, including by passing the Creating and Restoring Equal Access to
Equivalent Samples Act (CREATES Act) and protecting the 340B Program.
We also offer a broader set of comprehensive solutions in Appendix A.
The CREATES Act. Generic drugs are one tool for reducing drug prices,
as they increase competition after the monopoly enjoyed by drug
manufacturer ends when a drug's patent expires. The CREATES Act targets
two forms of anticompetitive behavior that are being used to block and
delay entry of generic drugs. The first is known as sample-sharing.
This occurs when brand-name drug companies refuse to sell samples of
their product to potential generic competitors so the generic company
cannot perform testing to show that its product is bioequivalent to the
brand-name product, a prerequisite for approval by the FDA. The second
involves participation in a shared safety protocol. This occurs when
brand-name manufacturers whose products require a distribution safety
protocol refuse to allow generic competitors to participate in that
safety protocol, which is needed to gain FDA approval. The CREATES Act
allows a generic drug manufacturer facing the sample-sharing delay
tactic to bring an action in federal court for injunctive relief, such
as to obtain the sample it needs. The bill also authorizes a judge to
award damages to deter future delaying conduct. We urge Congress to
pass the CREATES Act.
The 340B Program. Congress created the 340B program to permit safety-
net hospitals that care for communities with a high number of low-
income and uninsured patients ``to stretch scarce Federal resources as
far as possible, reaching more eligible patients and providing more
comprehensive services.'' \23\ Section 340B of the Public Health
Service Act requires pharmaceutical manufacturers participating in
Medicaid to sell outpatient drugs at discounted prices to these health
care organizations. For 25 years, the 340B program has been critical in
helping hospitals expand access to lifesaving prescription drugs and
comprehensive health care services to communities across the country
with a high number of low-income and uninsured individuals, at no cost
to the federal government.
---------------------------------------------------------------------------
\23\ https://www.hrsa.gov/opa/index.html.
Given the increasingly high cost of pharmaceuticals, the 340B program
provides critical support to help hospitals' efforts to build healthy
communities. In 2015, the 340B program accounted for only 2.8 percent
of the $457 billion in annual drug purchases made in the U.S. However,
hospitals were able to use those savings to support many programs that
are improving and saving lives.\24\
---------------------------------------------------------------------------
\24\ Assistant Secretary for Planning and Evaluation, ``Issue
Brief: Observations on Trends in Prescription Drug Spending,'' March
2016, https://aspe.hhs.gov/system/files/pdf/187586/Drugspending.pdf;
and The Health Resources and Services Administration, ``FY 2018
Justification of Estimates for Appropriations Committees,'' https://
www.hrsa.gov/sites/default/files/hrsa/about/budget/budget-
justification-2018.pdf.
Thirty percent of the hospitals that serve 340B communities are located
in rural communities. Nearly 50 percent of those hospitals' communities
significantly exceeded the minimum Medicare disproportionate share
hospital (DSH) adjustment percentage of 11.75 percent, which is the
qualifying threshold for the 340B program. In fact, one-fifth of these
hospitals have a Medicare DSH adjustment percentage of more than 25
percent. Many 340B hospitals are financially vulnerable and, in 2015,
one out of every four hospitals had a negative operating margin.\25\
---------------------------------------------------------------------------
\25\ AHA 2015 Annual Survey Data.
The 340B program enables these hospitals to serve their communities by
reinvesting savings from reduced drug pricing into programs that
benefit their patients, particularly their vulnerable patients. In
2015, 340B hospitals provided $23.8 billion in uncompensated care.\26\
Examples of programs provided by 340B hospitals include:
---------------------------------------------------------------------------
\26\ AHA 2015 Annual Survey Data.
Financial assistance programs for patients unable to afford
their prescriptions;
Provision of clinical pharmacy services, such as disease
management programs or medication therapy management;
Increased access to other medical services, such as obstetrics,
diabetes education, oncology services and other ambulatory services;
Establishment of additional outpatient clinics to improve access
to care;
Community outreach programs; and
Free vaccinations for vulnerable populations.
In addition, an examination of hospital services illustrates that 340B
hospitals provide access to essential services to their
communities:\27\
---------------------------------------------------------------------------
\27\ Ibid.
Nearly two-thirds of 340B hospitals provide trauma care.
Three-quarters of 340B hospitals provide pediatric medical
surgical services.
Nearly all 340B hospitals have obstetrics (OB) units.
Approximately two-thirds of 340B hospitals provide psychiatric
services.
42 percent of 340B hospitals provide substance abuse or
dependency services.
58 percent of 340B hospitals have Neonatal Intensive Care Units
(NICUs).
Nearly all 340B hospitals provide breast cancer screening.
The 340B program is under threat, especially as a result of a recent
change in Medicare payment policy that reduces by nearly 30 percent, or
$1.6 billion, Medicare payments to certain hospitals for outpatient
drugs purchased under the 340B program. Cuts of this magnitude will
negate the intent of the program, reducing resources that hospitals use
to expand access to care and services to vulnerable communities. We
urge Congress to pass H.R. 4392, which would prevent these cuts from
going into effect and reducing critical health care resources in
vulnerable communities.
CONCLUSION
We appreciate the opportunity to provide these comments and support the
Committee's efforts and attention to examining the issue of the cost of
medications. We remain deeply committed to working with Congress, the
Administration and other health care stakeholders to ensure that all
Americans can access the drug therapies they need to lead healthy,
happy and productive lives.
______
FINAL REPORT
Trends in Hospital Inpatient Drug Costs: Issues and Challenges
October 11, 2016
PRESENTED TO: PRESENTED BY:
American Hospital Association NORC at the University of Chicago
800 10th Street, NW 55 East Monroe Street
Two CityCenter 30th Floor
Washington, DC 20001 Chicago, IL 60603
Federation of American Hospitals
750 9th Street, NW, Suite 600
Washington, DC 20001
Preface
The price of prescription drugs has skyrocketed over the past several
years. It seems that every day we hear a new report of how the cost of
drugs hurts patients. When the price of a two-pack of Epipens jumped
from $100 to $600 between 2007 and 2016--an increase of 500 percent--
parents around the country wondered if they would be able to acquire
this life-saving medication for their children. When the cost of the
infection-control drug Daraprim went from $13.50 to $750 a pill
overnight, real patients ended up in the hospital when they could not
follow their treatment regimens.
These price increases are extremely troublesome throughout the health
care system. They not only threaten patient access to drug therapies,
but also challenge providers' abilities to provide the highest quality
of care. Drug costs also are a major factor in the rising cost of
health care coverage.
Hospitals bear a heavy financial burden when the cost of drugs
increases and must make tough choices about how to allocate scarce
resources. One hospital put the challenge starkly: last year, the price
increases for just four common drugs, which ranged between 479 and
1,261 percent, cost the same amount as the salaries of 55 full-time
nurses. And while nearly everyone can agree that price increases in the
hundreds or thousands of percent are unjustifiable, many hospitals
report that annual price increases of 10 or 20 percent on widely-used
older generic drugs can have an even greater effect, given the large
quantities that a hospital must purchase. Managing these skyrocketing
cost increases forces difficult choices between providing adequate
compensation to employees, many of whom are highly skilled in
professions facing shortages; upgrading and modernizing facilities;
purchasing new technologies to improve care; or paying for drugs,
especially when these price increases are not linked to new therapies
or improved outcomes for patients.
The American Hospital Association and the Federation of American
Hospitals commissioned this study to better understand how drug prices
are changing in the inpatient hospital setting. Given that inpatient
hospital services are generally reimbursed under a bundled payment
model, there is no single source for information on how much hospitals
spend on drugs and how that amount has changed over time. We intend for
this study to help inform policymakers and other stakeholders about the
challenges hospitals face in acquiring life-saving treatments, and
serve as a basis for further evaluating how drug prices impact the
patients we serve.
Richard J. Pollack Charles N. Kahn III
President and CEO President and CEO
American Hospital Association Federation of American Hospitals
EXECUTIVE SUMMARY
While there has been recent high profile media coverage of retail drug
price increases, the hospital inpatient pharmaceutical market is often
overlooked and is not systematically evaluated. This report presents
recent trends in hospital inpatient drug prices and spending, providing
policymakers and others with quantifiable information on challenges
posed by recent increases in inpatient drug prices.
In conjunction with the American Hospital Association and the
Federation of American Hospitals, NORC conducted a survey of all U.S.
community hospitals and analyzed survey results of 712 responding to
the survey. Additionally, two group purchasing organizations (GPOs)
representing over 1,400 community hospitals contributed price and
spending data on a subset of drugs. The drugs sampled were identified
by expert hospital pharmacy workgroups as being high-spend due to
volume, price, or both, or as having experienced substantial price
increases in recent years.
Between FY 2013 and FY 2015, inpatient drug spending increased an
average 23.4 percent annually, and on a per admission basis, by 38.7
percent. Over 90 percent of responding hospitals reported that recent
inpatient drug price increases had a moderate or severe effect on their
ability to manage the overall cost of patient care, with one-third of
the respondents indicating that the impact was severe. Many of the
sampled drugs that experienced substantial unit price increases in CY
2014 and CY 2015 were high volume drugs. In most cases, the sampled
drugs were not new entrants. This report provides a valuable look at a
section of the pharmaceutical market that affects hospitals and the
patients they serve.
Key Findings
Average annual inpatient drug spending increased by 23.4 percent
between FY 2013 and FY 2015.
Inpatient drug spending increased on a per admission basis by
38.7 percent during the same period.
Growth in unit price--not volume--was primarily responsible for
the increase in total inpatient drug spending.
Over 90 percent of surveyed hospitals reported that inpatient
drug price increases had a moderate or severe effect on their ability
to manage costs.
Due to delays in refreshing the pharmaceutical index, Medicare
reimbursement cannot keep pace with rapidly increasing drug prices.
The growth in spending on inpatient drugs exceeds the growth in
spending on retail drugs.
Price increases appear to be random, inconsistent, and
unpredictable: large unit price increases occurred for both low- and
high-volume drugs and for both branded and generic drugs. About half of
the drugs sampled had no generic competition.
Background
_______________________________________________________________________
Total net spending on prescription drugs, inclusive of discounts, has
accelerated over the past year to $309.5 billion annually, making
prescription drugs the fastest growing segment of the U.S. healthcare
economy.\1\, \2\ Growth in spending on drugs in 2014 (12.2
percent) dwarfs the overall rate of health care spending growth (5.3
percent) as well as the rate of spending growth on hospital and
physician care (4.1 and 4.6 percent, respectively).\3\ The price of
drugs--not utilization--is the predominant contributor to increased
drug spending. While spending on drugs rose 8.5 percent in 2015, total
prescriptions dispensed increased by only 1 percent.\4\ The Bureau of
Labor Statistics (BLS) Producer Price Index (PPI) suggests that
pharmaceutical price inflation was 7.2 percent in 2015, greatly
outpacing both general inflation (0.7 percent) and medical inflation
(2.7 percent).\5\
---------------------------------------------------------------------------
\1\ IMS Health, ``Medicines Use and Spending in the U.S.--A Review
of 2015 and Outlook to 2020,'' http://www.imshealth.com/en/thought-
leadership/ims-institute/reports/medicines-use-and-spending-in-the-us-
a-review-of-2015-and-outlook-to-2020#form.
