Specialty drug legislation pits hospitals vs. insurers at state Capitol [The Wisconsin State Journal]

Jan. 21—Hospitals and patients vied against health insurers and businesses Thursday at a public hearing in the state Capitol over a bipartisan bill that would prevent insurers from choosing the pharmacies where hospitals buy some specialty drugs given in hospitals.

Hospitals said the insurer practice, called "white-bagging" and sometimes requiring the use of insurer-owned pharmacies, can disrupt patient care and pose safety risks by adding more steps to drug delivery.

"These decisions have negative consequences on patient safety, drug supply chain, cost, waste and administrative burden on patients and medical care providers," said Joanne Alig, a senior vice president with the Wisconsin Hospital Association, a driving force behind the bill.

Insurers said controlling where certain expensive drugs are purchased saves money by avoiding hospital markups.

The bill "removes nearly every existing tool health insurance providers have to encourage lower cost, higher quality, and more convenient drug administration," said Tim Lundquist, a senior director at the Wisconsin Association of Health Plans, which includes Dean Health Plan, Quartz, WEA Trust and Group Health Cooperative of South Central Wisconsin, among others.

Introduced in November, the bill has many legislative sponsors from both parties, with hospital and patient groups registering in support and insurance and business groups registering against it. SSM Health — which owns Madison-based Navitus Health Solutions, a pharmacy benefit manager that owns Lumicera, a specialty pharmacy — said it is not supporting or opposing the measure.

The bill concerns some specialty drugs that must be administered at hospitals, including for conditions including cancer, multiple sclerosis, rheumatoid arthritis, Crohn's disease and cerebral palsy. More such drugs have been approved in recent years, and many are expensive.

At the hearing Thursday before the state Senate Committee on Insurance, Licensing and Forestry, Koreen Holmes, of Eau Claire, said that in September, while getting immunotherapy infusions for breast cancer, she learned her insurer would no longer cover the treatments at HSHS Sacred Heart Hospital.

The insurer, which Holmes did not identify, said its selected pharmacy would send the medication for her to use at the hospital. Hospitals typically oppose using such drugs, in part because they say delivery can be unreliable.

Holmes, who had recently given birth to a second child, eventually got a 90-day reprieve that allowed her to finish her treatment at the Eau Claire hospital. But she said the ordeal, which involved possibly having to go elsewhere for treatment, was stressful.

"That was scary, frustrating and honestly unfair," said Holmes, for whom supporters have dubbed the bill "Koreen's Law."

Willard Walker, CEO of Clintonville-based Walker Forge, a manufacturer with 350 employees, said "white-bagging," or what he called "alternate sourcing," saved the company $170,000 in drug costs last year, with no problems reported.

"Alternate sourcing has been an important tool for us, and we've been able to use it quite successfully without interruption, without disruption, without delay," Walker said.

Hannet Ambord, pharmacy director at Reedsburg Area Medical Center, said "white-bagging" has led some patients to switch to less-ideal drugs so they can continue to be treated at the hospital or stop treatments over frustration from repeated delays in drug delivery.

"As we continue to disrupt patient-provider relationships, our patients suffer," Ambord said.

Rachel Ver Velde, director of workforce, education and employment policy with Wisconsin Manufacturers and Commerce, pointed to a study done for drug manufacturers that found most hospitals charge patients and insurers more than twice their acquisition cost for medications.

"It is quite shocking that the legislature would consider giving hospitals a monopoly on these drugs and push other competition out of the market," Ver Velde said in written testimony.

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