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Copycat versions of expensive drugs may look the same, but the impact on consumer pocketbooks is far from identical

By Sally Greenberg, Chief Executive Officer, National Consumers League

To a scientist, a biosimilar medicine is designed to work like a brand-name medicine, with the molecular structure operating in a highly similar way in both therapies. The biosimilar medicine looks the same to a doctor, too, who can expect similar clinical results.

For many patients, though, the cost of the two medicines hit the pocketbook in hugely different ways. Today, many insurance plans ask patients to pay a percentage of the list price of certain medicines out of pocket – a practice called “coinsurance” – rather than a flat copay.

Even if that coinsurance percentage is the same no matter the drug, patients can pay vastly different amounts if one drug has a higher list price than another.

This has become a quiet crisis for patients using the anti-inflammatory medicine Humira, the best-selling medicine in history. Humira carries a list price of about $7,000 a month, though insurance companies, through savvy negotiation, pay far less.

For patients with coinsurance – the specifics vary by insurer, but it’s usually around 25% of a medicine’s list price, with some plans setting a maximum per-prescription price – that could add up to more than $1,500 a month out of their own pockets to get a medicine they cannot do without. That’s a huge burden, but not a huge surprise to those who have witnessed their health insurance benefits become less and less generous.

Fortunately, there are new options. Biosimilar versions of Humira are now available that have a list price of close to $1,000 a month. For patients with a 25% coinsurance, the medicine costs $250 out of pocket.

That should be a no-brainer for consumers. Who wants to pay six times more?

Unfortunately, due to our ultra-complicated health care system, almost no one uses the cheaper biosimilar. In part, that’s because insurance companies like more expensive medicines because they can make more money from these drugs, and there are few policies in place designed to protect patients from this kind of behavior.

Doctors, too, may miss opportunities to offer patients lower-cost options. After all, when the brand-name product and biosimilar are both technically “covered” by a patient’s insurance, it seems like it shouldn’t matter which product is selected.

The truth is that because insurance benefits are all over the place, it does make a difference for some patients. A huge difference. Thousands of dollars’ worth of difference.

The good news is that there are efforts that can make this easier for consumers and their physicians. Industry, government, and advocates can commit to boosting education so that more Americans can understand their health plan.

Such an educational effort could also include a focus on coinsurance to ensure that no consumer ever gets surprised when they have to pay a percentage of an inflated cost.

But educational efforts only go so far. We cannot rely on solutions based around asking doctors and consumers to assume primary responsibility for navigating a broken system. Fixing this problem for good requires policymakers to act.

First, Congress needs to address the role the pharmacy benefit managers – the middlemen known as “PBMs” that determine how drug benefits are designed – have played in creating the distorted market structure that has led to health plan strategies designed to push costs onto consumers.

Bipartisan legislation has been introduced that would begin to correct this convoluted market and put an end to patients needlessly overpaying to pad the profits of PBMs, but congressional leaders need to prioritize reform. There may be few areas of consensus on Capitol Hill, but this is one of them, and it’s time to turn good ideas into law.

Second, meaningful market incentives need to be established to drive biosimilar uptake. This happened in the generics market decades ago, where clear incentives have driven generic drug penetration to the point where 91% of all prescriptions are for generic drugs.  Unlike biosimilars, patients who take generics see clear cost savings, which is a great motivator.

But no such incentives exist in the U.S. biosimilar market, offering an opportunity for Congress to create similar incentives where both patients and physicians share in the savings available from these lower-cost biosimilars.  Only then will consumers, and the U.S. health care system more broadly, realize the enormous potential of a sustainable biosimilars market.

Our health care system is complicated on purpose. Complexity makes it hard for consumers to see good deals, even when they’re right in front of them. That’s the scenario playing out with biosimilar versions of Humira: even if the drugs may be the same, the impact on patients may not be.

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About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

PBMs claim new programs will save consumers money. Let’s take a closer look.

By Robin Strongin, Senior Director of Health Policy

Consumers have known for quite some time now that the prescription drug pricing system is essentially a black box. Dealings among drug manufacturers, health insurers and pharmacy benefit managers (PBMs) establish which drugs insurance will cover and make accessible to consumers. What’s more, the prices that consumers pay for those medicines vary wildly – often leading to high out-of-pocket costs for us all.

Two of the three major PBM companies that are in the middle of this drug pricing web recently announced that they are establishing new programs (CVS’s CostVantage and Express Scripts’ ClearNetwork) that set transparent formulas for drugs with a pre-set markup and a flat fee for the PBMs. On paper, this sounds like a great idea.

