A troubling disconnect between medical expertise and insurance mandates is putting patients' health at risk. Policies like step therapy and prior authorization are forcing individuals into treatments not recommended by their doctors—often with devastating consequences. In this episode, we hear from a patient who endured months of suffering due to her insurer's 'fail-first' requirements. We also talk with a doctor navigating this impossible system and a biotech leader fighting to ensure innovative treatments reach the patients who need them most. Follow us on LinkedIn, X, Facebook and Instagram. Visit us at https://www.bio.org/
A troubling disconnect between medical expertise and insurance mandates is putting patients' health at risk. Policies like step therapy and prior authorization are forcing individuals into treatments not recommended by their doctors—often with devastating consequences. In this episode, we hear from a patient who endured months of suffering due to her insurer's 'fail-first' requirements. We also talk with a doctor navigating this impossible system and a biotech leader fighting to ensure innovative treatments reach the patients who need them most.
Follow us on LinkedIn, X, Facebook and Instagram.
Visit us at https://www.bio.org/
Theresa Brady (00:31):
When we go to the doctor, we expect that the treatment they prescribe is what we'll receive. But for many patients that's far from reality. Hurdles like step therapy and prior authorizations have turned that expectation on its head. Imposed by insurance companies, these policies dictate what doctors can and can't prescribe, often putting financial incentives above patient well-being. From the insurer's perspective, their role is to control costs. They call this utilization management, a term that on the surface suggests managing inefficiencies and making sure treatments are effective for patients. But how does utilization management play out in the real world? Today we'll explore how these policies impact patients, doctors, and drug developers alike. Our guests reveal a troubling disconnect between medical expertise and insurance mandates. I'm Theresa Brady and you're listening to I am BIO.
Music (01:33):
(Music).
Theresa Brady (01:51):
When insurance policies override doctor's recommendations, patients often suffer as a result. Every physician has horror stories about patients whose health declined while the physician or the patient themselves fought with insurance companies. Today we learned the story of a patient who faced months of suffering because her insurer made her retry medications that had already failed her, and we talk with a doctor who spends hours each week navigating insurance requirements just to get his patients the treatments they need. Finally, we speak with the CEO of a biotech company about the challenges these policies pose for companies like his striving to deliver innovative treatments to patients. Our first guest talk to us about her experience with a lifelong illness.
Deb Constein (02:41):
Hi, my name is Deb Constein and I live in the Madison, Wisconsin area.
Theresa Brady (02:47):
Deb was diagnosed with rheumatoid arthritis 43 years ago when she was just 13 years old. At the time, the standard treatment was over-the-counter medication.
Deb Constein (02:58):
When I was 13 old, I needed to go in for a bunionectomy, so having a bone shaved in my right foot. And I went in for the surgery as a 13-year-old and came home a very different person. The doctor suspected arthritis and did tissue samples, which finally led to me seeing a rheumatologist for rheumatoid arthritis at the age of 13. When I started treatment, all the old-fashioned medications, handfuls of aspirin, and a lot of the drugs that I was on earlier caused stomach damage and I ended up having to be put on a medication to help with gastroesophageal reflux disease, GERD.
Theresa Brady (03:57):
For the next 10 years, Dev's stomach issues were treated with what she describes as a high-end medication.
Deb Constein (04:03):
I was on the stable medication that actually controlled my stomach for probably 10 years. I was on AcipHex, which was a high-end medication and very expensive.
Music (04:18):
(Music).
Deb Constein (04:21):
My insurance company decided that I no longer needed a higher-tier medication and had to go all the way back to the beginning because they figured there should have been healing during that time. And the healing would make it to where I didn't need a high-end medication, a more expensive medication. They made me go all the way back to Zantac, which is the most basic over-the-counter medication. That was what they made me go back to, and then they made me go to the very next level, and I can't remember what the name of that one was, but all medications that I had failed prior.
Theresa Brady (05:06):
Almost immediately, Dev's life changed for the worse.
Deb Constein (05:09):
During that time, I not only struggled with my rheumatoid arthritis, but adding on top of it, I had a toddler at home and it made my life turn upside down. I had trouble sleeping. I couldn't eat. It not only affected my life, but it affected my husband who was the provider for our family. He had to take days off of work to make sure that I was taken care of and our son was taken care of because at this point I had a 2-year-old at home, and I wasn't able to participate in life with my son like I typically was before.
