Dear Chairwoman Khan:
The Cystic Fibrosis Foundation is a national, non-profit organization dedicated to ensuring that people with cystic fibrosis have the opportunity to lead long, fulfilling lives, with the ultimate goal of curing CF. We are writing to express our deep concern about the ongoing business practices that harm patient access to care and medication, undercutting the Affordable Care Act’s protections for quality and nondiscriminatory insurance coverage regardless of health status and preexisting condition.
Cystic fibrosis is a rare genetic disease, affecting nearly 40,000 children and adults in the US, that causes the body to produce thick, sticky mucus that clogs the lungs and digestive system, which can lead to life-threatening infections. As a complex, multi-system condition, CF requires targeted, specialized treatment and medications. If left untreated, infections and exacerbations caused by CF can result in irreversible lung damage, and the associated symptoms of CF lead to early death, usually by respiratory failure. Transformative therapies —such as CFTR modulators which have no generic or therapeutic alternatives available —have been paramount in changing what it means to live with CF. However, PBM and health plan cost containment strategies have created a convoluted system that patients struggle to navigate and often results in significant barriers to care.
Given the authority of the Federal Trade Commission (FTC) to protect consumers from unfair trade practices, we are requesting a meeting with your office to discuss the FTC’s role in protecting patients from the unfair trade and business practices of pharmacy benefit managers (PBMs), health plans, and third-party alternative funding programs.
Background on Alternative Funding Programs
PBMs, PBM affiliated entities, employer groups, and health plans have recently developed new tactics to capitalize on pharmaceutical companies’ financial assistance programs by contracting with third-party vendors to manage their specialty medication benefits through alternative funding programs (AFPs). PBMs actively market these partnerships to health plans (in particular, self-funded employer plans) as a solution for lowering plan costs. However, these programs are unfairly structured to force consumers who are prescribed specialty medications, like people with CF, to enroll. AFPs promise to lower employer drug spending, via a formulary structure that drop or limit plan coverage for one or more drugs or drug classes. The AFP then coerces impacted employees into financial assistance programs. As reimbursement for its services, the AFP charges the employer a large monetary amount (often a percentage of the savings). A recent survey reveals that up to forty percent of commercial plans use or are considering using AFP practices.
The lack of transparency and coercive nature of these programs leave people with CF to face unnecessary, confusing, and time-consuming administrative barriers, financial harms, and unacceptable and inappropriate treatment gaps. Often, people with CF are not aware that these third-party programs are a part of their benefit design when selecting insurance during open enrollment. When they are contacted by the AFP at the start of the benefit plan year, they are told that their essential CF medications are not covered by their plan and their option is to either pay the full or very significant proportion of the therapy’s cost or work with the AFP, which will then assist with obtaining their medication at no- or low-cost. The AFPs then follow-up repeatedly to the point of harassment if patients choose not to enroll. For example, a person with CF declined to enroll in an AFP earlier this year after multiple attempts by the AFP’s representative. The AFP representative then reached out to our call center seeking help enrolling the person in the AFP without the patient’s knowledge or consent. The person with CF was forced to escalate the issue within her company and threatened to quit her job if the AFP representative continued to reach out to her. This ultimately caused significant anguish for the person with CF who was unable to get her medications covered for many months while she navigated this situation and was pressured to enroll in this program. Because of tactics like this from AFPs, in 2023, 48% of the CF Foundation’s case management cases related to AFPs have resulted in a therapy gap.
The FTC Has Authority to Regulate Alternative Funding Programs
Under the FTC Act, the FTC has the authority to prevent corporations from using “unfair or deceptive acts or practices in or affecting commerce.” A practice is considered unfair where the practice (1) causes or is likely to cause substantial injury to consumers; (2) cannot be reasonably avoided by consumers; and (3) is not outweighed by countervailing benefits to consumers or competition. Based on our analysis, alternative funding programs are unfair as defined by the FTC Act, and therefore we urge the FTC to investigate these practices and take appropriate enforcement action to protect consumers.