But consumers would be wise to take these claims with a healthy grain of proverbial salt. We know PBMs continue to find new ways to put themselves over patients (more on that here) and we must demand answers to the issues the PBMs are still skirting. For example:

  • Will these new programs actually make prescription drugs more affordable and reduce out-of-pocket costs at the pharmacy counter? Notably, both Express Scripts and CVS Health have acknowledged that employers and plan sponsors may not save any money from this move. There is no sign either that consumers will be able to get the drugs they need for a fair price.
  • While the companies boast increased transparency, they still have not shared – nor said they will share – how much they are paying to acquire the drugs that will be dispensed to patients. PBM clients have long sought this information, but it appears that data will still be hidden in the black box.
  • In the case of CVS Health, the changes the company announced will only be effective at CVS-owned pharmacies. It will not affect how CVS will reimburse millions of prescriptions at the local and independent pharmacies it doesn’t own. A cynic might say this is just another mechanism by CVS to drive more patients to its own pharmacies.

Most notably, nothing CVS Health and Express Scripts have announced will change one of the pervasive anti-consumer elements of the drug pricing system. In their dealings with drugmakers, they can still cut deals that will determine which medicines get preferential placement. This means PBMs could continue to push consumers toward higher-priced drugs and limit access to more affordable generics and biosimilars.

It’s no coincidence that Congress is getting closer to passing PBM reform legislation that would mandate transparency, force the PBMs to pass their negotiated savings from drugmakers to consumers and remove the incentives for PBMs to push consumers to higher-priced drugs. One might say that these moves by CVS and Express Scripts are cosmetic attempts to ward off legislation by touting their own self-reforms.

But, as with so much that goes on in the drug pricing game, these “reforms” may not be what they seem. We need Congress to step in for consumers to help ensure we’re no longer facing a big disadvantage at the pharmacy counter.

Learn more about the PBM problem at nclnet.org/pbms.

Congressional briefing: The path forward for a safe cannabis marketplace

By Robin Strongin, Senior Director of Health Policy

Cannabis Consumer Watch recently hosted a briefing on Capitol Hill to educate policymakers and staff on the public health risks that exist in the current cannabis marketplace, and to offer policy solutions that would help protect consumer safety and encourage innovation for patients. The briefing was moderated by the Collaborative for Cannabinoid Science and Safety’s Libby Baney, and the panel of experts included:

Robin Stronger, Senior Director of Health Policy, National Consumers League, who explained NCL’s biggest concerns about the current cannabis marketplace. She pointed out, “Out of over 140 CD products studied by the FDA, more than half were mislabeled and nearly 40 of those products had more than 120% of the CBD level listed. Several had pesticides and even toxic mold – we just don’t know what consumers are buying. And consumers aren’t aware of the risks.”

Dale Sutherland, President & Founder, CODE 3, who shared that during his time with DC Metropolitan Police Department, they saw, “how bad distribution efforts can be – product manufacturing and transportation conditions that aren’t heavily regulated present several unique health risks.”

Sue Thau, Public Policy Consultant, CADCA highlighted the negative effects cannabis products have on children in particular, explaining, “Poison control calls related to cannabis digestion are increasing each year – and that’s just the data that we do have – there isn’t an efficient way to track all the issues parents and families face.” She provided examples of THC products that use packaging similar to popular children’s snacks or are in packaging that appeals to kids.

From consumer health to law enforcement, to concerns around youth consumption, the unique backgrounds of the panel made for a robust conversation that included multiple perspectives on the cannabis issue. To learn more about the concerns highlighted during the discussion, visit our Cannabis 101 page here.

 

The return of Striketober and why consumers should care

By Eden Iscil, Public Policy Manager

The National Consumers League has a long history of fighting for both consumers and workers alike. Founded 124 years ago, NCL’s first major policy accomplishments included the establishment of minimum wage laws and protections around child labor. In support of these goals, much of the League’s early years were centered around consumer boycotts of companies that treated their employees unfairly.

Today, NCL’s support of workers’ rights remains just as critical as we find ourselves in another October with truly historic labor action. Two years after “Striketober,” 75,000 healthcare workers at Kaiser Permanente walked off the job in the largest healthcare strike in history largely due to low pay and understaffing. At the same time, 160,000 actors belonging to SAG-AFTRA and 25,000 members of the United Auto Workers continue to strike. The Writers Guild of America recently secured significant gains after a months-long writers’ stoppage, and UPS agreed to better contracts for drivers after 340,000 Teamsters threatened to withhold their labor.

Beyond the benefits for all workers that the presence of strong unions provides, it’s also in consumers’ self-interest to support workers agitating for better employment terms. As consumers, we rely on these employees to safely fly passengers across the country, provide critical healthcare services, and raise the alarm over unsafe food production. In addition to the harm that results from jeopardizing workers’ safety, poor working conditions can lead to indefinite closures, potentially reducing the amount of product on the shelves. In all of these cases, unions help consumers by advocating for adequate staffing levels to prevent worker burnout, securing healthy workplace environments, and ensuring robust whistle-blower protections.