(05:54):
We appealed at least two to three times because my husband kept saying, "You don't understand how much this is affecting her, and she can't sleep, she can't eat, she can't anything." And they didn't care. It was a requirement and it was my husband doing the fighting because I didn't have the fight in me. So he was the one throughout my journey, there are very few times that I'm not the one who's going through the process, but I honestly did not have the fight in me and I would be crying if I was trying to communicate to them. So I knew that I wasn't in the shape, and my husband also knew I wasn't in the shape to be able to go through the appeal process.
Theresa Brady (06:41):
After an unthinkable ordeal that impacted her entire family, the insurance company ultimately decided that Deb should go back on a medication similar to the one they had previously required her to stop taking.
Deb Constein (06:53):
My husband fought with them over and over saying, "You don't understand of what is happening in our life." I felt like I was having a heart attack. The pain was so intense in my sternum area and they still said, "You need to do a retrial. There should have been healing." And they made me go through the process of three different medications, not just one, but three and go through diagnostics of a colonoscopy as well as an endoscopy, I think it's called. And they came to the conclusion that I did need a higher-tier drug. It wasn't the exact medication that I was on prior, but it was at the same cost and tier level and they didn't care. It was a requirement and they made me go through it. Yeah, it was very frustrating during this time. It cost the healthcare system thousands of dollars as far as more diagnostics to show that no, there wasn't healing and I still did need a higher-tier medication and the time out of my life, and it caused disruption for me, my husband and my son.
Theresa Brady (08:12):
An unfortunate consequence of this terrible and trying ordeal is how Deb feels about the overall healthcare system.
Deb Constein (08:19):
It does lessen my confidence in the healthcare system, and it's a very broken system, and it's all out for dollars and cents. It's not about the patient anymore. They clearly set the patient aside. It's all about money, and that's what it literally came down to. But that kind of blows my mind in the fact that I had to go through very expensive process to come to the same conclusion. And that was very frustrating to me, very frustrating to my entire family.
Theresa Brady (09:04):
To shed more light on insurance company's practices, our next guest shares his experience with utilization management policies.
Dr. Harrison Nguyen (09:11):
My name is Dr. Harrison Nguyen. I'm a board certified dermatologist, clinical researcher and health economist in Houston, Texas.
Theresa Brady (09:19):
Dr. Nguyen explains that the daily fight with insurance barriers has become just a part of practicing medicine.
Dr. Harrison Nguyen (09:25):
Getting denied a medication or delays from insurance company happens every day in my practice. In fact, if there's not a denial, perhaps even a morning or uh, within a couple hours, it's an odd day. And so this is a common characteristic part of practicing medicine. It's extremely frustrating. It adds to burnout and an administrative burden and also adds to the cost of the practice of medicine. It's something that we have just come to accept as part of the practice of medicine, but it's extremely frustrating for us and our patients.
Theresa Brady (09:58):
Dr. Nguyen says that the complex demands of utilization management impose both financial and opportunity costs.
Dr. Harrison Nguyen (10:04):
I spend a tremendous amount of time fighting with insurance and it's a ongoing dialogue with my patients and they're aware of the burdens and it's something that we have to discuss at the time of their care because we have to consider it at the front end when we're trying to find them the right medications for them. I, I can have the best medication in the world, but if they're not gonna be able to get access to it or it's gonna cost them too much money or there's gonna be two significant delays, it's useless.
(10:31):
And so I personally will spend probably about 5 to 10 hours a week on insurance matters, but also bear in mind that I have two full-time biology coordinators on my staff who we have to pay a full-time salary and benefits. And their whole job is to essentially, for bet- lack of better word, to fight with insurance to get patients access to medications. And so from a business and administrative standpoint, it's frustrating for us as a, a practice because we have two people who are full-time on our payroll who we could deploy to more patient practical things. They don't generate any revenue for our practice. They're talented in- individuals, but we have to pay them a full-time salary just to be able to make sure our patients can access the appropriate medications.
Theresa Brady (11:19):
One story Dr. Nguyen plainly shows how patients suffer due to insurance requirements.