AFPs cause or are likely to cause substantial injury to consumers
A substantial injury occurs when a consumer experiences a genuine harm, and through these programs, consumers experience a financial injury that would satisfy the genuine harm requirement. AFPs cause consumers to experience financial losses and lose access to critical medications while they navigate these programs.
When a consumer is forced to enroll in a third-party program, any financial assistance the consumer receives will not be counted towards meeting their deductible or out-of-pocket limit. As a result of the assistance not being counted towards the consumer’s deductible or annual out-of-pocket limit, the individual is required to pay thousands of additional dollars before they reach their deductible and annual out-of-pocket limit. In other words, because the assistance is accepted for the plan’s benefit and not counted towards the consumers deducible or annual out-of-pocket limit, consumers lose the full financial benefit of the financial assistance. As such, these programs cause consumers to experience genuine financial harm.
In addition to the direct financial harm, patients going without medication can be detrimental to their overall health. Studies indicate gaps in CF medication adherence are associated with higher respiratory exacerbation, increased hospitalizations, longer hospital stays, increased number of pulmonary exacerbations requiring intravenous (i.v.) antibiotics, and lower baseline lung function. These secondary and tertiary effects cost patients and the health care system thousands of dollars, as well as cause irreparable harm to a patient’s health.
Consumers cannot reasonably avoid enrolling in these programs
The FTC has found that a practice is not unfair if a consumer can reasonably avoid the injury. However, a practice may be considered unfair if the consumer is coerced into purchasing the unwanted products or services.
As mentioned above, AFPs are structured to coerce consumers to enroll in the program. These programs present consumers with two bad options, both of which leads to financial injury over time. If consumers enroll in these programs, they receive their medications at a lower upfront cost; however, their financial assistance will be collected for the benefit of the plan and not count towards their deductible or annual out-of-pocket limit. As a result, they will have to pay significantly more out of pocket before these amounts are satisfied. If they do not enroll, the alternative funding programs require consumers to pay the full list price or between a 30 to 70 percent coinsurance that will not count towards their deductible or annual out-of-pocket limit.As a result, many consumers choose enrollment. There is no reasonable way for people with CF who are prescribed a specialty medication that is managed by an AFP to avoid financial injury.
Further, consumers are often unaware of t he existence of these programs when selecting insurance during open enrollment. Insurance plans do not advertise the use of these programs in their summary of benefits and often employer human resource representatives cannot confirm the existence of an AFP on the employer group plan. On other occasions, AFPs are added to the benefit design midway through a plan year, leaving the person with no opportunity to seek alternative forms of insurance.
AFPs do not benefit consumers or competition
Finally, for a practice to be unfair, its overall net effect on consumers must be negative, and any harm incurred by the consumer cannot be outweighed by an alternative benefit to consumer competition. AFPs do not have an underlying benefit to consumers or competition that would outweigh the net harm experienced by consumers forced to enroll in these programs.
Because of the financial structure and administrative burden, alternative funding programs can cost consumers thousands of additional dollars per year as they work to meet their deductible and annual out-of-pocket limit, in addition to both the hours of additional time navigating the administrative burden associated with the opaque new programs and the significant risk of a gap in treatment which can result in costly and irreversible negative health outcomes. As a result, the short-term benefit of paying less at the pharmacy counter for a specialty drug does not outweigh the additional financial pressures that consumers experience as a result of not having assistance counted toward their deductibles and annual out-of-pocket limits. As such, the long-term financial harm outweighs any short-term benefit under these programs, and the overall net impact of these programs is negative for consumers.
Conclusion
The CF Foundation believes that AFPs satisfy the definition of an unfair practice under the FTC Act. Therefore, we encourage the FTC to take appropriate enforcement action against these programs. We would greatly appreciate an opportunity to meet with your office and discuss these unfair trade practices that impede people with CF from accessing necessary treatments. Thank you for your time and consideration.