Even for less perilous industries (i.e. not flying a plane or driving a truck), consumers should support workers fighting for better employment conditions if only to safeguard the continuation of their favorite products. The arts—including television, movies, and music—provide invaluable comfort and entertainment, in addition to awakening us to new perspectives, ideas, and values. Despite consumers’ intense love for these forms of entertainment, writers, actors, and musicians continue to struggle in their fields for fair compensation, something that can threaten (or at the very least, doesn’t promote) the future creation of high-quality art.

Industry has always threatened to raise prices if they are forced to pay their employees more. Consumers should understand that this is a choice corporate executives can make—but it is not the only possible outcome. Rather than price gouging consumers, companies can reduce executive compensation to offset the costs of fair wages. General Motors, one of the targets of the UAW strike, pays its CEO 362 times what it pays its median worker. Starbucks, a company infamous for its illegal union-busting, paid its former CEO nearly 1,400 times what it paid its median employee in 2022.

For this year’s resurgence of Striketober, consumers should do their part in supporting workers. Try purchasing union-made goods, shopping at worker-owned cooperatives (a directory of local co-ops can be found here while a list of large chains is viewable here), and supporting non-profit news organizations.

This summer, I dipped my toe into electric vehicle land: It was hit or miss

Sally Greenberg

By Sally Greenberg, Chief Executive Officer

This summer I bought a new used 2021 Prius Prime. I wanted to dip my toe into the world of electric vehicles and the Prime provided that opportunity. I call my purchase a “new used” because compared to my 2007 Prius, my Prime feels spanking new. I wanted a Prime because unlike a traditional Prius, it provides an electric charge for up to 25 miles; after the electric is used up, the car reverts to using fuel, albeit a very fuel efficient 62 mpg. My friend Sarah owns one and has been crowing since she bought it about filling up her tank a mere 4 times a year because that 25-mph charge takes her all over town and home in time to recharge. So, she uses no gas. That’s what I wanted!

But I do more than drive around town. I bought the Prime anticipating a road trip at summer’s end to the Maritimes in Canada where I would work remotely and be a tourist on weekends. I wanted my new car to get maximum fuel efficiency for the 4,000-mile trip so I pledged to charge the Prius whenever I could. I wasn’t quite sure how it would work, so part of my plan was to test out how average consumers with electric vehicles were faring.  I was committed to trying, even if it only gave me 25 miles on the electric charge.

What I discovered is that finding reliable electric charging stations is hit or miss. The Prime provides one advantage: it comes equipped with a charging cable that can be plugged into any 120-volt outlet. Granted, the 120-v plug in option takes over 5 hours for a full charge, but it’s better than no charge at all.

The problem is that when you’re on a car trip and staying in roadside hotels, finding a place to plug in a car even at a standard outlet isn’t easy. When you can find one, it takes longer but has the advantage of being free.

So, my adventure began. I picked up my Prius Prime on August 18 from a dealer outside of Philadelphia and headed north, first stop Norwalk CT. I had a hotel booked, but alas, when I arrived, I couldn’t find a charger at the hotel. I tried using the Apps but which ones to use? Flo? Charge Point? Are they the same company? It was hard to tell and plus, they tell you there’s a station, but the chargers might not be working at that station. So, I figured I would rely on the chain hotels I stayed at along the route and tried to stay in places which claimed to have chargers.

On to the next stop, Keene, NH. My Holiday Inn Express had no charging stations, so I went across the street to Hampton Inn, where I had to pay for the charge, $2.00 for a two-hour session, and I wasn’t told ahead of time what the cost was. Next stop was Rockland, ME. I googled and found a charging station but only at the public library. Again, if I’m like most consumers, I want to know what I’m being asked to pay before I decide to pay it. Again, no such luck here; you flash your credit card on the display at the charging station and hope it won’t break the bank; you get a green light and plug in your car. Thankfully, again it cost me only $1.50 to $2 for the full charge.  But I had to leave the car for 2 hours and go back to my hotel to kill time. It’s safe enough because you lock up and the charging port doesn’t provide any opportunity for theft or vandalism. Advanced planning would have allowed me to see the wonderful Farnsworth Museum in Rockland while my car was charging.  Another lesson learned!

The next overnight was Bangor, ME. The hotel staff pointed to the gas station next door; a guy sitting in a Kia was charging his SUV and I thought, great! Alas, neither of the charging ports fit my Prime. That was a surprise.  I went away dejected and googled for another possibility. I drove ten minutes to the public library downtown, which I read had received many thousands in infrastructure funding to put up charging stations. The display where you put your card was unresponsive. I couldn’t pay and couldn’t get the ports working. I called the phone number on the charging station and clueless operator picked up and thanked me for the report but said she couldn’t help me. I called Bangor city hall, and no one answered, so I left a message and my phone number – it was a Monday morning. No one ever called back. So I got no charge in Bangor.

