By David S. Hilzenrath
Washington Post Staff Writer
Sunday, May 9, 1999; Page H01 

Some Washington area residents who depend on prescription medication may be in for a financial shock. Two health plans with more than 30,000 subscribers have begun to limit payments for prescription drugs, and a third is preparing to follow suit.

 The limits are among the ways, large and small, in which consumers are being affected by the rising cost of medications.

 Insurers say that they are imposing limits to keep premiums down, and that only a small percentage of clients will suffer. Yet for those who depend on such medication to live normal lives, the cost can be major.

 Washington management consultant Perry Cohen, 52, who takes four drugs to control his Parkinson's disease and a fifth to lower his cholesterol, never considered the cost of his prescriptions before. Beyond a modest co-payment, his Kaiser Permanente health plan covered the expense.

 But Cohen estimates he'll pay an additional $2,500 or more for his medications this year because Kaiser in February imposed a $1,500 annual limit on his prescription benefit. 

Kaiser still pays full benefits to its employer-sponsored group clients. But Cohen is an individual subscriber--he buys his policy directly from the company. Unlike big employers, which can bargain with insurers, he is virtually powerless in the market for health care. 

Blue Cross and Blue Shield of the National Capital Area added a similar limit on a plan for individual subscribers this month, and a third health plan is seeking permission to follow that example, according to the Maryland Insurance Administration. The caps are being implemented just as Congress is considering legislation that would, for the first time, add drug coverage to Medicare.

 Both developments follow sharp increases in spending on medicines. From 1990 to 1997, spending on prescription drugs more than doubled, from $37.7 billion to $78.9 billion. That was almost twice the rate of increase for overall health-care spending. 

Some of the increase in spending is attributable to the coverage itself: Managed care has given more consumers access to prescription benefits, and some use those benefits heavily. Also, the pharmaceutical industry has invested heavily in advertising campaigns aimed directly at consumers, and manufacturers have introduced many products that represent safer, more effective or altogether unprecedented remedies. Some have become household names, such as Prozac for depression and Viagra for impotence.

 Theoretically, much of the spending on prescriptions helps insurers save money, because, for example, medications to control cholesterol reduce the risk of heart attacks and avert the need for costlier bypass surgery. But insurers have had a hard time measuring the overall financial benefits.

 Blue Cross put the cap in place because "we need to . . . keep the prescription benefit affordable and available to our members," said Winston Wong, director of pharmacy management for CareFirst, the parent company, echoing Kaiser's explanation. The move could lower the health plan's drug costs by 26 percent, Wong said.

 For patients with chronic illnesses, the caps could mean digging deep into their pockets--or forgoing medication.

 Multiple sclerosis and stomach tumors make it difficult for Deborah Uveges, 40, of Poughkeepsie, N.Y., to walk, or to keep down what she eats. She previously worked as a hospital technician and a medical receptionist but now is largely bedridden, collecting $495 a month in Social Security disability payments, along with her husband's modest disability insurance.

 Uveges said she has stopped taking Prilosec, a stomach medication that costs $256 a month, to make her Medicare HMO's $1,000 annual drug benefit last longer. With about half a dozen other medications on her list, the benefit doesn't go far.

 To save money, Uveges has begun rationing her catheters, replacing them at a quarter of the recommended rate, because her insurance does not cover their cost. Recently, she went to the drugstore with just enough money to cover the $7 co-payment on each of three prescriptions. Then, the pharmacist surprised her with the news that her health plan had raised the co-payments, and she left with only one of the medications.

 When her pharmacy benefit runs out, Uveges said, she plans to stop taking her prescriptions, which would leave her in "unbearable pain," potentially dependent on her husband to carry her to the bathroom.

 For Cohen, the Parkinson's patient, an anticipated $4,000 increase in out-of-pocket expenses for him and his wife eclipses the $216 increase in their annual premium. His regimen includes Sinemet, which runs $288.65 for a three-month supply; Mirapex, which costs $297.35; two forms of Ritalin, for $75; the generic selegiline, for $153; and Lipitor, a cholesterol-lowering drug, for $228.35. He predicts his coverage will run out the next time he refills his prescriptions.

 The degenerative disease can slow his movements, interfere with his concentration and impair his ability to write, but the drugs make it easier for him to function. 