\2\ Total spending on an invoice price basis in FY 2015 was $425
billion.
\3\ Centers for Medicare and Medicaid Services, ``National health
expenditure fact sheet,'' Baltimore, MD, U.S. Department of Health and
Human Services (2015).
\4\ IMS Health, ``IMS Health Study: U.S. Drug Spending Growth
Reaches 8.5 Percent in 2015,'' April 14, 2016, http://
www.imshealth.com/en/about-us/news/ims-health-study-us-drug-spending-
growth-reaches-8.5-percent-in-2015.
\5\ U.S. Department of Labor, U.S. Bureau of Labor Statistics, PPI
Detailed Report, December 2015, http://www.bls.gov/ppi/ppidr201512.pdf.
Healthcare purchasers, including federal and state governments,
insurers, individual consumers, and providers, have identified the
rising cost of drugs as a major challenge for retaining patient access
to care. Hospitals bear a heavy financial burden when the cost of drugs
increases. Hospitals are significant purchasers of prescription drugs,
such as anesthesia and antibiotics to prevent infections during
surgery. They also treat patients suffering the repercussions of being
unable to afford or otherwise access their medications, often when
---------------------------------------------------------------------------
these individuals return through the emergency department.
While existing studies have quantified the rate of increase in retail
drug prices and spending, data limitations have prevented a more
detailed examination of the impact of high and rising drug prices on
hospitals and their patients.\6\, \7\ This study sought to
document the extent to which inpatient drug prices and spending have
increased in the inpatient setting, allowing policymakers and others to
examine the impact such changes may have on patients.
---------------------------------------------------------------------------
\6\ Leigh Purvis and Stephen Schondelmeyer, ``Rx Price Watch
Report: Trends in Retail Prices of Prescription Drugs Widely Used by
Older Americans: 2006 to 2013,'' AARP Public Policy Institute, http://
www.aarp.org/health/drugs-supplements/info-08-2010/rx_price_watch.html.
\7\ Allan Coukell and Chuck Shih, ``What's Driving Increased
Pharmaceutical Spending?'', The Pew Charitable Trust, 2016, http://
www.pewtrusts.org/en/research-and-analysis/analysis/2016/05/26/whats-
driving-increased-pharmaceutical-spending.
As large purchasers, hospitals appear to be particular targets for drug
price increases. At least one pharmaceutical company, Valeant,
specifically looked to increase prices for hospital-administered
drugs.\8\ These increases can be dramatic. In 2015, Valeant raised the
list prices of Isuprel and Nitropress, common heart medications, by an
average of more than 200 percent and 500 percent respectively.\9\ These
increases may be higher at individual hospitals: for example, the
Cleveland Clinic reported price increases for these two drugs of 310
and 718 percent, respectively, and the hospital spent more than $5.3
million on them alone that year. These are just some examples of the
price increases reflected in national data.\10\
---------------------------------------------------------------------------
\8\ Committee on Oversight and Government Reform, ``Memorandum Re:
Documents Obtained by Committee From Valeant Pharmaceuticals,'' 2016,
http://democrats.oversight.house.gov/sites/
democrats.oversight.house.gov/files/documents/
Memo%20on%20Valeant%20Documents0.
pdf.
\9\ Brady Dennis, ``Rattled by Drug Price Increases, Hospitals Seek
Ways to Stay on Guard,'' The Washington Post, March 13th, 2016, https:/
/www.washingtonpost.com/national/health-science/rattled-by-drug-price-
increases-hospitals-seek-ways-to-stay-on-guard/2016/03/13/1c593
dea-c8f3-11e5-88ff-e2d1b4289c2f_story.html.
\10\ Katie Thomas, ``Valeant Promised Price Breaks on Drugs. Heart
Hospitals Are Still Waiting,'' The New York Times, May 11, 2016, http:/
/www.nytimes.com/2016/05/12/business/valeant-promised-price-breaks-on-
drugs-heart-hospitals-are-still-waiting.html.
From the beginning, a key selling point advanced by Marathon
was data that it had accumulated showing that Nitropress and
Isuprel were mispriced relative to their value to hospitals . .
. we elected to implement significant price increases
immediately upon purchasing the drugs. In retrospect, we relied
too heavily on the industry practice of increasing the price of
---------------------------------------------------------------------------
brand name drugs in the months before generic entry.
-- J. Michael Pearson, Chief Executive of Valeant Pharmaceuticals
The way in which hospitals are reimbursed compounds the impact of
increasing drug costs. Most hospitals are not directly reimbursed for
the drugs they purchase for use in the inpatient setting.\11\ Instead,
they generally receive a single payment for all non-physician services,
including drugs, that they provide during an inpatient stay or, less
commonly, each inpatient day (per diem). For example, Medicare, which
accounts for a significant source of payments to hospitals for
inpatient services nationally, uses a reimbursement system that cannot
keep pace with changes in drug prices. Some commercial and other payers
either use the Medicare payment model, called the Inpatient Prospective
Payment System (IPPS),\12\ or pay directly based on the Medicare rate,
e.g., as a percentage of Medicare reimbursement. When reimbursement
rates cannot keep up with input costs, such as drugs, hospitals must
absorb the excess.
---------------------------------------------------------------------------
\11\ Some small, rural hospitals, called Critical Access Hospitals,
are reimbursed on a cost basis.
\12\ Under the IPPS, hospitals are paid a single pre-determined
amount that is based on a national base payment rate, which is adjusted
to account for factors such as a patient's condition, the treatment
provided, and local market conditions that affect hospitals' costs of
providing care. The national base payment rate reflects the capital and
operating costs that ``efficient'' hospitals are expected to incur for
providing inpatient services. The capital and operating base payments
are updated annually to account for changes in patient case mix, market
conditions, and other factors.
Each year, CMS evaluates changes in the prices of goods and services
required to furnish acute inpatient care for purposes of updating the
IPPS. For purposes of evaluating changes in drug prices, CMS uses the
BLS PPI prescription drug component, which in turn relies on
manufacturers to provide timely information on prices. The BLS reviews
a sample of drugs that it selects based on probability proportionate to
size (dollar value). The BLS refreshes the pharmaceuticals index every
5 to 7 years to allow entirely new products or new trends in the market
to be incorporated into the sample.\13\ To address the continuous
introduction of new drugs, the BLS draws supplemental samples every
year.\14\ However, these annual samples do not include existing drugs
that may have experienced significant price increases in a very short
period of time. Thus, the delay in refreshing the pharmaceuticals index
fails to capture sudden price increases. Rapid and unpredictable
changes in drug prices adversely affect hospitals due to their
reimbursement model.
---------------------------------------------------------------------------
\13\ Bureau of Labor Statistics (U.S.), The Pharmaceutical
Industry: An Overview of CPI, PPI, and IPP Methodology, 2011.
\14\ The FDA Orange Books list all new drugs approved for marketing
in the United States.
Study Objectives
_______________________________________________________________________
This study aims to evaluate trends in hospital inpatient drug prices
and spending nationwide and assess the impact of such trends on
hospitals. Because most payers reimburse hospitals for inpatient
services using a predetermined, fixed payment model, data does not
readily exist on the price of drugs or other services that are used in
the inpatient setting. This study used a large sample survey design to
obtain data on this largely unknown market. The study targeted the
following research questions:
Did inpatient drug spending increase between FY 2013 and FY
2015?
To what extent was price--not volume--a contributor to changes
in inpatient drug spending?
To what extent have changing drug costs impacted hospitals'
ability to manage costs within a predetermined, fixed-amount payment
system?
Definitions
_______________________________________________________________________
This study used the following definitions:
Inpatient drug spending per admission. This study includes
hospital-based pharmacy spending on prescription drugs (injectable,
non-injectable, and biological products) in inpatient settings during
the fiscal year net of discounts. Radiopharmaceuticals are excluded
from the estimates. Inpatient drug spending is divided by total
admissions per year \15\ to calculate inpatient drug spending per
admission for each sampled hospital.
---------------------------------------------------------------------------
\15\ Number of hospital admissions are derived from the AHA annual
survey.
Community hospitals: All nonfederal, short-term general, and other
specialty hospitals. Other specialty hospitals include obstetrics and
gynecology; eye, ear, nose, and throat; rehabilitation; orthopedic; and
other individually described specialty services. Community hospitals
include academic medical centers or other teaching hospitals if they
are nonfederal short-term hospitals. Excluded are hospitals not
accessible by the general public, such as prison hospitals or college
---------------------------------------------------------------------------
infirmaries.
Price: Price in this report is typically referred to as unit cost
or unit purchase cost. For average price, weighted averages were taken
based on spending on a drug across different suppliers, formulations
and dosages. Prices are inclusive of all discounts, including those
offered as volume-based discounts as well as those rebates offered for
drugs of varying market competitiveness and relative efficacy.
Total spending: The total amount spent on a drug across inpatient
community hospitals responding to the survey.
METHODS
Study Population and Data Sources
_______________________________________________________________________
The study population includes all U.S. community hospitals. According
to the 2014 AHA Annual Survey, there are 4,369 community hospitals in
the United States.
This study utilized several complementary data sources. First, we share
data collected through a survey sponsored by the American Hospital
Association (AHA) and the Federation of American Hospitals (FAH) that
targeted all U.S. community hospitals (the Drug Survey). Second, we
analyze aggregate prescription drug purchasing information from two
group purchasing organizations (GPOs). Third, the study uses
information on hospitals' characteristics from the 2014 AHA Annual
Survey. Finally, NORC, the AHA and the FAH interviewed key stakeholders
from a variety of inpatient settings to supplement the study with
qualitative findings on changes in inpatient drug prices.
The Drug Survey was administered using the AHA's Annual Survey web-
based platform, and was fielded for two months between April and June
2016. Of the sampled hospitals, 778 hospitals responded. Of the 778
responding hospitals, data from 712 hospitals remained in the survey
after data cleaning and quality assurance processes (Table 1).
The GPO data include aggregate inpatient prescription drug purchase
cost information for 28 selected drugs for more than 1,400 U.S.
community hospitals. Approximately, 38% percent of these hospitals also
responded to the Drug Survey. The sampled drugs were selected by expert
pharmacist and hospital budget workgroups because they are either drugs
with high inpatient spend or drugs that have experienced substantial
price increases in the past several years. Total spending for these
drugs for all hospitals in the two GPO networks amounted to
$972,208,384 in CY 2015.