Next, on to St. John, Canada. We were hoping the Canadians had figured it all out and the hotel would have the promised charging stations – they were there but neither was working. So, no charging in St. John.

Our next stop was Charlottetown, Prince Edward Island. The town is charming, and we were excited that the hotel advertised multiple charging stations; there were two and once again, neither was working. We got a maintenance guy to reset the charger and plugged in. Yes! A two-hour charge and for free!

The next evening though, we couldn’t get access to the charger because a van parked at the only working charging station from 6 pm till late the next morning and we had to hit the road. A woman in a Tesla next to me looked perturbed – she and her young daughter had rented a Tesla and had no access to a charger either. She reassured me she had another 30 kilometers of charge. But what if she didn’t have any charge to spare?  She’d have been SOL, as the saying goes.

Onto Sydney, Cape Breton, where the hotel had no charging stations, but they let us use a 120-v outlet in the parking lot and we happily charged up overnight for free.

Making our way around Nova Scotia, we landed in the lovely capital Halifax and our hotel advertised a free charging station. It worked for a change, but it wasn’t free. In fact, I made the mistake of plugging my car in overnight and waking up to a $12 charge on my credit card, even though the charge likely only took 2 hours. Again, I was never told about cost before plugging in. Another lesson learned! Don’t leave the car plugged in overnight when you don’t know the cost.

On the return to the US, we stopped again in St John for the night, at a different hotel which advertised charging stations. The stations were there, but both were out of order. A phone call to the customer service yielded no results. They took the report but couldn’t fix the problem. Again, no charge.

As the trip continued, I feel like I got smarter. Ask at the hotel for charging stations either on the property or in town. I learned to plan my day around charging – either the night before or in the morning, when I had things to do before hitting the road. If the hotel had a working station, great, I could get a fast charge. If not, find an outlet and go for the 5-hour charge. Move the car as soon as it is charged up. Working my way back to Washington DC, I used my newfound knowledge to find charging stations where I could. Several nights I just couldn’t find a way to charge.  Finally, I reached home and the relief of instant charging.

Two weeks later, I drove to see my son Durham, NC. Oh good, I thought, a town known for being part of the “Research Triangle” will be filled with techie EV owners and early adapters. I was wrong. The charging station in one trendy part of Durham was available but the chargers didn’t work for the Prime. We drove to a nearby garage where the guys said, “Sure, no problem, use our EV charger. Not sure it is working though.”  And it wasn’t. The hose was badly frayed and needed replacing. We drove all over town looking for a plain old 120 outlet outside. No luck, so no charge in Durham. So, my endless search for chargers on the east coast comes to a close.

Friends are enjoying my saga. Sally, they say, you’re only get 25 electric miles a day! I don’t care. I’m dedicated to reducing my carbon footprint and plus, it’s fun to drive around knowing you’re using no gas. That said, I would love to have a full EV, but I like to take road trips and I can’t trust the EV infrastructure and risk a car running out of juice. In fact, I don’t know exactly what happens if you do run out of charge.

I know that Tesla owners have better access and reliable charging stations, and for good reason.  According to JD Power, Tesla is the longest-running pure electric brand with about 114,000 vehicles delivered in the first quarter of 2022. Teslas also has two SUVs and two sedans, with a wide range of pricing points and sizes, The Model 3, Model Y, Model S, and Model X are apparently outselling many established gasoline-powered cars.[1]   But I can’t use a Tesla charger on my Prime because the nozzle doesn’t fit.

Plus, I personally refuse to buy anything from Elon Musk.

But other manufacturers are selling EVs, and I don’t know what drivers are doing for reliable charging. Maybe not taking road trips. Kia is second behind Tesla, with EV sales at 8,450 vehicles delivered in the first quarter of 2022.  Ford is third, with slightly over 7,400 electric vehicles delivered in the United States in the first quarter. They include the Ford Mustang Mach-E and the new electric Ford Lightning pickup has received 200,000 Lightning orders.

Hyundai is fourth, with 7,000 electric vehicles in the first quarter of 2022.

Some final thoughts on charging electric vehicles. Neither America nor Canada appears to be ready for prime time.  (Pun intended!) I was lucky to have a mostly gas vehicle. If I had relied on charging stations, I’d have been in trouble. As my tale of woe notes, they often aren’t working, don’t exist, are occupied, cost money but don’t tell you ahead of time how much, or aren’t located conveniently. In addition, NCL works on combatting child labor around the world, and EV battery production from China often involves materials mined in Congo where children work long hours in mines exposed to toxic chemicals. We support bills like that of Congressman Chris Smith (R-NJ) to ban the importation of “goods, wares, articles, or merchandise containing metals or minerals, processed, wholly or in part, by child labor or forced labor in the DRC.”

