For 14 years, Encino resident Ed Wright received an expensive prescription medication for free through a drug-industry program intended to assist people with limited or fixed incomes.
Now he’s rationing his doses after a change to the program that imposed a $1,100 deductible before he can get a refill.
“I can’t afford that,” Wright, 75, told me. “When I run out in a few weeks, that’s going to be it.”
He isn’t alone. Industry watchers say soaring drug prices have prompted many pharmaceutical companies to rethink long-standing programs to help subsidize purchases or even give meds away for free.
“More and more people have become aware of these programs, and demand has gone up,” said David P. Wilson, president of PRAM Insurance Services, a Brea firm that helps employers with prescription-drug benefits.
This means trouble for patients who, like Wright, can’t handle sticker shock at the drugstore.
He suffered a head injury 17 years ago that damaged his pituitary gland. In 2003, he was diagnosed as having an abnormally low level of growth hormone, which caused him to suddenly become overwhelmed with fatigue.
That’s a potentially life-threatening condition if an episode should occur while driving, walking down stairs or performing some other physical activity.
Wright’s doctor prescribed the self-injected human growth hormone Humatrope, manufactured by Eli Lilly & Co.
The cost, however, was out of reach for Wright, even with Medicare Part D. According to the drug-pricing website GoodRX, a 6-milligram cartridge of Humatrope — a one month’s supply — runs about $700.
Luckily, Wright’s fixed income made him eligible for a program called Lilly Cares, which made the drug available free of charge. He and his doctor would renew the paperwork annually, and for 14 years Wright had no difficulty receiving the med.
That’s no longer the case with the new $1,100 deductible, which requires Wright to spend that amount on prescription drugs before he can access his free Humatrope.
Wright requires few other drugs, so the deductible is an almost insurmountable barrier to maintaining normal quality of life.
Most drugmakers offer what are known as patient assistance programs, through which the company may provide meds directly to patients at little or no cost. Or the company may assist with co-payments — the patient’s out-of-pocket expense that’s not covered by an insurer.
A 2009 study published in the journal Health Affairs found that most patient assistance programs run by drug companies were reluctant to disclose details of the number of people they serve or the program’s eligibility requirements.
These programs “exist to provide patients with access to a wide variety of medications,” researchers concluded. However, “many details about these programs remain unclear. As a result, the extent to which these programs provide a safety net to patients is poorly understood.”
Aaron Tidball, chief Medicare advisor for the Illinois consulting firm Allsup, which assists individuals and businesses in navigating the public insurance system, said Lilly Cares “has been more generous than some programs we’ve seen.”
He said that, until now, people who qualified for Lilly’s assistance were able to receive whatever specialty meds that were prescribed by their doctor without cost or co-pay.
It should be noted, though, that Lilly has structured its program so the company benefits as well. Rather than provide drugs directly to patients, as many companies do, Lilly donates its medications to a private foundation, the Lilly Cares Foundation, which in turn deals with the public.
This allows Lilly to deduct the value of its donated drugs from its taxes. According to the nonprofit foundation’s 2015 tax return, which by law must be made public, the Lilly Cares Foundation received more than $408 million worth of drugs from the company. That figure represented the “fair market value” of the meds.
“That’s obviously a lot more than the cost to produce the drugs,” observed Jeff Geida, a Los Angeles estate lawyer who specializes in nonprofit foundations and who examined the most recent Lilly Cares tax return at my request.
In other words, Lilly was able to reduce its taxable income for the year by $408 million, although the actual expense of manufacturing the donated drugs almost certainly was just a fraction of the deducted amount.
“It’s a very good deal,” Geida said.
To be sure, the company is still doing enormous good by making millions of dollars worth of drugs available to people in need. But the inflated figures highlight the lack of transparency surrounding the true cost of prescription meds.
Julie Williams, a Lilly spokeswoman, declined to answer my questions about the Lilly Cares Foundation. But she forwarded a statement from Steven Stapleton, the foundation’s president.
He said the foundation imposed the $1,100 deductible for Medicare Part D beneficiaries “after benchmarking our program with other similar programs, helping Lilly Cares to balance all the criteria for the program and to try to help as many people as possible.”
That’s just gibberish to my ear — and doesn’t address the fact that Lilly still helps itself to that whopping tax deduction while making it considerably harder for low-income people to receive assistance.
I called the foundation and spoke with a service rep, but she said she didn’t know why the deductible was put in place. Nor could she explain how it’s in the best interest of patients with limited incomes to have to spend $1,100 on drugs before being eligible to receive a needed medicine.
Stapleton said notifications were sent to program participants in the fall of 2015 and 2016, but Wright told me he couldn’t recall receiving any such notice. The office manager of his doctor’s practice said she too was caught by surprise.
Lilly Cares made the situation even more inexplicable when it sent a notice to Wright last month formally dropping him from the program. The only reason it gave was “inactivity,” which made no sense considering that he’s been using Humatrope steadily for 14 years.
Williams, the Lilly spokeswoman, said she couldn’t discuss an individual patient.
Wright told me that, after I started poking around, he received a call from a Lilly representative. She advised him to contact the Partnership for Prescription Assistance, an industry-sponsored service intended to help people find subsidy programs that can help cover the high cost of their meds.
Wright contacted four subsidy programs through the service. Each one turned him down.
Lilly says it’s balancing all the criteria for Lilly Cares, which undoubtedly will make the company more profitable.
Wright, and the many other patients in similar positions, are a secondary consideration.
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