Individuals who live with chronic diseases refer to “step therapy” as a major roadblock to getting the often life-saving drugs they need.

Health insurance companies view the approach as a way of controlling costs of increasingly more expensive drugs. 

Both sides collided on Wednesday during debate on House Bill 1370, which seeks to make the process of getting those more expensive drugs easier for patients with chronic conditions. The House Health & Insurance Committee is currently hearing the measure.

HB 1370 includes two major provisions. One requires rebates paid to health insurers and pharmacy benefit managers to be passed along to consumers who buy their own health insurance or the employers who pay for those plans in the individual and small business markets. That population makes up about 15% of all insured individuals in Colorado.

Another repeals sets new standards for “step therapy,” under which a patient can be required by a health insurer to take a less expensive drug first before “stepping up” to a more expensive one.

That approach occurs even when a doctor recommends the more expensive drug first, leading to situations in which patients get a cheaper but less effective drug, according to supporters who testified in committee Wednesday.

Critics of the measure argue that it would inhibit insurers’ ability to best manage care, while raising the health care costs for everybody.

Rep. Iman Jodeh, D-Aurora, a sponsor of the bill who sits on the board of directors of the Epilepsy Foundation of Colorado and Wyoming, said during a Wednesday press conference that she has faced the challenge of being told to take a drug that isn’t as effective in treating her epilepsy.

Jodeh said she knows how critical it is to get the medications her doctor prescribes without having to jump through the hoops put in place by insurance carriers. Those hoops, she argued, result in high out of pocket costs, putting her life at risk. She added that the consequences for individuals with chronic conditions and who require consistent care just to get by can be dire. The Aurora legislator emphasized that the bill does not eliminate step therapy. That approach will still be the default, but doctors could apply for an exemption so that patients don’t have to first try medications that don’t work, she said.  

She said the bill also bans insurers from dropping medications from coverage or raising prices in the middle of a consumer’s contract. She claimed HB 1370 will increase a consumer’s ability to plan ahead for expenses by requiring health plans to offer predictable costs through fixed dollar amount copays rather than unpredictable percentages based payments.

Medications don’t work if patients can’t afford to buy them because their insurance company has dropped coverage for their medication or raise the price in the middle of their contract, said co-sponsor Rep. Emily Sirota, D-Denver.

HB 1370 will ensure Coloradans can get what they pay for when they sign up for insurance coverage, Sirota said, adding doctors are the experts when it comes to the health of their patients and they should decide which medications are best for their patients, not insurance companies. 

Sen. Faith Winter, D-Westminster, one of the bill’s Senate sponsors, said she has seen the problems of step therapy up close. Her sister, who has multiple sclerosis has been able to keep her condition managed for nine years. But every other year, Winter said, the insurance companies try to get her to change her drug regimen.

Several who spoke at the press conference before the committee hearing shared similar stories.   

Myra Hansen, a teacher from Fort Morgan who lives with a rare bleeding disorder – her blood doesn’t clot properly, which means an injury can lead to serious bleeding and organ damage – said the medication that works best to treat her condition is very expensive, and it’s a battle to get the insurance company to pay for it. The unpredictability of copays also means she can’t plan ahead, she said, adding it could be $75 in one week and $250 the next.

Hansen said insurance companies have forced her into step therapies with lower-cost drugs that don’t work, and, at one point, she claimed, the insurance company suggested she undergo an abdominal surgery to prove how poorly her blood would clot.

Health care providers countered that HB 1370 would limit the tools health insurance carriers use to manage the price of drugs, affecting the costs Coloradans will pay for health premiums.

The bill’s other major provision – passing rebates to consumers – could result in both lower out-of-cost expenses for patients but much higher premiums, providers argued, noting lawmakers seek the changes at a time when insurers face a state mandate to lower the cost of health care premiums by 15% by 2025. Health care providers claim HB 1370 could sabotage those efforts before they have a real chance to get underway, adding the bill, as proposed, will only benefit big drug companies. 

Those premium increases could be as much as $36 per month per individual, Amanda Massey, executive director of the Colorado Association of Health Plans, told Colorado Politics. She said prescription drugs represent 20% of health premium costs, so as those costs go up, so would premiums. 

Rebates play a much bigger role in the healthcare market than most people are aware of. The nonpartisan Center for Improving Value in Health Care reported in 2020 that all health insurance payers, including Medicaid and Medicare, commercial health insurers and self-insured plans, received a total of $1.12 billion in rebates in Colorado in 2018. The center said that “while rebates may reduce the size and growth of overall drug spending by payers in the short-term, they incentivize the increased use of high cost drugs.”

Those rebates – about $179 million in 2018 – often go into the bottom line of commercial providers and pharmacy benefit managers, which manage prescription drug benefits on behalf of health insurers, according to a 2021 report by the Colorado Department of Health Care Policy and Financing.

The agency’s report recommended greater transparency around rebates and passing them along to employers and consumers.

But the report also warned that while rebates can reduce overall prescription drug spending for payers, “they also contribute to long-term growth in prescription drug spending by incentivizing the use of higher cost specialty and brand name drugs.”

During the committee hearing, Rachel Beck of the Colorado Competitiveness Council, a critic of HB 1370, said the measure is not about cost savings but cost-shifting. She predicted that families of four will pay an extra $120 per month – or businesses will absorb the costs but eliminate raises. Either situation is not desirable when inflation is at a 40-year high, she said.

The Denver Metro Chamber of Commerce opposes the bill, also calling it a cost-shift. The bill will direct people to more expensive brand-name drugs, and that will increase costs, said Adam Burg, the chamber’s vice president for government affairs. 

Efforts to control costs needs to focus on the pharmaceutical side, said Tammy Liederman of the Colorado State Association of Health Underwriters. She noted that pharmaceutical companies in January alone increased prices for 791 brand name medications, including drugs for cancer and HIV. 

The bill does nothing to reduce the price of pharma, she added, and it will undermine Gov. Jared Polis’ pledge to lower the cost of health insurance for Coloradans.

HB 1370 is not the first effort to deal with the rebate issue. In 2019, then-Rep. Dominique Jackson, D-Aurora tried an approach similar to HB 1370 before abandoning the effort. She tried again in 2020 with a bill that died when the General Assembly decided to deal only with pandemic-related issues in the shortened session. 

“It’s not our intention to raise premiums,” Jodeh said.

The bill was laid over to a future date so that sponsors could continue to work on amendments.