My experience prompted these questions.

  • despite the millions provided to US municipalities, why are so many stations not functioning?
  • Why can’t hotel chains like Marriott, Holiday Inn, Hilton and IHG guarantee working charging stations?
  • Who is accountable? The charging station companies were paid a lot of taxpayer money to put up devices that often don’t work?
  • Why can’t municipalities ensure their chargers are working? As I said, I never got a call back after my complaint to the city of Bangor.

My experience also prompted some possible solutions:

  • Require charging station manufacturers to guarantee that their stations are working and if they are not, are serviced quickly. They know exactly when a station is offline and if they have accepted municipal funds to build the station, they must be held accountable to keep it up and running or pay fines to the town or city.
  • Incentivize through taxes or otherwise major hotel chains and ensure that they build charging stations, post accurate information on how many charging stations they have, whether they are working and for what type of vehicle and what the cost will be to customers.
  • Rate the apps that give you nearby charging stations for accuracy – sure, there might be a station nearby, but is it in working order? is it occupied? Will it work for your vehicle?

The bottom line is that consumers don’t want to drive around for hours looking for working charging stations. The emphasis on building electric vehicles is admirable, but if we don’t vastly improve access to working charging stations, no one will want to own an electric car.

*Update* Since my trip I have enjoyed charging my car at daily at home and do in fact enjoy driving an electric car around town for my daily commute and errands!

[1] https://www.jdpower.com/cars/shopping-guides/what-percent-of-us-car-sales-are-electric

Unveiling the flaws in the 340B Drug Pricing Program: Hospitals, medical debt, and consumer struggles

Sally Greenberg

By Sally Greenberg, Chief Executive Officer

In 1992, Congress created the 340B Drug Pricing Program to help ensure vulnerable patients would be able to access medications they need but may not be able to afford. This program provides steeply discounted drugs to health care providers – mostly hospitals – serving low-income patients with the intent that the providers would pass those discounts along to patients. Unfortunately, that is not what is happening. The National Consumers League (NCL) is increasingly concerned about this program, especially as it relates to hospitals’ abusive and aggressive debt collection practices, and how those practices lead to consumer medical debt. A recent letter from a bipartisan group of Senators underscores hospitals’ role in this growing problem.

We find it particularly troubling that many hospitals benefiting from 340B are not only nonprofit entities but are designated as charity hospitals – supposedly caring for low income and indigent patients. A 2022 report by the Alliance for Integrity and Reform of 340B found that charity care spending for nearly two-thirds of 340B hospitals was less than the national average for similar hospitals. Further, a December 2019 Government Accountability Office (GAO) report found that “some nongovernmental hospitals that do not appear to meet the statutory requirements for program eligibility are participating in the 340B program and receiving discounted prices for drugs for which they may not be eligible.” One report found that 82% of nonprofit hospitals spent less on community programs than the value of their tax exemptions.

Consumers are not benefiting from the 340B program in the way Congress intended. A patient whose income is above 200 percent of the Federal Poverty Level (FPL) is expected to pay full price for a drug they receive at the hospital, even though the care center from which they are “buying” the drug did not pay full price for it. Hospitals participating in the 340B program saved an average of $11.8 million per year, according to a 2019 report from Beckers Hospital Review, and multiple studies have found that a majority of hospitals markup medicines between 200-500 percent. Under the current program, an individual who makes $29,200 per year has to pay that price.

What is even more alarming is the fact that if a patient can’t pay, the hospitals that have benefited enormously from discounted drugs intended for vulnerable patients are aggressively suing these same patients. This illustrates a major disconnect between the intent of the 340B program and the way it is operating today.

While estimates differ, medical debt is believed to cause more than 60 percent of bankruptcies in America. Most consumers facing medical debt did not end up in that situation because of bad decisions or profligate spending. Most have had some kind of injury or unexpected illness and don’t have insurance – or don’t have sufficient insurance – to cover their medical and hospital costs. Patients who need financial assistance should be processed when entering the hospital for medical care. Many are not given the chance to do so and as a result, can be sued for debt after services are rendered. Medical debt collection practices are debilitating for low-income consumers and can destroy their credit ratings, subjecting them to subprime rates and a never-ending spiral of debt.

Even if patients don’t start out poor, because of excessive fees, penalties, and other costs added onto what may or may not be actual medical debt on the part of patients, aggressive debt-collection practices can leave them destitute. Many don’t have funds to hire a lawyer, and if summoned, they often don’t know they need to actually go to court; in fact, sometimes debt collectors advise them not to show up in court. As a result, default judgments are filed against them, leading to garnishments of wages, and liens on homes, cars, and other properties. In 2019, the Journal of the American Medical Association studied the garnishment of wages by hospitals in the state of Virginia and found that 71% of the hospitals were nonprofit and the gross mean annual revenue of hospitals engaged in garnishments was $806 million, with 8,399 patients having wages garnished.