Table 1. Target Population and Study Sample
------------------------------------------------------------------------
Population and Sample Definition Number of Hospitals
------------------------------------------------------------------------
All U.S. Community Hospitals * 4,369
------------------------------------------------------------------------
U.S. Community Hospitals Responding to AHA-FAH 712
Drug Survey
------------------------------------------------------------------------
All Community Hospitals Belonging to Two More than 1,400
Sampled GPO Networks
------------------------------------------------------------------------
* Source: 2014 AHA Annual Survey.
Source: AHA-FAH Drug Survey.
Source: 2014 AHA Annual Survey; GPO Rx Data.
Analysis
_______________________________________________________________________
The study used survey weights to account for overall selection
probability of each responding community hospital in the Drug Survey
and make the results nationally representative. We used Taylor series
variance estimation to compute standard errors. We applied post-
stratification weight adjustments to calibrate the survey weights so
that they sum to known population totals for key hospital
characteristics. We obtained the population totals from the recent
census of U.S. community hospitals in the 2014 AHA Annual Survey data
set. Post-stratification weight adjustments resulted in reduced
variance and bias in the final survey estimates. As shown in Table 2,
compared to all U.S. community hospitals, a larger proportion of
hospitals responding to the survey were for-profit; belonged to a
hospital system; participated in a GPO network; were located in an
urban setting; lacked a critical access hospital designation; were
designated as teaching hospitals; and were larger in size in terms of
number of beds and total Medicare discharges. After post-stratification
adjustments were made to the survey weights, survey respondents matched
the census of U.S. community hospitals from the 2014 AHA Annual Survey,
across all key characteristics.
To estimate inpatient drug spending per hospital admission, information
on number of admissions for each surveyed hospital was sourced from the
2013 and 2014 AHA Annual Surveys. Information on number of admissions
for FY 2015 was not available at the time this report was published.
Since volume of admissions was similar between 2013 and 2014, we
assumed that volume of admissions in 2015 was similar to 2014.\16\
---------------------------------------------------------------------------
\16\ 2013 AHA Annual Survey; 2014 AHA Annual Survey.
Table 2. Key Characteristics of Sampled Hospitals Compared to all U.S. Community Hospitals
----------------------------------------------------------------------------------------------------------------
Sampled Community Hospitals
Hospital Characteristic All U.S. Community -------------------------------------
Hospitals Unweighted Weighted [95% CI]
----------------------------------------------------------------------------------------------------------------
Number of Hospitals 4,369 712 4,369
----------------------------------------------------------------------------------------------------------------
Ownership
----------------------------------------------------------------------------------------------------------------
Government 22.5% 13.9% 22.5% [18.5%-27.2%]
----------------------------------------------------------------------------------------------------------------
Not-for-profit 61.8% 57.3% 61.8% [57.3%-66.1%]
----------------------------------------------------------------------------------------------------------------
For-profit 15.6% 28.8% 15.6% [13.3%-18.2%]
----------------------------------------------------------------------------------------------------------------
Hospital System
----------------------------------------------------------------------------------------------------------------
Yes 60.9% 75.4% 60.9% [56.2%-5.4%]
----------------------------------------------------------------------------------------------------------------
No 39.1% 24.6% 39.1% [34.6%-43.8%]
----------------------------------------------------------------------------------------------------------------
Group Purchasing Organization
----------------------------------------------------------------------------------------------------------------
Yes 74.7% 76.3% 74.7% [70.5%-78.5%]
----------------------------------------------------------------------------------------------------------------
No 1.8% 1.4% 1.8% [0.8%-3.8%]
----------------------------------------------------------------------------------------------------------------
Not Available 23.5% 22.3% 23.5% [19.8%-27.6%]
----------------------------------------------------------------------------------------------------------------
Geography (Core Based Statistical Area)
----------------------------------------------------------------------------------------------------------------
Division 14% 14.9% 14.0% [11.5%-16.9%]
----------------------------------------------------------------------------------------------------------------
Metropolitan 41.4% 48.7% 41.4% [37.3%-45.7%]
----------------------------------------------------------------------------------------------------------------
Micropolitan 18.9% 21.2% 18.9% [15.8%-22.4%]
----------------------------------------------------------------------------------------------------------------
Rural 25.7% 15.2% 25.7% [21.4%-30.5%]
----------------------------------------------------------------------------------------------------------------
Critical Access Hospital
----------------------------------------------------------------------------------------------------------------
Yes 29.6% 14.8% 29.2% [24.6%-34.2%]
----------------------------------------------------------------------------------------------------------------
No 70.2% 85.3% 70.8% [65.8%-75.4%]
----------------------------------------------------------------------------------------------------------------
Teaching Status
----------------------------------------------------------------------------------------------------------------
Yes 26.3% 31.9% 26.3% [23.0%-30.0%]
----------------------------------------------------------------------------------------------------------------
No 73.7% 68.1% 73.7% [70.0%-77.0%]
----------------------------------------------------------------------------------------------------------------
Bed Size
----------------------------------------------------------------------------------------------------------------
Up to 99 49.4% 35.0% 49.4% [44.9%-53.8%]
----------------------------------------------------------------------------------------------------------------
100 to 399 40.4% 51.7% 40.4% [36.4%-44.6%]
----------------------------------------------------------------------------------------------------------------
400 or more 10.2% 13.3% 10.2% [8.3%-12.5%]
----------------------------------------------------------------------------------------------------------------
Medicare Discharges
----------------------------------------------------------------------------------------------------------------
4th Quartile (highest) 25% 10.0% 25% [20.4%-30.2%]
----------------------------------------------------------------------------------------------------------------
3rd Quartile 25% 23.7% 25% [21.5%-28.8%]
----------------------------------------------------------------------------------------------------------------
2nd Quartile 25% 35.1% 25% [21.9%-28.4%]
----------------------------------------------------------------------------------------------------------------
1st Quartile 25% 31.2% 25% [21.9%-28.5%]
----------------------------------------------------------------------------------------------------------------
Source: AHA-FAH Drug Survey; 2014 AHA Annual Survey.
To identify the drugs that had the greatest impact on hospital budgets
due to changes in price and not volume, we analyzed the GPO data
containing information on spending, price, and volume for the 28
selected drugs over a three-year period (CY 2013 to CY 2015). Total
spending and pricing information was aggregated across dosage/strength
combinations and branded/generic versions for each drug.\17\ We then
identified the 10 drugs that had the highest total inpatient drug
spending by the GPOs during CY 2015, and computed growth in total
spending and unit price for these drugs. We also identified the 10
drugs with the largest unit price growth between 2013 and 2015. As
shown in Table 3, compared to all U.S. community hospitals, a larger
proportion of GPO hospitals were for-profit; belonged to a hospital
system; were located in an urban setting; were not a critical access
hospital; were designated as teaching hospitals; and were larger in
size in terms of number of beds. The GPO hospital sample is a
convenience sample; in other words, no sampling weights are used.
Because the information from the GPOs was aggregated, we could not
apply post-stratification weighting. However, as shown in Table 3, on
aggregate, the characteristics of GPO hospitals are quite similar to
that of all U.S. community hospitals.
---------------------------------------------------------------------------
\17\ Prices are inclusive of all discounts, including those offered
as volume based discounts as well as those rebates offered for drugs of
varying market competitiveness and relative efficacy.
Table 3. Key Characteristics of Sampled GPO Hospitals Compared to all
U.S. Community Hospitals
------------------------------------------------------------------------
Community Hospitals
Hospital All Community Belonging to the Two
Characteristic Hospitals GPO Networks
------------------------------------------------------------------------
Number of Hospitals 4,369 More than 1,400
------------------------------------------------------------------------
Ownership
------------------------------------------------------------------------
Government 22.5% 19.2%
------------------------------------------------------------------------
Not-for-profit 61.8% 64.3%
------------------------------------------------------------------------
For-profit 15.6% 16.5%
------------------------------------------------------------------------
Hospital System
------------------------------------------------------------------------
Yes 60.9% 67.1%
------------------------------------------------------------------------
No 39.1% 32.9%
------------------------------------------------------------------------
Geography (Core Based
Statistical Area)
------------------------------------------------------------------------
Division 14% 11.4%
------------------------------------------------------------------------
Metropolitan 41.4% 45.8%
------------------------------------------------------------------------
Micropolitan 18.9% 22%
------------------------------------------------------------------------
Rural 25.7% 20.9%
------------------------------------------------------------------------
Critical Access
Hospital
------------------------------------------------------------------------
Yes 29.6% 24.6%
------------------------------------------------------------------------
No 70.2% 75.4%
------------------------------------------------------------------------
Teaching Status
------------------------------------------------------------------------
Yes 26.3% 31.2%
------------------------------------------------------------------------
No 73.7% 68.8%
------------------------------------------------------------------------
Bed Size
------------------------------------------------------------------------
Up to 99 49.4% 46.4%
------------------------------------------------------------------------
100 to 399 40.4% 40.7%
------------------------------------------------------------------------
400 or more 10.2% 12.9%
------------------------------------------------------------------------
Medicare Discharges
------------------------------------------------------------------------
4th Quartile 25% 18.7%
(highest)
------------------------------------------------------------------------
3rd Quartile 25% 27.4%
------------------------------------------------------------------------
2nd Quartile 25% 25.8%
------------------------------------------------------------------------
1st Quartile 25% 28.1%
------------------------------------------------------------------------
Source: 2014 AHA Annual Survey; GPO Rx Data
KEY FINDINGS
Inpatient drug spending increased significantly between FY 2013 and FY
2015. Average annual inpatient drug spending at U.S. community
hospitals increased by 23.4 percent between FY 2013 and FY 2015 (from
$5.2 million to $6.5 million).\18\ Over the same period, average
inpatient drug spending increased 38.7 percent on a per admission basis
(from $714 to $990, see Figure 1).\19\
---------------------------------------------------------------------------
\18\ Average annual spending was estimated to increase 11.5 percent
between FY 2013 and FY 2014 from $5.2 million to $5.8 million. Between
FY 2014 and FY 2015, average annual spending increased by 10.7 percent
to $6.5 million.
\19\ On a per-admission basis, average inpatient drug spending was
estimated to be $714 during FY 2013. Between FY 2013 and FY 2014,
spending increased by 24 percent to $886 [$795-$976]. Between FY 2014
and FY 2015, spending increased by 12 percent to $990 [$893-$1,086].
[GRAPHIC] [TIFF OMITTED] T2618.001
Changes in inpatient drug spending impacted hospitals' ability to
manage costs within a fixed payment system between FY 2013 and FY 2015.
