Family Builds Empire Off ‘Christian’ Insurance; Narcolepsy Drug Patent Games
Welcome to the latest edition of Investigative Roundup, highlighting some of the best investigative reporting on healthcare each week.
Family Builds Empire Off ‘Christian’ Insurance
Liberty HealthShare, a nonprofit known as a health care sharing ministry, billed itself as a religious alternative to Obamacare. In reality, the family running it funneled money from members into various shell companies and businesses owned by other family members, leaving medical bills unpaid and patients in debt, a ProPublica investigation found.
One member spent her last months begging Liberty to pay her bills that went to collections. But the company has largely escaped consequences because insurance regulators can’t investigate the nonprofit, and federal agencies haven’t acted.
Through Liberty, Daniel Beers, with family members and a colleague, helped create what ProPublica calls a “dizzying array of businesses, real estate holding companies and shell companies — entities that conduct no business but hold assets and move money,” and spend it on land, a wedding venue, a horse stable, a hunting and fishing camp, and even a vineyard.
At the same time, Liberty didn’t pay many patients’ bills: 70 members interviewed for the investigation described “extended periods of stress, harassment by bill collectors and financial ruin” over bills Liberty promised to reimburse but never did.
Health care sharing ministries work like health insurers, but have roots in Mennonite and Amish communities, pooling money from a community to send aid directly to families with medical expenses. Beers was part of an early operation that started out with a similar model, charging members a small fee to be a part of a network, which would then cover medical expenses for people in need. This eventually grew into an insurance-like business, using marketers to recruit new subscribers, and a second company to negotiate with hospitals and doctors. Eventually, medical bills went unpaid because leaders were hiding money and siphoning it to leaders and family members, ProPublica reported.
Beers started Liberty in 2014 with family and ran it the same way, contracting out services like bill negotiations to companies owned by his family members. He insisted to ProPublica he doesn’t work for Liberty. Between 2015 and 2021, Liberty recruited members and made nearly $2 billion in revenue, but didn’t report half of it to tax agencies, claiming this pool of money belonged to its members, although in reality Liberty had control of the money, the article stated.
Narcolepsy Drug Patent Games
Jazz Pharmaceuticals, the maker of a narcolepsy medication, exploited its past as a date-rape drug to patent a safety feature it built into the drug’s distribution, taking competition-delaying schemes to a new level, the New York Times reported.
Its two versions of the drug, Xyrem and Xywav, are pharmaceutical-grade versions of GHB, which is subject to strict regulations since the late 1980s when it was available as a dietary supplement. So the federal government made Jazz come up with a plan to ensure the drug’s safe distribution, including sending prescriptions directly to patients from one pharmacy.
In 2014, Jazz patented the program — which has little to do with its formulation — as a means of delaying a competitor from entering the market and disrupting its $13 billion monopoly.
One such competitor, made by Avadel Pharmaceuticals, is easier for patients to take because it requires just one dose before bed. Patients on Jazz’s versions, on the other hand, must take one dose at bedtime and another 4 hours later, waking up at 2 or 3 am to take the second. One patient told the New York Times he had such severe brain fog he couldn’t drive most mornings after taking the second dose too late.
Delaying the competition effectively deprives patients of a drug that’s easier to take, the Times reported. The FTC has criticized the tactic, and a Delaware court ruled the company had used it inappropriately. After an appeal, a federal circuit court upheld the ruling.
According to the New York Times, the court decision “shows there may be limits to how far the drug industry can go in exploiting the patent system to lock out rivals.”
Copay Assistance Battle Harms Patients Most
Vertex Pharmaceuticals, which makes expensive cystic fibrosis drugs, and insurers are locked in a dispute that’s led to a sudden spike in out-of-pocket costs for patients, STAT reported.
On one side, Vertex slashed its copay assistance for cystic fibrosis treatment from $100,000 a year to $20,000. Copay assistance programs from drug companies cover out-of-pocket and deductible costs for patients.
Health insurers, on the other hand, argue that copay assistance is a tactic to sell patients on higher-cost drugs and wring more money from insurers, raising costs for healthcare as a whole. Insurers and pharmacy benefit managers (PBMs) have created a complicated insurance tool called a “copay accumulator” in recent years meant to curb copay assistance.
They “copay accumulator” doesn’t allow copay assistance to count toward the patient’s deductible and out-of pocket maximum, which means the patient might have to reach it themselves and continue to cover the drug once the copay assistance runs out.
For some patients, who need drugs that can cost as much as $322,000 a year, this has meant having to apply for grants or risk going into deep medical debt, on top of the costs of their other cystic fibrosis care.
Each side has blamed the other, insurers saying drug companies keep their prices too high, and drug companies arguing the insurers are preying on patients. A total of 16 states have already banned “copay accumulators.” Vertex declined STAT‘s request to comment on their copay assistance cut.
Dan Brickey, the father of a 2-year-old with cystic fibrosis, told STAT that as a result of the ongoing corporate fights, “We’re caught in the middle. No matter how much I scream, I know I can’t change anything. I just know it’s not fair to my daughter.”
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