Below are just a few stories illustrating hospitals’ medical debt collection practices playing out in communities throughout the nation.

  • A woman in Knoxville, Tennessee, was diagnosed with cancer and underwent surgery and chemotherapy. Even though she had health insurance, she was left with almost $10,000 in medical bills that she couldn’t pay. Financial counselors told her she couldn’t schedule cancer checkup appointments with her doctor until she has a plan to pay her bills, according to a December 2022 story by NPR.
  • As reported by the Washington Post in May 2019, an investigation by the Baltimore Sun found that 46 hospitals in Maryland filed more than 132,000 lawsuits for unpaid medical bills from 2003 to 2008 and won at least $100 million in judgments. In some cases, hospitals added annual interest at twice the rate permitted for other types of debts or placed liens against patients’ homes.
  • The Washington Post reported in 2019 that the University of Virginia (UVA) Health System sued former patients more than 36,000 times for over $106 million over a six-year period. During that time, UVA’s Medical Center earned a $554 million profit and held stocks and other investments worth $1 billion. One of the patients the UVA Health System sued was Heather Waldron. Following emergency surgery and other treatment in 2017 to address an intestinal malformation, Waldron received a bill from the University of Virginia Health System for $164,000, more than twice what a commercial insurer would have paid for the care. When she was unable to pay, the UVA Health System pursued her with a lawsuit and a lien on the home she shared with her then-husband and five children. In the fall of 2019, the family lost their home, and the “financial disaster” contributed to Waldron and her husband divorcing earlier that year.

We support the critical role hospitals play in communities across the country and understand many dutifully provide charity care to those who cannot pay. However, we believe that if hospitals are designated charity entities and are receiving 340B discounts, they should be required to prove that those discounts have been passed along to patients. The current situation is unacceptable and merits an in-depth investigation and tightening up of the 340B rules. Charity hospitals should not be able to both claim 340B status and drag the very populations they are pledged to serve into debt collection proceedings, taking their homes, their cars, and their possessions in the process. Changes need to be made to ensure that only eligible hospitals are allowed to participate in the 340B program and that the deep discounts for medicines are passed along to patients, as Congress intended.

NCL mourns the passing of Rhoda Karpatkin

Sally Greenberg

By Sally Greenberg, Chief Executive Officer

The National Consumers League mourns the passing of consumer icon and President of Consumer Reports Rhoda Karpatkin.

Rhoda, who died last week, served as President of Consumer Reports (CR) and Consumers Union (CU)—having served for 26 years from 1974 to 2000.

I had the honor of working under Rhoda when I was hired in 1998 as Senior Product Safety Counsel in CU’s Washington office. I would use two nouns to describe Rhoda – fierceness and integrity. Rhoda maintained an unbending commitment to CR’s absolute independence from any outside influence or outside money, and that included corporations, individuals, labor unions, politicians, or media.

A visionary, Rhoda held to an unwavering moral compass. We all looked to her for ideas and guidance. She oversaw the work of Consumer Reports magazine in tumultuous times.

When I was hired, CR was being sued by two automakers whose cars did not pass CU’s rigorous safety testing. Consumer Reports won the lawsuit and neither auto company sells cars today.

Rhoda believed in a global consumer movement. She served two terms as president of Consumers International, a membership organization for consumer activist groups. She also helped to launch the Transatlantic Consumer Dialogue, which continues to this day. This past summer I represented NCL at the TACD meeting in Brussels. An inspiring organization, TACD brings together consumer groups from the U.S. and Europe to share strategies and collective initiatives.

In the name of Esther Peterson, the beloved and powerful consumer advisor to three presidents, Rhoda created a fellowship at CU’s Washington office. Gene Kimmelman, the director of the DC office, and I worked closely with Rhoda to bring candidates in for interviews and Rhoda loved the process and enjoyed coming to Washington from her Yonkers headquarters to participate in the interviews. She often asked candidates, “What are you reading?”—a question I have incorporated into my interviewing repertoire.

A central figure in the consumer movement of the 1970s, Rhoda nearly doubled the circulation of Consumer Reports to 4.2 million. By the time she left, its website was one of the largest paid subscription sites on the internet, with approximately 475,000 subscribers, according to the magazine. Rhoda grew the magazine’s operating budget and oversaw the redesign of the auto-test track and new research laboratories. She also supported the work of Dr. R. David Pittle, CU’s technical director, as we worked with Congress when product safety hazards made the headlines. Together we all tried to ensure that pro-consumer leaders had a place at federal safety agencies like the Consumer Product Safety Commission and the National Highway Traffic Safety Administration.