Over 90 percent of the hospitals responding to the Drug Survey reported
that recent changes in drug prices had a moderate or severe impact on
their budgets, with a third of hospitals rating the impact as
``severe'' (Figure 2). These observations are reinforced by the fact
that growth in inpatient drug spending during this period exceeded the
Medicare hospital rate update (IPPS market basket plus/minus
adjustments), the pharmaceutical price inflation rate, as well as the
spending in the retail drug market (Figures 3 and 4).\20\
---------------------------------------------------------------------------
\20\ Medicare payments are adjusted annually based on changes to
the cost of goods and services (``market basket'') plus or minus any
other adjustments as a result of other policy changes, such as coding
adjustments.
There might be upgrades you were trying to do, but there is
only [so much] budget to do those things. Is it mandated? Can
we duct tape this equipment? If it breaks in six months, we'll
buy it out of contingency. These are the tough choices that a
small community hospital needs to make. . . . Drug volume has
gone down while dollars [prices] have gone up. . . . We'll do
anything to drive costs down, even [cut] costs like gas and
---------------------------------------------------------------------------
electricity. It's really like a household budget.
-- Pharmacy Administrator
[GRAPHIC] [TIFF OMITTED] T2618.002
[GRAPHIC] [TIFF OMITTED] T2618.003
[GRAPHIC] [TIFF OMITTED] T2618.004
Drug price increases had a larger impact on hospital drug spending than
utilization between CY 2013 and CY 2015. The data from the two GPOs
included information on total inpatient spending, unit price, and
change in unit price between CY 2013 and CY 2015 for the selected
drugs. From this data, we were able to calculate total utilization for
each year and evaluate how utilization changed over the three year
period. By comparing changes in drug prices and changes in utilization
on total spend for a drug, we were able to identify where spending was
more significantly impacted by price or volume. Consistently, changes
in prices drove increases in spending. Figure 5 and Appendix Table A.1
presents information for the 10 drugs with the highest spending; Figure
6 and Appendix Table A.2 presents information for the 10 drugs with the
greatest change in unit cost.
Drug price increases appear to be random and inconsistent from one year
to the next. The unit price of many of the drugs changed significantly
and unpredictably. Many of these drugs--but not all--were high-volume
drugs (e.g., calcitonin, nitroprusside, isoproterenol, neostigmine
methylsulfate, phytonadione, and glycopyrrolate; Figures 5 and 6). Most
were not innovator drugs, that is, brand name drugs under patent
protection. While some drugs increased at similar rates each year
(e.g., glucagon), others varied dramatically one year to the next
(e.g., acetaminophen, calcitonin).
The rationale for changes in price is not immediately clear. For some,
it appears that the instigator for the price change was simply a change
in the drug's ownership. For example, the leukemia drug Oncaspar
(pegaspargase) was originally approved in 1994. The price of the drug
increased by nearly $10,000 last year after Baxalta Inc.'s purchase.
The antiparasitic Daraprim (pyrimethamine) was originally approved in
1953, yet cost hospitals substantially more in CY 2015 after new owner
Turing Pharmaceuticals increased the price by more than 3,000 percent.
As previously noted, Valeant increased the prices of Isuprel and
Nitropress by hundreds of percent between CY 2013 and CY 2015 after
they purchased the rights to those drugs from Marathon
Pharmaceuticals.\21\
---------------------------------------------------------------------------
\21\ These figures still reflect aggregated GPO data and represent
the price change across 2 years, see Table A.2.
You can pretty much ballpark medications that were already high
priced, but it's for the ones that were $5 last year and $300
this year. Those are the ones that make it very difficult to
budget. These types of increases are being more commonly found
for generics. It used to be you could buy these generics and
save, now all of a sudden these generics are not cheap anymore.
For Isuprel, which is in all your crash carts and increased 500
percent overnight, there is no way to budget ahead of time.
It's taking up pretty much the entire DRG reimbursement on
---------------------------------------------------------------------------
cases.
-- Pharmacy Vice President
Temporary market failures also appear to impact drug pricing, sometimes
with lasting consequences. In 2012 Luitpold Pharmaceuticals, one of
only two makers of glycopyrrolate (a drug used to dry secretions prior
to surgery) temporarily closed its factory to fix quality control
problems.\22\ Hikma Pharmaceuticals, the other manufacturer, then
raised its prices of the injectable version in 2013. As a result, GPOs
experienced a 334 percent increase in the drug's price in CY 2014.
However, once both manufacturers were making it again, its price
decreased by just 5 percent in CY 2015.
---------------------------------------------------------------------------
\22\ Cynthia Koons, ``Broken Markets for Old Drugs Means Price
Spikes Are Here to Stay,'' Bloomberg, November 18, 2015, http://
www.bloomberg.com/news/articles/2015-11-18/the-law-of-pharma-pricing-
physics-what-goes-up-often-stays-up.
We did a presentation on nitroprusside and other old drugs to
our CEO and our executive team. Our CEO was a former surgeon so
he was familiar with the drug. He couldn't believe the
---------------------------------------------------------------------------
magnitude of the increases--he knew it's been around forever.
-- Chief Pharmacy Officer
[GRAPHIC] [TIFF OMITTED] T2618.005
[GRAPHIC] [TIFF OMITTED] T2618.006
CONCLUSIONS
This study examines trends in inpatient drug spending for hospitals
nationwide in order to determine the quantitative impact and to
discover how such changes may have impacted hospitals' ability to
manage costs. Findings show:
Drug spending in the hospital inpatient setting is quickly
increasing. Growth in annual inpatient drug spending between FY 2013
and FY 2015 increased on average 23.4 percent, and on a per admission
admission basis, 38.6 percent. Growth in spending in the inpatient
setting exceeded the growth in retail spending, which increased 9.9
percent during this period. In contrast, CMS's update to hospital rates
through the IPPS increased by only 2.7 percent. Large and unpredictable
increases in the price of drugs used in the inpatient setting
significantly impacted hospitals' ability to manage costs within a
fixed price based payment system.
Many of the sampled drugs that accounted for a substantial
proportion of total inpatient drug spending experienced dramatic unit
price increases in CY 2014 and CY 2015. In most cases, the identified
top ten drugs were not new entrants.\23\ About half of the 28 drugs had
no active generic competition, leaving hospitals no lower cost
alternatives. For most of the drugs, growth in unit price--not volume--
was primarily responsible for the increase in total inpatient drug
spending.
---------------------------------------------------------------------------
\23\ The drugs received FDA approval prior to CY 2013.
Stakeholder interviews suggest that significant budgetary
accommodations are needed to keep up with rising drug prices. Most of
those interviewed raised concerns about older generic drugs whose
prices have increased unpredictably and the lack of alternatives
available in order to provide high quality care to their patients.
Limitations
_______________________________________________________________________
The conclusions of this study should be considered in the context of
the following limitations:
The information on total spending for inpatient drugs between FY
2013 and FY 2015 gathered from the Drug Survey was self-reported.
Of the 4,369 hospitals that met the criteria to participate in
the survey, only 778 responded and the data from only 712 was
sufficiently clean to be used.
Although the survey solicited responses from individual
hospitals, some hospitals systems reported aggregate information for
the entire system. The analysis took account such responses where it
was readily evident that the response was at the system level.
Not all hospitals participate in GPOs (the GPO data include
information on 1,409 of 4,369 U.S. community hospitals), which allow
hospitals to consolidate their collective purchasing power. As such,
the GPO data may not be reflective of the experience of all hospitals,
and likely understates the actual rate of growth.
APPENDIX
Table A1. Change in Unit Cost for Top Ten Drugs With Highest Total Spending in CY 2015 (GPO Data)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Percent
Total Inpatient Total Inpatient Total Inpatient Change in Change in
Generic name Spending CY Spending CY Spending CY Unit Price Unit Price Unit Price Unit Price Unit Price
2013 2014 2015 CY 2013 CY 2014 CY 2015 (CY 2013- (CY 2014-
CY 2014) CY 2015)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acetaminophen 43,156,542.02 87,113,521.07 99,061,331.23 12.94 27.64 30.46 114% 10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nitroprusside 9,802,140.32 48,278,606.78 94,966,434.83 102.34 150.31 790.46 47% 426%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Isoproterenol 5,602,447.81 23,066,826.13 86,541,461.54 278.67 804.16 1,617.62 189% 101%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Neostigmine methylsulfate 56,818.46 4,311,153.48 78,814,217.26 15.69 16.44 85.59 5% 421%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Glycopyrrolate 4,932,748.72 66,606,577.06 73,082,412.98 5.46 23.83 22.70 337% -5%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pegaspargase 32,142,583.64 34,337,561.15 60,374,093.00 5,605.44 5,617.24 12,858.14 0% 129%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vasopressin 1,923,293.58 3,698,147.36 55,243,306.86 - 48.76 88.16 - 81%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Calcitonin, salmon 2,372,551.94 12,529,284.26 55,226,841.19 67.98 923.51 2,286.23 1,259% 148%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Glucagon 23,427,876.25 26,041,923.88 39,738,796.65 109.66 132.91 166.80 21% 25%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Phytonadione 12,731,141.91 20,809,335.38 35,609,824.48 549.84 1,241.61 2,502.80 126% 102%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: GPO Rx Data
Table A2. Top Ten Drugs With Highest Unit Price Increases in CY 2015 (GPO Data)
----------------------------------------------------------------------------------------------------------------
Percent
Change in
Generic Total Inpatient Total Inpatient Total Inpatient Unit Price Unit Price Unit Price Price per
name Spending CY Spending CY Spending CY CY 2013 CY 2014 CY 2015 Unit (CY
2013 2014 2015 2013-CY
2015)
----------------------------------------------------------------------------------------------------------------
Pyrimetha 595,748.81 801,690.28 812,109.32 919.10 1,045.52 34,882.24 3,695%
mine
----------------------------------------------------------------------------------------------------------------
Calcitoni 2,372,551.94 12,529,284.26 55,226,841.19 67.98 923.51 2,286.23 3,263%
n,
salmon
----------------------------------------------------------------------------------------------------------------
Hydralazi 6,951,150.65 7,725,372.30 17,568,936.99 4.72 5.02 41.32 776%
ne
----------------------------------------------------------------------------------------------------------------
Nitroprus 9,802,140.32 48,278,606.78 94,966,434.83 102.34 150.31 790.46 672%
side
----------------------------------------------------------------------------------------------------------------
Isoproter 5,602,447.81 23,066,826.13 86,541,461.54 278.67 804.16 1,617.62 480%
enol
----------------------------------------------------------------------------------------------------------------
Neostigmi 56,818.46 4,311,153.48 78,814,217.26 15.69 16.44 85.59 446%
ne
methylsu
lfate
----------------------------------------------------------------------------------------------------------------
Phytonadi 12,731,141.91 20,809,335.38 35,609,824.48 549.84 1,241.61 2,502.80 355%
one
----------------------------------------------------------------------------------------------------------------
Glycopyrr 4,932,748.72 66,606,577.06 73,082,412.98 5.46 23.83 22.70 316%
olate
----------------------------------------------------------------------------------------------------------------
Sodium 4,857,185.90 3,559,993.22 12,651,343.86 11,118.66 5,192.88 45,665.71 311%
benzoate
----------------------------------------------------------------------------------------------------------------
Ephedrine 7,533,234.15 10,528,689.87 34,552,474.48 5.98 8.90 23.96 300%
sulfate
----------------------------------------------------------------------------------------------------------------
Source: GPO Rx Data.
