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American Association of Health Plans Blue Cross and Blue Shield by richman7

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									American Association of Health Plans Blue Cross and Blue Shield Association Health Insurance Association of America Academy of Managed Care Pharmacy Pharmaceutical Care Management Association AdvancePCS Express Scripts, Inc. National Association of Health Underwriters

May 24, 2002

Ms. Barbara Morales Burke Senior Deputy Commissioner, NCDOI Chair, NAIC Pharmaceutical Issues Working Group c/o National Association of Insurance Commissioners 444 North Capitol Street, NW, Suite 701 Washington, DC 20001 Re: NAIC proposed Health Carrier Prescription Drug Benefit Management Model Act (Draft dated 2/11/02)

Dear Ms. Morales Burke: This letter represents the shared viewpoints of the organizations listed above regarding the NAIC’s Pharmaceutical Issues Working Group (PIWG) proposal for a Health Carrier Prescription Drug Benefit Management Procedures Model Act (draft dated 2/11/02). We are writing to follow-up the discussions held at the Spring National meeting in Reno, Nevada. We appreciate the willingness the working group has shown to consider our comments and input throughout the development of this model. Before submitting another comment letter specific to the provisions of the draft model, we wanted to take this opportunity to highlight some fundamental issues regarding the work on this model for the group to consider as it prepares for continued discussion at the Summer National Meeting in Philadelphia. Many different constituencies are interested in prescription drug issues. Given this, in any discussion related to prescription drugs, there is a great temptation to include a far ranging set of topics that relate to prescription drugs in general, but that do not relate specifically to prescription drug benefit plans offered by health carriers. We believe that the success and integrity of this model -- and the ability of the industry to not oppose its

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adoption -- will rest in large part on the ability of the working group to deal only with those issues that are directly related to the prescription drug benefit plan. We are concerned that at the Reno meeting the working group began reanalyzing pharmaceutical marketplace issues that had already been addressed in earlier discussions on the scope of this model. We believe that if this trend continues, the working group will lose focus on the primary objective of this effort -- the appropriate regulation of health carrier drug benefit plans. Discussion in Reno extended beyond procedural protections related to prescription drug benefit plans and ventured into clinical issues related to the prescribing of medications (e.g. generic and therapeutic substitution). We believe that the inclusion of clinical issues in a model insurance law is inappropriate and will ultimately undermine the ability of health plans to appropriately administer the prescription drug benefit and meet their obligations to employers and other purchasers. Health plans in this country provide drug benefits to over 150 million people. The discounts and rebates health plans and their designees are able to negotiate with pharmaceutical manufacturers subsidize the cost of drug benefits, making them more affordable. Without health plans, millions of Americans would be unable to afford necessary prescription drugs. A recent report by the National Institute for Health Care Management Research and Education Foundation entitled Prescription Drug Expenditures in 2001: Another Year of Escalating Costs found that overall prescription drug spending in the U.S. continues to be the fastest growing component of health care. The report further found that drug costs have disproportionately contributed to overall health care costs and are a major contributor to the dramatic increase in health insurance premiums seen over the last 2 years. Two million people reportedly lost coverage last year due in large part to rising health care costs. It is incumbent upon health plans to continue addressing the skyrocketing prescription drug costs and upon regulators to allow plans the flexibility of benefit design and the use of clinically appropriate and effective benefit management procedures. One need only look at Congress, the nation’s governors, state legislatures and state Medicaid Departments to understand the problems being faced in finding solutions for providing a safe and cost effective, inclusive prescription drug benefit for national and state health care delivery systems. Similarly, in this time of escalating premiums, health plans are struggling to contain costs on behalf of their employer group and individual members, while meeting the increasing consumer demand for a broad-based prescription drug program. In order to effectively meet these goals, health plans must retain the freedom and flexibility to utilize benefit management procedures. Removing or reducing such flexibility by layering additional, unnecessary and costly requirements on health plans for providing prescription drug coverage, which this model does, is not responsive to consumer needs. The perceived benefit of some of the more recently discussed requirements will actually add costs that far outweigh the benefit to the employers and individual consumers that purchase drug benefits from health plans.

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Given the following vagaries in the pharmaceutical marketplace, health plans must be permitted to retain flexibility and control over prescription drug benefit design in order to be responsive to these developments:
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Patent Expirations . According to The Merck Medco Drug Trend Report 2001, drugs accounting for 11% of total prescription drug expenditures will be losing patent exclusivity over the next few years. With the resulting availability of cost-saving generics, consumers will expect health plans to respond promptly to these positive developments and adjust benefit packages accordingly to make the more affordable drugs available to them. New Drugs. The constantly advancing market is producing therapeutically similar drugs to compete with other brand name products, creating the potential for driving down the cost of the class of drug. Again, health plans must be able to promptly and efficiently incorporate into their drug benefit programs those new, safe and effective products as they become available. Direct to Consumer Advertising. The over prescribing of certain drugs due to the onslaught of direct to consumer advertising and the promotional activities directed at physicians by pharmaceutical manufacturers makes it imperative that health plans have the ability to manage the cost of the benefit. Technology Advances. This model needs to consider the many new technological advances being made that will render many of the notification requirements in the model unnecessary. For example, there is technology available that provides information on drug utilization review and health plan formulary information at the point of prescribing.

We want to bring to the attention of the working group that we believe the inhibitive requirements currently under consideration in the model will stymie health plans’ flexibility and will negatively impact consumers’ access to affordable drug coverage. We recognize and support the importance of ensuring that P&T committees consist of the proper health care professionals and providing consumers with clear information regarding coverage. However, we believe this draft is tending toward costly overregulation of health plans’ prescription drug benefits, to the detriment of the consumers it is intended to protect. We felt that it was imperative to bring these fundamental concerns and issues to the forefront of your thinking as work on the prescription drug benefits management model continues. We appreciate your willingness to take our comments into account, and we will be submitting another comment letter specific to provisions in the draft model for further consideration in Philadelphia. Please contact any of the undersigned by return email if you have questions or would like to discuss these comments further. Sincerely, American Association of Health Plans Lauren Baldwin Blue Cross and Blue Shield Association

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Joan Gardner Health Insurance Association of America Joy Ryan Academy of Managed Care Pharmacy Bill Hermelin Pharmaceutical Care Management Association Sharon Canner AdvancePCS Lisa Block Express Scripts, Inc. Vern Rowen National Association of Health Underwriters Janet Trautwein Cc: Members, Pharmaceutical Issues Working Group Jolie Matthews

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