The consumer movement has had many great leaders, but Rhoda Karpatkin stands out for her kindness, integrity, and vision. I know I share the views of many of my colleagues who are deeply saddened to lose Rhoda. Her indelible influence lives on in all of us lucky enough to have worked with her.

Thank you, Rhoda. We will miss you.

New insurance schemes to carve out specialty drugs deserve skepticism and scrutiny

Sally Greenberg

By Sally Greenberg, Chief Executive Officer

Employers seeking to cut healthcare costs should remember this simple rule of thumb: If an offer to save money seems too good to be true, it usually is. That seems to be the case with offers to try “Alternative Funding Programs” or AFPs.  This is a devious but growing cottage industry, which promises to cut employer costs for specialty medicines.

Specialty medicines are used to treat complex, chronic conditions like cancer and rheumatoid arthritis; they are drugs often offered to some of the sickest patients. While they represent a mere 2 percent of prescriptions, they add up to half of the estimated $500 billion spent each year in the U.S. on drugs. Thus, specialty drugs are hefty contributors to self-funded employers’ health plan costs. (Source: optum.com)

One “solution” offered by third party vendors peddling AFPs is to remove coverage of specialty drugs from the employer’s formulary. This immediately renders those employees “uninsured” as far as coverage for their needed drugs goes. The AFP vendor then matches the newly uninsured employee with a patient assistance program offered by drug manufacturers and other charitable foundations. The patient’s co-pay is fully covered by the assistance program, the employer saves money, and the vendor takes a cut of the savings.

We think this so-called solution is underhanded and dangerous for patients.  It is also unethical and possibly illegal.

First, the charitable programs being mined by the AFP vendors are meant for the truly needy—those who are uninsured or underinsured. If these sources of funding are being drained by the AFPs, they won’t be available for patients who really need the assistance.

These programs are having a predictable effect:  drug manufacturers are starting to tighten the eligibility criteria for their charitable programs, limiting them to patients who are truly uninsured. That means the AFPs won’t be able to fulfill their promise to find alternative sources to pay for the medicine. The inevitable will happen:  patients will be forced to go back to their employers’ insurance, causing dangerous delays in treatment and eliminating any savings.

Critically, the AFP process interrupts and delays care for patients. One of the AFP vendors, aptly named SHARx, with a logo shaped like the predatory creature its name invokes, admits the process can take 2 to 6 weeks. While trying to enroll the previously insured patient in an assistance plan, they’ll “do as much as they can” to help a patient access their medicine, sometimes demanding they sign over power-of-attorney to their company. In practice, that means patients can be left in limbo with no coverage for a period of time.

How can an employer ethically expose their employees with serious health conditions to that risk? (Source: sharxplan.com)

There are also ERISA and IRS legal and compliance risks to self-insured employers, too, according to an analysis by Vivio, a Public Benefits Corporation (Source: viviohealth.com)

And by some accounts, the AFP vendors are taking a huge cut of any savings, as much as 25 percent, on top of the administrative costs employers must pay to implement the program. (Source: drugchannels.net)

Nonetheless, according to a 2022 survey, 10 percent of self-insured employers with at least 5,000 U.S. employees are using alternative funding vendors. Some 8 percent said they were planning to use them within two years and 19 percent are considering their use in three to five years. (Source: optum.com)

It is easy to initially discount AFP critics as defenders of unfettered drug pricing. However, even Optum, a subsidiary of leading health plan provider United Health Care, has sounded the alarm. They advise their clients “to look past the short-term sales pitch and consider longer-term financial implications, compliance risk and ethics of alternative funding programs.” (Source: optum.com)

We are raising the voice of consumers in support of efforts in Congress to rein in other dubious co-pay assistance schemes deployed by Pharmacy Benefit Managers such as co-pay maximizers and accumulators.  In this case, employers should take the lead in standing up for their employees’ health by refusing to open the door when third party AFP vendors come calling.

National Consumers League Live Event Ticketing Principles

By John Breyault, Vice President, Public Policy, Telecommunications, and Fraud

The ticketing industry is the gatekeeper to much of our nation’s arts, sports and culture. What should be an exciting moment—securing a seat for your favorite event —has become exceedingly frustrating for many consumers as they navigate a confusing ticket-buying process laden with hidden fees.

NCL works on behalf of fans for all live events to ensure that consumers get the best possible experience, the best bargain for their hard earned dollars and don’t feel they’ve been ripped off with gotcha added costs, like mandatory “convenience fees” “processing fees” “venue fees” or the like when purchasing live event tickets.