Table A3. Glossary
------------------------------------------------------------------------
Approval in
Generic Therapeutic Medical Use Past Four Any Generic
Name Class Years Competition
------------------------------------------------------------------------
Acetaminoph Analgesic Treats minor No Yes
en aches and
pains, and
reduces
fever
------------------------------------------------------------------------
Calcitonin, Calcitonin Treats bone No Yes
salmon pain and
other
symptoms of
Paget's
disease,
hypercalcem
ia, and
osteoporosi
s
------------------------------------------------------------------------
Ephedrine Sympathomimetic Used to No Yes
sulfate s; prevent low
decongestants, blood
vasopressors pressure
during
spinal
anesthesia
------------------------------------------------------------------------
Glucagon Hormone, Treats No Yes
hyperglycemic severe low
agent blood sugar
------------------------------------------------------------------------
Glycopyrrol Synthetic Reduces No Yes
ate anticholinergi secretions
c in the
mouth,
throat,
airway and
stomach
before
surgery
------------------------------------------------------------------------
Hydralazine Vasodilator, Direct- No Yes
arteriolar acting
vasodilator smooth
muscle
relaxant
used to
treat high
blood
pressure
------------------------------------------------------------------------
Isoproteren Nonselective Used to No No
ol beta-agonist; improve
sympathomimeti breathing
c while a
patient is
under
anesthesia,
or to treat
certain
types of
heart
problems
------------------------------------------------------------------------
Neostigmine Antianginal, Reversal May 31, 2013 No
methylsulf antihypertensi agent of Approval
ate ve certain
kinds of
muscle
relaxants
used in
surgery
------------------------------------------------------------------------
Nitroprussi Vasodilator Used to No No
de treat
congestive
heart
failure and
life
threatening
high blood
pressure,
or to keep
blood
pressure
low during
a surgery
------------------------------------------------------------------------
Pegaspargas Chemotherapy, Leukemia No No
e asparaginase treatment
------------------------------------------------------------------------
Phytonadion Vitamin K Aids blood No Yes
e clotting
------------------------------------------------------------------------
Pyrimethami Antiparasitic, Treats No No
ne antimalarial toxoplasmos
agent is, can
also
prevent
malaria and
other
infections
------------------------------------------------------------------------
Sodium Metabolic Agent Treatment of No Yes
benzoate urea cycle
disorders
and
hyperammone
mia
------------------------------------------------------------------------
Vasopressin Hormone, A blood April 17, Yes
vasoconstricto vessel 2014
r constrictin Approval
g agent
used in
emergencies
, also used
to treat
diabetes
insipidus,
after
stomach
surgery or
before
stomach x-
rays
------------------------------------------------------------------------
______
Association of American Physicians and Surgeons
1601 N. Tucson Blvd., Suite 9
Tucson, AZ 85716
Statement of Jane M. Orient, M.D., Executive Director
Chairman Hatch, Ranking Member Wyden, and Members of the U.S. Senate
Committee on Finance:
There are many obstacles impeding prescription drug affordability. Yet,
one especially responsible culprit is the safe harbor to Medicare anti-
kickback law enjoyed by Group Purchasing Organizations (GPOs) that has
been further extended by administrative guidance to Pharmacy Benefit
Managers (PBMs).
The Federal statute granting this ``safe harbor'' is 42 U.S.C. 1320a-
7b(b)(3)(C), the language of which was established by the ``Omnibus
Budget Reconciliation Act of 1986,'' strengthened by the ``Medicare and
Medicaid Patient and Program Protection Act of 1987,'' and subsequently
ensconced in federal regulation at 42 CFR 1001.952(j).
The provision ostensibly facilitates greater bargaining power for the
purchasing of supplies and drugs. However, the safe harbor has in
practice driven up costs and scarcity by perpetuating a system rife
with hidden kickbacks, rebates, and single source contracts that
financially benefit GPOs, PBMs, and large manufacturers, but constrain
competition and ultimately harm patients.
It is time to repeal 42 U.S.C. 1320a-7b(b)(3)(C) and direct HHS to
revoke any related regulations and guidance that protect such improper
kickbacks.
Physicians Against Drug Shortages calculates that such ``corrupt
practices have driven up the prices of drugs sold by PBMs to individual
consumers by at least $100 billion annually.'' This is in addition to
the $100 billion per year in inflated supply costs that result from
kickbacks to GPOs. For additional details see http://
www.physiciansagainstdrugshortages.com/.
Diabetes patients are one group particularly hard hit by the collusion
between PBMs and manufacturers. CBS News recently reported that ``the
cost of two common types of insulin increased 300 percent in the past
decade'' thanks in large part to kickbacks to PBMs. Contracts between
GPOs, PBMs, suppliers, and manufacturers are hidden from public view,
despite the fact that taxpayers fund nearly two-thirds of every dollar
spent on medical care.
This Committee should request, subpoena if needed, and make public,
contracts related to the sale of insulin to help shine sunlight on
these secret backroom deals. In addition it should similarly obtain
copies of contracts related to other medical products that have
recently seen a dramatic rise in scarcity or price: e.g., Baxter's
contracts related to saline market allocation, the Hospira (now Pfizer)
contracts for fentanyl, and Mylan's contracts for Epipen.
Meanwhile, independent physicians are providing tremendous savings to
patients with in-office dispensing of prescriptions that cut out the
cost increases caused by middlemen like PBMs. For example, a 72 year
old female patient with multiple chronic conditions purchases all nine
of her medications through a Direct Primary Care office for $14.63/
month. Through her Medicare ``coverage'' her cost would be $294.25 per
month.
The Senate Committee on Finance has jurisdiction over S 1358, the
Direct Primary Care Enhancement Act, which would increase patient
access to this promising delivery model by simply clarifying that
Health Savings Accounts can be used for these arrangements. We urge the
Committee to expedite consideration and approval of S. 1358.
In conclusion, lowering costs for care is going to mean ending the
improper flow of money to middlemen profiting without adding value to
patient care. We encourage the Committee to take action to end failed
policies that benefit the bottom lines of these special interests and
simultaneously implement solutions that hand control back to patients.
Please do not hesitate to reach out to us for further discussion about
our concerns.
Sincerely,
Jane M. Orient, MD
AAPS Executive Director
______
Campaign for Sustainable Rx Pricing (CSRxP)
Testimony of Lauren Aronson, Executive Director
Chairman Hatch, Ranking Member Wyden, and members of the Senate Finance
Committee, the Campaign for Sustainable Rx Pricing (CSRxP) thanks you
for the opportunity to submit testimony for the record on the
critically important issue of increasing prescription drug
affordability for consumers and taxpayers while at the same time
fostering a marketplace for the development of innovative medicines.
CSRxP is a nonpartisan coalition of organizations committed to
promoting an informed discussion on sustainable drug pricing and to
developing bipartisan, market-based solutions that improve
affordability while maintaining access to innovative prescription drugs
for American patients and their families. Our members represent
organizations including consumers, hospitals, physicians, nurses,
pharmacists, employers, pharmacy benefit managers and health insurance
providers.
We very much appreciate the leadership of this Committee and Department
of Health and Human Services (HHS) Secretary Azar in finding ways to
address the unsustainable growth in prescription drug costs. Consumers
currently spend 23 cents of every healthcare dollar on prescription
drugs--an amount that can and must come down, as needlessly high drug
prices and out-of-pocket spending can threaten the financial security,
health and well-being of American patients and their families, as well
as strain Federal and State budgets.\1\
---------------------------------------------------------------------------
\1\ America's Health Insurance Plans, ``Where Does Your Health Care
Dollar Go?'', May 22, 2018.
CSRxP welcomes HHS's ``Blueprint to Lower Drug Prices and Reduce Out-
of-Pocket Costs'' as a good first step in the effort to reduce
needlessly high list prices and lower overall prescription drug costs
for consumers and taxpayers.\2\ The Blueprint includes a number of
thoughtful and creative ideas on innovative methods to reduce
prescription drug spending and we would like to work with the Committee
and HHS to ensure that those policy ideas are successfully implemented.
However, we believe that more can and should be done to bring prices
down. Policies must be implemented to address the root of the problem:
brand drug makers set list prices too high and increase them at
excessively high rates. Prescription drug costs will continue to grow
at unacceptably unsustainable rates unless serious actions are taken to
thwart the pricing practices of the brand industry. Without addressing
the root cause of the problem, many American patients, particularly
those on limited incomes, will continue facing choices they should
never have to make between buying groceries for their families or
purchasing the medications they need to get well and stay healthy.
---------------------------------------------------------------------------
\2\ 83 Fed. Reg. 22692-22700.
Below, CSRxP expresses support for policies in the Blueprint that will
improve the affordability of prescription drugs while at the same time
fostering a competitive market, which drives innovation in drug
development. We then discuss our concern with certain policy ideas
that, while very well-intentioned, unfortunately will not lower
prescription drug costs for most consumers and taxpayers. Finally, we
recommend a limited number of additional bipartisan, market-based
policies for adoption that will increase affordability and promote
---------------------------------------------------------------------------
innovation in drug development.
CSRxP looks forward to working with the Committee and HHS to
successfully implement policies that will help address the goal we all
mutually share: to make prescription drugs more affordable and
accessible for U.S. consumers and taxpayers without imperiling the
discovery of innovative breakthrough therapies that can improve the
health and well-being of patients.
I. Policies That Improve Market Competition and Lower Out-of-Pocket
Costs for Consumers
A. Increasing Transparency in Prescription Drug Pricing
CSRxP strongly agrees with HHS that improving transparency in
prescription drug pricing is a critical component to making
prescription drugs more affordable for consumers and taxpayers. Among
other benefits, increased transparency will support and better enable
transformation of the U.S. health care system toward one based on
value; will better inform patients, prescribers, and dispensers of
actual drug costs as they determine the most appropriate treatments to
meet individual patient needs; and encourage drug makers to justify the
high prices they set for their products. Hence, CSRxP welcomes policies
in the Blueprint that promote drug pricing transparency, including:
Requiring drug manufacturers to include list prices in direct-
to-
consumer (DTC) advertisements: DTC advertising has come under scrutiny
as prescription drug spending takes up a bigger portion of health care
dollars each year both for consumers and taxpayers. DTC advertising has
the potential to lead to over-utilization of high-cost medicines.