Though he isn't happy about it, Cohen said he can absorb the expense.

 For the less fortunate who exhaust their coverage, Kaiser said it has set aside $750,000 of charity, to be doled out based on income qualifications.

 Blue Cross said that last year, 774 of the 12,118 people enrolled in the newly capped health plan for individual subscribers would have hit the $1,500 limit. Those 6.4 percent of enrollees accounted for about half of the health plan's drug costs.

 For consumers who receive employer-sponsored medical coverage, limits on prescriptions are uncommon, said Deborah Chollet, a health economist at the Alpha Center, a Washington think tank. In that segment of the market, it is the employer rather than the insurance company that controls the benefits, and limits could make it harder for employers to keep and attract workers, Chollet said. What's more, people with employer-sponsored coverage tend to be healthier and less expensive to cover than those who make a personal decision to buy their own insurance, she said.

 With group coverage, health plans are using a variety of other tools to restrain prescription spending. Managed-care companies such as United HealthCare Corp. and Mid Atlantic Medical Services Inc. of Rockville are giving consumers incentives to use brand names from a select "formulary" list and generics, the chemically equivalent versions of products that have lost their patent protection. Using a "three-tiered" approach that is gaining popularity, United HealthCare lets employers select co-payments that range from $5 to $10 for generics, from $10 to $15 for brand names on its approved list, and from $25 to $30 for brands that are off the list.

 Drugs on the approved list are often less expensive.

 Experts predict that employees will bear an increasing share of the cost of prescription drugs as more companies tighten benefits. Some health plans and employers are considering designating a new category of "lifestyle" drugs for problems such as baldness, obesity and impotence, said Arthur Shinn, a pharmacy benefits expert at the William M. Mercer consulting firm. Employees would be responsible for as much as 50 percent of the cost, but the effect could be to increase access to the drugs, because other restrictions would be removed, Shinn said.

 So far, employees with private insurance have been largely insulated from the mounting pressure of drug costs. In 1997, for example, private health insurers' spending on prescription drugs grew by 17.7 percent, while consumer out-of-pocket payments increased by only 5.6 percent, the Employee Benefit Research Institute reported last month.

 Among the Medicare population, one-third of beneficiaries have no coverage for prescription drugs, according to an April report by the National Academy of Social Insurance. Some beneficiaries have access to supplemental "Medigap" policies with limited drug coverage. Others receive retirement benefits from their former employers. And many have obtained pharmacy benefits by enrolling in HMOs that contract with Medicare.

 Though Medicare HMOs have used their pharmacy benefits as a major selling point, many restrict the coverage. Cigna, a new entrant to the Washington area Medicare market, offers unlimited coverage for generic drugs and up to $600 a year in brand-name prescription drugs, provided they are on its approved list. Kaiser this year lowered its cap for Washington area Medicare beneficiaries to $1,000, bringing it line with Blue Cross and United HealthCare of the Mid-Atlantic.

 Sometimes, that doesn't begin to meet the need.

 After powerful new drugs reversed the course of his disease, an AIDS patient had built a life in Georgetown--surrounded by friends, active in neighborhood politics and comfortable in his two-bedroom house.

 But recently he dismantled that life--sold his car, gave away possessions, and moved out of Washington and into a cramped Manhattan studio apartment.

 The only Medicare HMO that would cover the cost of his expensive prescriptions had left town, and he concluded that his only hope was to leave with it. In Manhattan, the HMO would continue to pay for protease inhibitors and other medications that would otherwise cost him about $1,850 a month.

 "It was devastating," said the patient, a 35-year-old former business executive who receives too much disability income to qualify for assistance--and not enough to pay for his medicine. "I was at the end of my rope," he added. He asked not to be identified.

 The AIDS patient said his health plan, one of several offered by Aetna U.S. Healthcare, exempts his AIDS medications from a $500 annual limit on brand-name drugs and pays for them as if they were ordinary medical expenses. If he opted to enroll in another Washington area HMO, he said, he would have drained his annual pharmacy benefit in mere weeks.

 He considered committing insurance fraud instead of moving, as acquaintances told him they had done, but he said he "didn't want the added pressure of worrying about being caught and prosecuted."