Consumers are at the mercy of a rigged ticket marketplace. One company – Live Nation Entertainment (LNE) — dominates the marketplace. The company was created after Ticketmaster and Live Nation were given the green light to merge by the Department of Justice in 2009, despite strong consumer and business opposition.  LNE today controls around 80% of primary ticketing services, owns or has exclusive rights to operate many venues, and has major positions in artist management and event promotion. In 2022, LNE reported $4.5 billion in revenue from ticket resale, more than double what it earned in 2019, making it one of the largest players in the secondary ticket market.

Not surprisingly, LNE engages in practices typical of monopolies, working to drive out competitors. NCL and other consumer groups are leading the charge to unwind the ill-advised 2009 merger of Live Nation and Ticketmaster and restore healthy competition to the marketplace.

NCL believes that ticket resale has a legitimate place in the live event marketplace. The availability of ticket resale services provides a hedge for consumers who buy season tickets or non-refundable tickets, and is also a source for ticket buyers to get bargains when supply outpaces demand, allowing them to save money on below-face value tickets.

Below are some general principles on ticketing that NCL supports.

  1. We want the DOJ and Congress to unwind the Ticketmaster-Live Nation merger.
  2. Hidden ticket fees, deceptive dark patterns, and other anticompetitive ticketing practices should be prohibited. “All in” ticket pricing should be required so that consumers can compare prices from one site to another.
  3. Ticket holdbacks (also known as allocations) should be disclosed to ticket buyers prior to purchase.
  4. Secondary ticket exchanges should be required to disclose the face value of tickets offered for sale on their platforms.
  5. Ticket resellers should be prohibited from engaging in deceptive practices that are deliberately intended to confuse consumers into believing they are buying tickets from the primary seller. Deceptive design practices such as using URLs or other indicia of affiliation with a venue, team, or artist and by paying for search engine optimization that results in resale websites appearing higher in search results than the official box offices should be prohibited.
  6. Secondary ticket exchanges should be required to closely monitor their ticket inventory to ensure that they are not listing tickets obtained in violation of federal or state laws.
  7. All stakeholders in the live event industry should be required to assist enforcement agency’s efforts to stop illegal automated ticket buying and resale.
  8. Federal or state law enforcement agencies should investigate how tickets appear on the secondary ticket market at prices far above face value before offered for sale by primary ticket sellers and whether such sales violate applicable laws.

To these ends, NCL has endorsed legislative reforms to protect ticket buyers and promote competition in the live event industry, such as the BOSS and SWIFT Act and the TICKET Act.

What’s going on with student debt cancellation?

By Eden Iscil, Public Policy Manager

A few weeks ago, the US Supreme Court ignored the facts of the case in front of them and wrongfully ruled that President Biden’s first attempt at cancelling student debt was illegal. While the Court was misguided and seemingly hellbent on making life worse for millions of Americans, debt cancellation is not dead. Earning much less media coverage than the Court’s ruling, President Biden announced on that same day that his Department of Education had initiated a plan B for debt cancellation. Additionally, he revealed a 12-month “on-ramp” to repayment. Here’s what we know so far about these two programs. 

Plan B for cancelling student debt 

Over the past 60 years, Congress passed two laws giving the secretary of education the authority to cancel student debts—the Supreme Court’s ruling last month only applied to one of them. While there is still one more legal avenue available for the Education Department to broadly cancel student debt, the law requires a lengthy regulatory process to get there. Specifically, the department must initiate a negotiated rulemaking, seeking input from various stakeholders involved in student debt. From nominating and appointing negotiators to reaching a final recommendation for the Department, this stage will likely finish around the end of the year. 

Next, the Department will have to publish a proposed rule outlining the parameters of the debt cancellation plan. Currently, the administration has not spoken to how much debt will be cancelled under plan B and who will be eligible beyond an intention to deliver “debt relief for as many borrowers as possible.” This means that we shouldn’t expect to see the details of plan B until early 2024. And once the Department publishes its proposal, there will be a 60-90 day comment period for the public to submit their thoughts on the plan. Only after this comment period is finished (and the Department has read the public’s thoughts) can the program go into effect. Once all of these steps are completed, it will likely be around springtime next year at the very earliest. 

A 12-month “on ramp” to repayment 

Congress set September 30 as the last day of the federal loan payment pause. Without some form of debt cancellation, it is estimated that repayment will put over 9 million borrowers into default. Recognizing this reality and its legal inability to extend the current payment pause thanks to Congress, the Department will waive certain repayment related penalties from October 1, 2023 through September 30, 2024. 

Specifically, during this year-long period, missing a monthly federal loan payment: 

  • Will not result in default or delinquency 
  • Will not be reported to credit bureaus 
  • And will not be referred to debt collection agencies 

While both plan B and the 12-month on ramp are imperfect, the Department is taking steps to minimize harm and is still working to deliver debt relief. It’s important that we continue to show our support for debt cancellation, especially during the public comment period. We should not tolerate an educational system that results in lifelong debt and average monthly payments of $500.