Presenting list prices--as well as price increases--in DTC advertising
will make patients much more aware of prescription drug costs when they
talk with their providers about treatment options for their individual
health care needs. Thus, CSRxP urges the Committee to work with HHS and
the Food and Drug Administration (FDA) to require drug makers to
include list prices and list price increases in DTC advertisements for
their products.
Updating routinely, and expanding, the amount of information
available on the Medicare and Medicaid Drug Dashboards: The Medicare
and Medicaid Dashboards have provided valuable data and information to
consumers and providers on prescription drug costs in a transparent
manner. Hence, CSRxP urges the Committee to encourage HHS to routinely
update information on both dashboards, including list prices, price
increases, and year-over-year pricing data, among other data points, so
that consumers have a more transparent understanding of the
prescription drug cost increases they face each year.
Furthermore, CSRxP urges the Committee and HHS to build on the
important policy initiatives ongoing at the Department and described in
the Blueprint that will increase transparency in prescription drug
pricing, including:
Mandating that drug makers release details of a drug's unit
price, cost of treatment, and projection on federal spending before FDA
approval: Given the significant impact pharmaceuticals have on overall
health care spending, manufacturers should be required to disclose
information on the estimated unit price for the product, the cost of a
course of treatment, and a projection of federal spending on the
product so that patients, providers, taxpayers and policymakers have a
better understanding of actual treatment costs.
Requiring drug companies to annually report increases in their
drugs' list prices: Similar to requirements already in place for other
entities like health insurance providers, hospitals and nursing
facilities, pharmaceutical companies should be required to report
increases in a drug's list price on an annual basis, as well as how
many times during the year the price has increased.
Compelling drug manufacturers to disclose R&D costs: Drug makers
should be required to disclose how much research was funded by public
entities like the National Institute of Health (NIH), other academic
entities, or other private companies, so that regulators and taxpayers
can properly weigh return on investment.
Producing annual HHS reports on overall prescription drug
spending trends and price increases for individual prescription drugs:
HHS should produce and publicly release annual reports covering (1)
overall prescription drug pricing trends similar to the one produced by
the HHS Assistant Secretary for Planning and Evaluation (ASPE) in March
2016; and (2) the top 50 price increases per year by branded or generic
drugs; the top 50 drugs by annual spending and how much the government
pays in total for these drugs; and historical price increases for
common drugs, including those in Medicare Part B.\3\ These important
pieces of information will better inform patients, prescribers,
dispensers, policymakers, and taxpayers of the significant costs of
prescription drugs that consumers face today.
---------------------------------------------------------------------------
\3\ HHS ASPE, ``Observation on Trends in Prescription Drug
Spending,'' March 8, 2016.
---------------------------------------------------------------------------
B. Thwarting Anti-Competitive REMS Abuses by Brand Drug Makers
The FDA uses the Risk Evaluation and Mitigation Strategy (REMS) program
to allow products with potential safety issues to enter the market.
When employed effectively and appropriately, REMS improves patient
safety and makes accessible medicines that otherwise might not be
available due to safety concerns. However, as described in the HHS
Blueprint, drug manufacturers often engage in abusive, anti-competitive
behaviors that manipulate REMS to block generic drug companies from
obtaining samples of brand drugs under the guise of addressing patient
safety concerns, effectively preventing them from pursuing the research
needed to bring less expensive generic drugs to market. CSRxP
appreciates the leadership of FDA Administrator Gottlieb in using
administrative action to help curb these abuses. However, we believe
more can be done and therefore urge the Committee to encourage and
welcome further actions by the FDA to thwart anti-competitive abuses of
REMS by brand drug makers identified in the Blueprint, including:
Evaluating current REMS programs to determine whether existing
limited distribution programs are appropriate: CSRxP urges FDA to
assess whether existing REMS programs inappropriately restrict access
to samples necessary for testing by generic drug makers. Lifting any
inappropriate and anti-competitive restrictions in sample access will
better enable generic drug makers to develop products that can inject
competition into the marketplace and bring drug prices down for
consumers and taxpayers.
Applying the same scrutiny to reference biologic manufacturers
as applied to brand drug companies when assessing potential anti-
competitive REMS abuses by reference biologic manufacturers: CSRxP
welcomes HHS's recognition in the Blueprint that reference biologic
manufacturers have the potential to engage in the same shenanigans that
certain brand drug manufacturers do with respect to REMS; namely,
developers of biosimilars and interchangeable biologic products may
face challenges in obtaining samples of reference biologics for testing
due to anti-competitive REMS abuses by reference biologic
manufacturers. As such, CSRxP urges FDA to apply the same scrutiny to
reference biologic manufacturers as it does to brand drug companies
when evaluating REMS programs for reference biologics.
Support for the CREATES Act and FAST Generics Act: In addition to the
actions described in the Blueprint to curb REMS abuses, bipartisan
legislation has been introduced in the Senate and the House--the
CREATES Act and the FAST Generics Act--that would inhibit anti-
competitive REMS practices by brand drug makers. CSRxP urges enactment
of these bipartisan pieces of legislation, which will build on the
important and ongoing work at FDA to curb REMS abuses and better enable
generic drugs to enter the market.
C. Fostering a Robust Market for Biosimilar and Interchangeable
Biologic Products
Biosimilars and interchangeable biologic products have the potential to
expand treatment options and substantially lower prescription drug
costs for consumers and taxpayers. For example, one study found that 11
biosimilars already approved for sale in Europe and elsewhere could
generate approximately $250 billion in savings over 10 years if they
were available in the U.S.\4\ Thus, CSRxP welcomes implementation of
policies identified in the Blueprint that promote and incentivize the
development of biosimilars and interchangeable biologic products to
compete against high-priced specialty brands and lower costs for
consumers and taxpayers, including:
---------------------------------------------------------------------------
\4\ Express Scripts, ``The $250 Billion Potential of Biosimilars,''
April 23, 2013.
Improving the interchangeability of biosimilars: CSRxP strongly
supports efforts to improve the interchangeability of biosimilars,
which will provide enhanced competition in the marketplace particularly
for high-cost specialty drugs. FDA has approved eleven biosimilar
products since enactment of the Biologics Price Competition and
Incentive Act (BPCIA) over 8 years ago. However, the agency has not
deemed any as interchangeable, which means they cannot be substituted
without the intervention of a health care provider. CSRxP is concerned
that this continued dynamic will discourage further investment from
biosimilar developers and ultimately reduce the number of
---------------------------------------------------------------------------
interchangeable biologics that reach the market.
FDA has not finalized its draft guidance entitled
``Considerations in Demonstrating Interchangeability With a Reference
Product,'' which outlines the process a biosimilar manufacturer must
follow to obtain an interchangeable designation from FDA.\5\ CSRxP
urges the Committee to encourage FDA to finalize this guidance as soon
as possible. Developers of interchangeable products need the final
guidance for certainty so that they have a clear and consistent pathway
for demonstrating interchangeability, fostering the ability of more of
these products to enter the market.
---------------------------------------------------------------------------
\5\ FDA, ``Considerations in Demonstrating Interchangeability With
a Reference Product,'' Guidance for Industry, Draft Guidance, January
2017.
Educating providers and patients on the value, safety, and
efficacy of biosimilars: CSRxP strongly agrees with HHS that,
``[p]hysician and patient confidence in biosimilar and interchangeable
products is critical to the increased market acceptance of these
products.'' \6\ Hence, we firmly support efforts by the FDA to educate
patients, prescribers and dispensers about the value, safety, and
efficacy of biosimilar and interchangeable biologic products. Along
similar lines, we further recommend that the Centers for Medicare and
Medicaid Services (CMS) engage with patients, prescribers, dispensers
and health plans to develop and implement tools that offer education on
the value, safety, and efficacy of biosimilars and interchangeable
products specifically for Medicare beneficiaries enrolled in Part Band
Part D. Enhanced education efforts from FDA and CMS on biosimilars and
interchangeable biologics will help to generate improved comfort,
acceptance and increased utilization of these more affordable products
over time.
---------------------------------------------------------------------------
\6\ 83 Fed. Reg. 22696.
Improving FDA's Purple Book: CSRxP supports improvements to
FDA's Purple Book that make it a more useful tool for developers of
biosimilars and interchangeable biologics, as well as patients and
prescribers. Researchers have documented how the Purple Book does not
include the same level of information as that available in FDA's Orange
Book for small molecule drugs and have suggested that the lack of
sufficient information has the potential to hinder development of
biosimilars.\7\ Moreover, these same researchers described how the
limited information available in the Purple Book is not easily
accessible and searchable online, particularly compared to the Orange
Book, which can create additional challenges for biosimilar developers,
patients, prescribers, dispensers, and health plans.\8\ As such, CSRxP
would welcome efforts by the Committee to encourage FDA to make
modifications to the Purple Book so that the Purple Book for biologics
maintains similar levels to--or improves upon--the information and
online accessibility of the Orange Book for small molecule drugs.
---------------------------------------------------------------------------
\7\ Feldman, Robin et al., ``May Your Drug Price Ever Be Green,''
UC Hastings Research Paper No. 256, October 29, 2017, page 89.
\8\ Ibid., page 90.
Shortening the market exclusivity period for brand biologics: In
addition to these policies included in the HHS Blueprint, CSRxP urges
the Committee to work with the Administration on shortening the market
exclusivity period for brand biologics to foster a more robust
marketplace for biosimilars and interchangeable biologic products.
Currently, reference biologics enjoy a 12-year market exclusivity
period. Analyses suggest this amount of time may be unnecessary and
prevents lower-cost alternatives from entering the market. Although
providing for intellectual property protections is important to
encourage innovation and the introduction of medical advancements in
the U.S. market, consideration should be given to shortening the
periods of exclusivity. It is important to find the right balance of
incentives for pharmaceutical companies while alleviating cost
pressures for consumers and payers. CSRxP believes that action in this
area is particularly important, as a growing proportion of the drug
---------------------------------------------------------------------------
development pipeline is comprised of high cost biologics.