Dr. Harrison Nguyen (11:25):
I had a patient who had suffered for years with atopic dermatitis, wasn't able to see a dermatologist, finally came to me, full body rash from head to toe, full body rash, wasn't able to work, barely could walk. And for these types of patients, a simple steroidal cream will not be sufficient to treat that patient. And so we wanted to reach for a biologic medication with appropriate adjuvant topical therapies to get this patient's skin condition better. Now, when we went to try to prescribe this medication, the insurance company came back and said, "No, you have to start with topical steroids." Well, first of all, the patient had been using these topical steroids for years and years and with no improvement. And again, this is a full body rash, right? And so this is moderate to severe atopic dermatitis. Topical steroids aren't gonna touch them, right? And so that was the first barrier.
(12:17):
Then we obviously sent in justification that this was not appropriate, and then they came back and said, "This patient needs to fail light therapy phototherapy." So historically, some inflammatory skin conditions have been treated with light therapy. They typically have to be administered in the office about three times per week. Now this patient lived by herself, she was elderly and she didn't have access to be able to drive herself to the clinic for care three times a week. So it just wasn't a practical consideration for the patient. So we had to write back and say, this is not something that is practical for the patient. And remember, again, a full body rash. So we're talking about trying to get the whole patient into the light box, all the considerations there.
(12:58):
They wrote back three other times trying to get us on other therapies, things that are not even FDA approved for atopic dermatitis, things that have issues that can hurt the the liver. And if a patient has other comorbidities, other diseases that have liver problems that just don't make sense for the patient. This back and forth, back and forth, six months later, this patient still couldn't get access to therapy. And so even though this patient is suffering, is losing, sleep isn't able to work, we can't get this patient on the right therapy. And this is a common story, something that we encounter on a regular basis. And so these stories are plentiful and they happen every day.
Theresa Brady (13:36):
Doctors undergo extensive education in years of specialized training to determine the most effective therapies for each patient. Dr. Nguyen explains that in contrast, insurance companies' decisions are often influenced more by financial considerations than by clinical data and guidelines.
Dr. Harrison Nguyen (13:52):
The formulary, which is essentially a protocol or a collection of steps or medications that patients will have access to is organized by the PBM or a pharmacy benefit manager. A pharmacy benefit managers, their job is to aggregate these formulas on behalf of insurance companies. Now, you would think that a formulary is organized based on the clinical data, right? It should be based on what is effective and what is safe for these patients. But that's not the case. We know that formularies are often driven by rebates, which are payments to PBMs. And so these are essentially payments to PBMs from different stakeholders in the supply chain to be able to get a drug onto a formulary. These formularies and how they are designed are not necessarily driven by clinical data and clinical guidelines. So that is a conflict in and of itself with the system and how it's structured.
(14:52):
The second thing is that oftentimes the formulary or different step throughs, different treatments that must be tried before we can get access to the right medication, aren't driven by FDA approval or aren't driven by clinical guidelines. And so medications that we have to try, I've had to try, going back to the example of eczema and atopic dermatitis, having to try a treatment such as methotrexate is inappropriate because methotrexate is not FDA approved for the treatment of atopic dermatitis. Is it cheap for the PBM and the insurer? Yes it is. Is it effective? Not particularly. Is it safe? No. But it is often considered a first line therapy from PBMs because, and again, it's not FDA approved, but because of the financial etiology of it.
Theresa Brady (15:42):
Dr. Nguyen believes this system is both ineffective and dangerous.
Dr. Harrison Nguyen (15:46):
The utilization management in medicine represents a tremendous danger and risk to patient care. We especially know this to be true in dermatology, again, because dermatology is a quality of life specialty. And so insurers and PBMs may say that this isn't going to kill the patient, therefore, we're not gonna pay for the best medication for the patient. They are forcing us to try medications again that are not the most effective and often don't have a very good safety profile, but they may be cheap, right? And so we're often times if, if we're not going to fight with insurance and if we don't have the resources to fight with insurance, we're often forced to turn to medications that are cheaper for the PBM or insurer, but are not the most effective and safe for the patient. And this again, happens all the time in dermatology.
Theresa Brady (16:36):
Sadly, this all can lead to the erosion of the doctor-patient relationship.
