May 8, 2014 The Honorable Dave Jones 300 Capitol Mall, Suite 1700 Sacramento, CA 95814 Dear Insurance Commissioner Jones, We are writing to bring a potentially illegal and discriminatory issue impacting chronically ill patients to your attention. The issue involves the use and proliferation of higher out-of-pocket costs (OOC) or specialty tiers as part of the design and management of prescription drug benefits offered in California. Higher OOC or specialty tiers are discriminatory because they apply a totally different benefit structure to certain medicines that patients with particular diseases need. By selectively applying high cost-sharing requirements to these drugs, while requiring lower, fixed co-payment requirements for other drugs, plans who use specialty tiers force certain patients who suffer from certain diseases to pay much more. California's Unruh Civil Rights Act (Section 51 of the Civil Code) specifies that all people must be treated equally "no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status or sexual orientation." Additionally, Section 12926.1 of the California Government Code says that "physical and mental disabilities include, but are not limited to, chronic or episodic conditions such as HIV/AIDS, hepatitis, epilepsy, seizure disorder, diabetes, clinical depression, bipolar disorder, multiple sclerosis and heart disease." Therefore, it is our opinion that certain patients with certain medical conditions on certain medications are being forced to pay much higher OOC and are being discriminated against. Specialty tiers are prescription drug formulary management tools that insurers and payers use to limit their liability and increase the beneficiaries’ share of the costs of certain prescription drugs (sometimes referred to as specialty drugs). These specialty drugs generally include prescription medicines that are used to treat complex, chronic conditions. Specialty tiers commonly include drugs that are injected, infused, or inhaled. They may require refrigeration, compounding, or other “special” handling. Unlike standard tiers, which have fixed copayments, specialty tiers require that beneficiaries pay coinsurance – a percentage of the drug price. Specialty tiers are cost shifting mechanisms. They are driven by cost alone. Drugs are assigned to specialty tiers by virtue of their higher cost profiles. The “specialty” designation of these drugs and tiers is not based upon need or efficacy relative to the other tiers. Specialty tiers are designed to limit payer/insurer financial exposure. They do not advance quality care. They do not increase access to medications. They do not protect the patient. They protect profit margins with no consideration given to the impact on access, or quality of outcomes for patients. Specialty tiers are inherently discriminatory. In theory and in practice, specialty tiers are the antithesis of the philosophical, legal and regulatory underpinnings that are the hallmark of legitimate, good faith, non-discriminatory practices. Specialty tiers are an example of a priori discrimination based upon disease state, treatment modality, and ability to pay. Additionally, specialty tiers and coinsurance are an economic burden that delays treatment, compromises the ability of physicians to prescribe essential medications, increases medication non-adherence, and increases the risk for avoidable hospitalizations and re-hospitalizations, medical complications, and amenable mortality. Insurance is a means by which health risk is spread across a pool of payers. Yet when a serious illness strikes patients are often are singled out for much higher co-pays and other outof-pocket costs. This practice is appalling and negates the very reason they had been paying for insurance in the first place — to be protected from financial hardship should they become ill. This discriminatory benefit design imposes much greater cost-sharing requirements on patients who suffer primarily from a relatively limited spectrum of diseases – but ones that are severe, chronic, debilitating, and often life-threatening. Patients who are impacted the most by specialty tiers typically suffer from hemophilia, cancer, hepatitis C, multiple sclerosis, rheumatoid arthritis, primary immune deficiencies, certain neuropathies, etc. In addition to commercial plans in California we are also concerned about ACA mandated or related health programs and services, including the Title 1 Health Insurance Marketplaces. Section 1557 of the ACA prohibits discrimination on the basis of race, color, national origin, sex, age, or disability. Thank you for considering this matter. Should you have additional questions please feel free to contact Liz Helms, President/CEO, California Chronic Care Coalition at (916) 444-1985. Sincerely, Liz Helms President/CEO California Chronic Care Coalition James D. Lee Public Policy Chair Neuropathy Action Foundation Stewart Ferry State Director of Public Policy CA Chapters of The National MS Society Randall Curtis Chair Hemophilia Council of California Adam Marks, PA-C President CA Academy of Physician Assistants Kathy West Executive Director Epilepsy Foundation – California Bill Remak, B. Sc. MT, B. PH., SGNA, AHCJ Chairman California Hepatitis C Task Force David Benjamin, MD President California Urological Association Hollaine Hopkins Executive Director Lupus Foundation of Southern California Willie Galvan VOP Administrator American GI Forum of California Barby Ingle Chair of the Board Power of Pain Foundation Monica Johnson Public Policy Advisor International Foundation for Autoimmune Arthritis Loretta Jones Founder & CEO Healthy African American Families, Phase II Bob Goldberg Executive Director The Myositis Association Bev Anderson President The Pacific Chapter of The Neuropathy Association Richard Zaldivar Executive Director The Wall Las Memorias Project Mariana S-B Lamb, M.S. Stephanie Alband, MSBA Executive Director Pacific SW Regional Coordinator Medical Oncology Association of Southern California, Inc. Huntington's Disease Society of America Laurie Savage M.P.H.Executive Director Spondylitis Association of America Ho Luong Tran, M.D., President and CEO National Council of Asian Pacific Islander Physicians Gary R. Feldman, MD President California Rheumatology Alliance Jose Luis Gonzalez Executive Director Association of Northern California Oncologists (ANCO) cc: The Honorable Edmund G. Brown The Honorable Kamala Harris Herb Schultz, Regional Director, HHS Region IX Phil Wilson President and CEO Black AIDS Institute