D. Promoting Value-Based Arrangements in Federal Health Programs
Currently Medicare and Medicaid purchase prescription drugs for their
beneficiaries, but not generally in a manner to accommodate value-based
payment models. CSRxP agrees with HHS that steps should be taken to
ensure these programs can best take advantage of recent developments in
value-based purchasing so that all parts of the U.S. health care system
benefit from market-based negotiating efforts to lower drug prices. In
particular, certain value-based arrangements such as indications-based
pricing have the potential to lower drug costs and would benefit from
more comparative effectiveness research on the value of various
treatment options. Public and private institutions such as the
Institute for Clinical and Economic Review have introduced important
information into the public domain on the value of particularly high-
cost efforts and should receive additional funding for this critical
work.
However, CSRxP cautions that value-based arrangements remain in their
infancy and oftentimes do not directly lower costs for U.S. patients
and their families. More importantly, any savings that accrue from such
arrangements are not expected to occur in the near-term, severely
limiting their ability to provide meaningful price relief. While
representing innovative and important steps in helping to lower drug
costs, value-based arrangements do not address the root of the problem,
namely that drug prices are too high and brand pharmaceutical companies
alone are responsible the high cost of prescription drugs that American
consumers and taxpayers face every day.
E. Better Management of High-Cost Medications
High-cost drugs are significant drivers in the unsustainable growth in
prescription drug costs. CSRxP supports efforts to lower this
unsustainable growth in spending through the extension of increased
flexibility to health insurance providers in managing prescription drug
costs. With increased flexibility, health plans can employ their
substantial private sector experience to Medicare and lower costs
particularly for high-cost medications while maintaining appropriate
beneficiary access to treatments needed to get well and stay healthy.
As part of these changes, CSRxP strongly urges HHS to revisit its
existing exceptions and appeals processes to ensure that they are
transparent, easy-to-understand, and fair. HHS also should be willing
to regularly revisit and make changes to such processes as necessary.
II. Policies That Ultimately Will Not Lower Prescription Drug Costs for
Consumers and Taxpayers
HHS requests information in the Blueprint on a number of policies that
it believes have potential to slow the unsustainable growth in
prescription drug costs and increase the affordability of medications
for consumers. While CSRxP supports many of the policies under
consideration, we are concerned that certain policies identified in the
Blueprint unfortunately will have the unintended consequence of
increasing--not decreasing--the costs of prescription drugs for most
consumers and taxpayers. While we very much share the Department's goal
of lowering out-of-pocket costs for patients and reducing government
spending on prescription drugs, we are very concerned that certain
policies will harm consumers and further strain Federal and State
health budgets. In particular, policies that would limit or prohibit
rebates in Medicare Part D or establish long-term financing models for
purchase of prescription drugs in Federal health care programs, will
harm consumers and further strain Federal and State health budgets.
A. Limiting or Prohibiting Rebates in Medicare Part D
HHS asks in the Blueprint whether limiting or prohibiting pharmacy
benefit managers (PBMs) from negotiating rebates for Part D drugs could
lower costs for consumers and taxpayers would lower drug list prices.
While CSRxP very much shares HHS's concern that list prices for drugs
are too high and welcomes actions that will actually bring down list
prices, we disagree that PBMs are responsible for high list prices. In
fact, brand drug companies alone set excessively high list prices and
continuously implement significant price increases. By contrast, PBMs,
negotiate with drug manufacturers to lower costs for Medicare
beneficiaries enrolled in Part D plans, as well as employers, unions,
and government plans offering prescription drug coverage.
Indeed, a recent study found that there is no correlation between the
prices set by drug companies set and the rebates they negotiate with
PBMs and that drug companies increase prices regardless of rebate
levels.\9\ In certain instances, the study pointed to prominent cases
of higher-than-average price increases in drug categories where
manufacturers negotiated relatively low rebates and, conversely,
prominent cases of lower-than-average price increases in drug
categories where manufacturers negotiate relatively high rebates.\10\
---------------------------------------------------------------------------
\9\ Visante, ``No Correlation Between Increasing Drug Prices and
Manufacturer Rebates in Major Drug Categories,'' April 2017.
\10\ Ibid.
In fact, rebates and other discounts negotiated by PBMs and Medicare
Part D plans produce significant savings for the program and its
beneficiaries. One recent analysis estimated that PBMs and Part D plans
saved the Part D program and its beneficiaries over $20 billion in drug
costs in 2017.\11\ Similarly, in their most recent report, the Medicare
Trustees projected significantly slower growth in Part D spending in
part due to higher manufacturer rebates negotiated by PBMs.\12\ Again,
while CSRxP appreciates the intent of the question in looking to solve
this critical problem, we disagree that PBMs are the cause. Instead,
the root cause of the problem belongs to drug makers and drug makers
alone, which set high list prices and routinely raise them.
---------------------------------------------------------------------------
\11\ Milliman, ``Value of Direct and Indirect Remuneration: Impact
on Part D Prescription Drug Plan (PDP) Stakeholders,'' July 2017.
\12\ The Board of Trustees, Federal Hospital Insurance and Federal
Supplementary Insurance Trust Funds, ``2018 Annual Report of the Board
of Trustees of the Federal Hospital Insurance and Federal Supplementary
Insurance Trust Funds,'' page 112.
B. Establishing Long-Term Financing Models for Purchase of Prescription
---------------------------------------------------------------------------
Drugs
HHS asks in the Blueprint about the feasibility of establishing long-
term financing models for the purchase of prescription drugs. Once
more, while CSRxP welcomes the goal of looking for innovative methods
to lower drug costs, we are concerned that implementing long-term
financing models for the purchase of prescription drugs actually will
make prescription drugs less--not more--affordable for consumers and
taxpayers.
Indeed, long-term financing mechanisms could encourage drug makers to
continue increasing their prices at excessively high rates for years,
knowing that the multi-year financing would blunt the total upfront
cost of the drug--all at the expense and burden of patients and Federal
and State health programs that unfairly would bear such costs. Any
lower drug prices generated from market competition incented in
traditional insurance benefit designs would be eliminated under long-
term financing models, enabling drug makers to increase prices
throughout the term of the long-term financing model. Such financing
mechanisms merely would function as perpetual debt payments and cost
shifts, unfairly transferring the burden of prescription drug
affordability from manufacturers to consumers and taxpayers; patients
would have to make onerous debt payments for years while Federal and
State health programs already faced with significant budgetary
challenges would have to absorb even more long-term costs that they
simply cannot afford in the current fiscal environment.
Moreover, long-term financing models would be very challenging to
implement and operate. Drug makers likely would insist that State and
Federal health programs develop the infrastructure and continuously
operate a highly complex financing mechanism, increasing government
administrative spending for years. Administrators of these financing
programs would have to determine how to handle situations where a
patient takes a drug for a meaningful period time, burdened with
significant continuous costs, only to find out during the course of
treatment that the drug has not been effective. These patients should
not have to bear those costs, although it is unclear how a long-term
financing model would handle such unfortunate situations. These
represent just a few of the many complexities and operational
difficulties long-term financing models present.
Insurers currently manage many costly diseases and conditions such as
cancer, traumatic brain injury, and organ transplant, belying the
notion that traditional insurance cannot handle the management of
expensive treatments today. As such, CSRxP firmly believes that using
traditional insurance rather than long-term financing models will
better address prescription drug pricing problems for consumers and
taxpayers. While we appreciate thoughtful and creative approaches to
tackling the challenging problem of prescription drug pricing, long-
term financing models are not the solution as they simply serve to prop
up an unsustainable pricing market.
III. Additional Policies to Slow the Unsustainable Growth in
Prescription Drug Costs
Brand biopharmaceutical companies employ a variety of anti-competitive
tactics to delay competition and keep lower cost generic drugs and
biosimilars from entering the market. These inappropriate and unfair
abuses effectively extend the period of market exclusivity for brand
products and, consequently, cause consumers to continue experiencing
needlessly high out-of-pocket expenses and Federal and State
governments to engage in unnecessary spending on prescription drugs. To
help combat these anti-competitive tactics by brand drug makers, CSRxP
urges the Committee and the Administration to work together to adopt
the bipartisan, market-based solutions described below, which inject
more competition into the market particularly after brand products
already have benefitted from market exclusivity post FDA approval.
A. Enhancing Oversight of ``Pay-for-Delay'' Settlements
Brand and generic drug makers enter into patent dispute settlements--
often referred to as ``pay-for-delay'' settlements--that result in a
generic company agreeing to refrain from marketing its products for a
specific period of time in return for compensation (often undisclosed)
from the branded company. The Federal Trade Commission (FTC) has cited
these arrangements as anti-competitive and estimates that they cost
consumers and taxpayers $3.5 billion in higher drug costs every
year.\13\ More recently, these settlements unfortunately have extended
to biologics, delaying the entry of less costly biosimilars into the
market. For example, the top-selling product in the world, Humira, with
global sales exceeding $18 billion in 2017 and a more than doubling of
its price over the past 5 years, will not face biosimilar competition
until 2023 due to a settlement agreed to by the brand and biosimilar
manufacturer of the product.\14\, \15\, \16\
---------------------------------------------------------------------------
\13\ FTC, ``Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers
Billions,'' January 2010.
\14\ AbbVie, ``AbbVie Reports Full-Year and Fourth-Quarter 2017
Financial Results,'' January 26, 2018.
\15\ Reuters, ``AbbVie. Amgen settlement sets Humira U.S.
biosimilar launch for 2023,'' September 28, 2017.
\16\ The Center for Biosimilars, ``Latest Humira Price Increase
Could Add $1 Billion to U.S. Healthcare System in 2018,'' January 5,
2018.
``Pay-for-delay'' settlements hurt consumers who need to have lower
out-of-pocket costs, especially when taking high-cost specialty
medications like Humira, as well as taxpayers who effectively have to
foot the bill of delayed competition. As such, CSRxP urges robust
oversight and opposition to settlements that are deemed anticompetitive
and prevent generics and biosimilars from entering the market in a
---------------------------------------------------------------------------
timely manner.
B. Targeting Exclusivity Protections to Truly Innovative Products
Currently, pharmaceutical manufacturers can extend patent and market
exclusivity protections by seeking approval for a ``new'' product that
is essentially the same as the original product, such as extended
release formulations or combination therapies that simply combine two
existing drugs into one pill. These anti-competitive tactics--often
referred to as ``evergreening'' or ``product hopping''--inhibit entry
of generic drugs into the market. For example, a recent analysis
suggested that anti-competitive drug reformulations potentially can
result in up to $2 billion in losses per anti-competitive reformulation
for consumers each year.\17\ Prohibiting these anti-competitive
``evergreening'' and ``product hopping'' tactics by brand drug makers
will foster increased availability of generic drugs, resulting in lower
costs for consumers and taxpayers. Therefore, CSRxP urges the
appropriate federal agencies to closely monitor and increase scrutiny
of these schemes and prosecute if they are found to be in violation of
antitrust laws.
---------------------------------------------------------------------------
\17\ Shadowen, Steve et al., ``Anticompetitive Product Changes in
the Pharmaceutical Industry,'' Rutgers Law Journal, Vol. 41, No. 1-2,
Fall/Winter 2009, page 78.
---------------------------------------------------------------------------
IV. Conclusion
In conclusion, CSRxP appreciates the leadership from the Committee on
the critically important issue of prescription drug pricing and thanks
the Committee for the opportunity to submit testimony for the record on
this issue that impacts consumers and taxpayers every day. CSRxP looks
forward to continued work with the Committee on developing and
implementing market-based policies that promote competition,
transparency, and value to make prescription drugs more affordable for
all American patients and their families while at the same time
maintaining access to the innovative treatments that can improve health
outcomes and save lives.
______
Center for Fiscal Equity
14448 Parkvale Road, Suite 6
Rockville, Maryland 20853
[email protected]
Statement of Michael G. Bindner
Chairman Hatch and Ranking Member Wyden, thank you for the opportunity
to submit these comments for the record to the Committee on Finance.
As you may recall, we have in the past written urging a combination of
catastrophic insurance, health savings accounts (Archer) and medical
lines of credit, which is a bit more liquid version of a flexible
spending account, with all accessed by one card with costs allocated
based on account balances and income levels. Poor people would have
minimum or even no copays, but would always have credit access. As
income rises, so would copays and available balances, as well as
catastrophic deductibles.
This plan would offer little incentive for the poor to shop for cheaper
drugs; however, wealthier patients could be made to feel the pain of
drug prices a bit more, but only if they were denied comprehensive
insurance. Good luck passing that; it may be what cost Senator McCain
the White House in 2008. Additionally, the Archer accounts and lines of
credit are designed to assure universal access to care and drugs with
little pain. It only helps the well who can redirect funds to asset
accumulation (thus causing asset inflation, speaking of 2008).
Single Payer and negotiation by government payers, state or federal
price controls or taxing away excess profits would all control prices,
which are monopolistically high. Unless an economist is far out on the
rightward fringe, there is no doubt about the equity of stopping
monopoly prices. The only question is how.
While some favor restricting patent rights, I would argue in favor of
having every drug approval disclose all government-supported research
used to develop the product, giving the sponsoring agency the right to
both share in the profits and have a say in the pricing. This both
keeps the research dollars flowing and limits cost.
The last possibility is through our proposed Net Business Receipts Tax/
Subtraction Value-Added Tax. It would replace corporate income taxes
and proprietary and pass-through taxes and treat all business income
the same. It would provide for the health insurance exclusion or fund
single payer insurance. Companies who hire their own doctors and
pharmacists and buy their own drugs would get a tax exclusion from
single payer (third party insurance would be discouraged), and would
negotiate with drug makers for lower prices, although this would leave
small firms at a distinct disadvantage and would discourage such
practices as franchising and 1099 employment. Still, on the whole, it
would decrease cost while not discouraging innovation.
Short of that, an NBRT subsidized Public Option would allow sicker,
poorer and older people to enroll for lower rates, allowing some
measure of exclusion to private insurers and therefore lower costs.
Drug prices would also decrease if the Public Option is allowed to
negotiate with drug companies. Of course, the profit motive will
ultimately make the patient exclusion pool grow until private insurance
would not be justified, leading again to Single Payer if the race to
cut customers leads to no one left in private insurance who is actually
sick.
Thank you for the opportunity to address the committee. We are, of
course, available for direct testimony or to answer questions by
members and staff.
______
National Community Pharmacists Association (NCPA)
100 Daingerfield Road
Alexandria, VA 22314-2888
(703) 683-8200 phone
(703) 683-3619 fax
Chairman Hatch and Ranking Member Wyden, and Members of the Committee:
Thank you for conducting this hearing on prescription drug
affordability, innovation, and the President's ``Blueprint to Lower
Drug Prices and Reduce Out-of-Pocket Costs.'' In this statement, NCPA
will offer support and suggestions on a number of policy considerations
outlined in the President's Blueprint. NCPA represents America's
community pharmacists, including the owners of more than 22,000
independent community pharmacies. Together they represent an $80
billion health care marketplace and employ more than 250,000
individuals on a full or part-time basis. Independent community
pharmacies are typically located in traditionally underserved rural and
urban communities, providing critical access to residents of these
communities.
Importantly, community pharmacists are health care providers on the
front-lines who regularly talk to patients about their concerns with
prescription drug costs and work diligently to address these concerns.
NCPA addresses a number of these concerns below in the hopes that
community pharmacists can add meaningful solutions for patients,
especially those seniors in the Medicare Part D program.
Changes to the application and usage of manufacturer rebates and
pharmacy DIR
NCPA recognizes that this administration, through the President's
Budget or recent request for information pending at HHS, largely has
focused on changes to the application and usage of manufacturer
rebates. However, rebates are not the only concession that leads to
inflated drug prices and higher out-of-pocket costs for seniors. In
fact, while the application of rebates is an important aspect to the
drug pricing conversation, the out-of-pocket costs conversation is
incomplete without specific discussion regarding all direct and
indirect remuneration (DIR), including all pharmacy price concessions
in the Part D program and how PBMs leverage these fees to pad their
pockets at the expense of patients, the government, and small
businesses.
DIR fees imposed on pharmacies participating in Medicare Part D
networks by plan sponsors and their PBMs have exploded in recent
years.\1\ The treatment of these pharmacy price concessions as DIR
rather than as reductions in the ``negotiated price'' of a drug at the
point of sale has had a crippling impact on patients, the government,
and community pharmacies. The retroactive nature of these fees means
beneficiaries face higher cost-sharing for drugs and are accelerated
into the coverage gap or ``donut hole'' phase of their benefit.
---------------------------------------------------------------------------
\1\ The HHS Office of Inspector General has noted that these
catastrophic costs that are driven by retroactive pharmacy DIR fees
have tripled in recent years--from $10 billion in 2010 to $33 billion
in 2015.
What's more, beneficiaries reach the catastrophic phase of the benefit,
for which CMS incurs approximately eighty percent of the cost. Costs to
the government have surged as liability for Part D costs is
increasingly being shifted from Part D plan sponsors to CMS. Finally,
all retroactive pharmacy DIR fees are taken back from community
pharmacies months later rather than deducted from claims on a real-time
basis. This reimbursement uncertainty makes it extremely difficult for
---------------------------------------------------------------------------
community pharmacists to operate their small businesses.
As this administration has discussed the possibility of prohibiting
PBMs from using rebates in contracts with manufacturers, NCPA argues
that the same policy should be applied to pharmacy price concessions.
Therefore, NCPA requests that the administration or Congress eliminate
pharmacy DIR in the Medicare Part D program.
If this administration or Congress does not eliminate all DIR including
pharmacy price concessions, the administration or Congress should
prohibit all retroactive pharmacy DIR fees leveraged against
pharmacies, as policymakers have considered this policy move several
times over the past few years. Just this spring, CMS collected
information on what it could mean if DIR, including pharmacy price
concessions, were included in the negotiated price at point of sale.
CMS has yet to do anything with this information, but it is clear that
the need for change is sorely needed.
Finally, this administration or Congress should seek to limit and
control the way in which PBMs and plan sponsors impose arbitrary and
inconsistent performance-based standards and incentive payment schemes
on community pharmacies. While not all pharmacy DIR is performance
based, the proliferation of pharmacy DIR is now intricately tied to
performance-based standards. PBMs and plan sponsors have argued they
should have the ability to create programs that are accounted for as
DIR to reward pharmacies for achieving contractual, performance-based
metrics. However, these retroactive fees are based on a payment
methodology that withholds a certain amount with the opportunity for
the pharmacy to either ``earn back'' or have the retroactive fees
decreased based on achieving certain arbitrary quality measures.
Therefore, NCPA requests that the administration or Congress define
pharmacy quality within the Medicare Part D program and hold plans
accountable for determining performance-based payments. Performance-
based payments should be based on standardized, achievable, and proven
criteria that measure pharmacy performance, as opposed to criteria that
focus on measuring plan performance or criteria which pharmacies have
little to no opportunity to influence.
Fiduciary duty for Pharmacy Benefit Managers
NCPA continues to urge policymakers to require PBMs to have a fiduciary
duty to the entity for whom they manage pharmaceutical benefits, a move
that would shed light on opaque PBM practices, including the PBM's
incentive to charge the plan more than the pharmacy is reimbursed and
keep the difference as profit. This would force PBMs to put patients'
financial interests before their own and would eliminate the loophole
of PBMs leveraging their clients' purchasing power.
By way of background, PBMs serve as the ``middleman'' in all
prescription drug transactions in the United States. They are able to
leverage the number of beneficiaries in a particular plan in order to
negotiate lucrative rebates from pharmaceutical manufacturers. They
also formulate pharmacy provider networks that will supply or dispense
these drugs to the plans' beneficiaries. What most consumers and plan
sponsors alike do not know is that PBMs extract ``spread'' profits from
both these activities.
The amount that the PBM pays the pharmacy for dispensing the drug to
the plan beneficiary is rarely the same amount that the PBM ``charges''
the plan for the same drug. Typically, the PBM ``marks up'' the cost of
the drug, charging the plan more than the pharmacy is reimbursed,
keeping the difference as profit for the PBM. It is precisely these
hidden spread amounts that are one of many opaque PBM practices that
need to be disclosed. Fiduciary status for PBMs would force PBMs to put
patients' financial interests before their own.
Federal preemption of contracted pharmacy gag clause laws
NCPA supports this administration's efforts to abolish gag clauses in
contracts. The RFI calls for immediate action to prohibit ``gag
clauses'' in Part D contracts. Under some contracts, pharmacists have
been unable to inform patients of lower-cost alternatives due to
overbroad confidentiality clauses and the pharmacist's inability to
disclose the negotiated price to patients. NCPA supports the
administration's successful efforts to abolish all pharmacy gag clauses
to the extent such clauses were present in Medicare Part D contracts,
including CMS' recent letters sent to plan sponsors that state gag
clauses in contracts are unacceptable.
However, NCPA remains concerned about the number and scope of other
provisions in one-sided PBM contracts that pharmacists are forced to
sign, including multiple provisions that in one way or the other
prohibit the free flow of information.
Those include overly broad confidentiality provisions, non-
disparagement clauses, and requirements that the pharmacy charge
insured patients what the PBM tells them to charge. NCPA urges
policymakers to examine all contract provisions that prevent the
pharmacist from discussing drug costs with patients.
Conclusion
In conclusion, prescription drug prices continue to grow at an alarming
rate. There are many factors in the pharmaceutical supply chain and
delivery system that may contribute to this growth, including pharmacy
benefit manager ``middlemen.'' NCPA stands ready to work with the
administration and Congress to implement policies that will lower drug
prices at the pharmacy counter.
[all]