Dr. Harrison Nguyen (16:41):
So if we talk to a patient about treatment A is best for you because of these reasons, and we start the process to get the patient on that medication, but because of insurance or, uh, related issues, we're not able to get him or her access to the medication. It erodes the patient's trust in me as their physician. And so it's something that I try to have a discussion with the patient on the front end. We talk about these therapies and I can say treatment A is the best for you. I'm gonna work hard and fight with insurance to make sure that you can get access to it. I hope that you'll be able to get access to right away. I hope that it's not gonna cost you very much money, but unfortunately, I don't have access to any of that information at the time of meeting the patient. I don't know how quickly I can get that patient medication. I don't know how much it's gonna cost that patient. We have no faint clue of the patient's costs of the medication at time of prescription.
Theresa Brady (17:35):
There is growing pressure to reform this broken system so that life-changing treatments reach those who need them, when they need them.
Dr. Harrison Nguyen (17:42):
We can spend years in school becoming the best doctors that we can be. We can spend decades doing the best research we can to develop the best medications. We can invest the money to develop great molecules and great drugs and bring them to the market. But if we don't have a system that provides patients access to these therapies, what are we even doing? And so I would say to listeners, the I am BIO listeners, who are working to develop these cutting edge medications to transform lives, we're working together as doctors with companies and researchers to develop these but we need to be advocating on Capitol Hill. We need to be meeting with our legislators to let them know these problem points that we have. And we really need to be partnering together because ultimately I think drug companies, they want to be able to get patients access to these cutting edge medications. So we share the same concern, we share the same frustration, and I think we can work together with multiple stakeholders to continue to advocate and push along reform for our system.
Theresa Brady (18:43):
Our next guest couldn't agree more.
Frank Watanabe (18:45):
I'm Frank Watanabe and I am the president and CEO of Arcutis Biotherapeutics.
Theresa Brady (18:50):
Frank's company, Arcutis, develops drugs that target some of the very diseases Dr. Nguyen treats in his practice.
Frank Watanabe (18:57):
Arcutis has been around for a little over eight years, and we currently have three products that are approved by the FDA on the market, and we have a new indication for one of those products in front of the FDA right now. And then we have several other programs further back in our pipeline and development as well. We are a dermatology, dedicated biotechnology company. We only work on skin diseases.
Theresa Brady (19:18):
With 30 years of experience in the pharmaceutical and biotechnology industry. Frank has observed a growing trend in how insurance companies use utilization management practices.
Frank Watanabe (19:29):
My concern about this trend is that physicians, you know, are trained to treat their patients and physicians know their patients. And yet we have a situation where the insurance company is dictating to the physician what treatment their patient can receive. In many cases, it's not the therapy that the physician thinks is best for the patient. And in fact, in some cases, the insurance companies are mandating that the doctor use a product that's approved by the FDA, but not for the use that they're requiring it to be used for in lieu of a drug that's been reviewed for safety and efficacy by the FDA.
Theresa Brady (20:04):
FDA's rigorous standards are time-consuming and costly, but for good reason. They ensure that drugs are safe and effective before they reach the public. Frank explains that the road to FDA approval is not for the faint of heart.
Frank Watanabe (20:17):
Developing drugs is inherently lengthy and difficult and expensive and about 90% of all drugs that enter the clinic fail to receive FDA approval. So you have very high probability failure. It takes around 10 years from the start of clinical studies to completion of the clinical development process. I think the latest estimate from the Congressional Budget Office was that it was about $2.5 billion to develop a drug on average. Arcutis has invested more than $1.2 billion in the development of the three therapies that we have on the market. And we're a very small company. And so that cost is very challenging for us, as is the length of time that we've had to work on these products. And then when you get it on the market and your adoption is being restricted because of insurance companies, it has a significant impact on companies and it has a significant impact on our ability to develop the next generation of treatments as well because we're investing our profits back into research and development.
Theresa Brady (21:13):
And patients are often left in the dark.
Frank Watanabe (21:16):
Unfortunately, I think in many cases the patients don't even realize what's happening. Most doctors aren't gonna say to you, "I think that drug X is the best choice for you based on your medical history and your medical condition, but the insurance company is making me use drug Y, so we're gonna have to use that. And if that doesn't work, then maybe we can get you drug X." I do know some doctors who do that, but I, I don't think it's consistent again, because, you know, physicians are very busy people and so they're just gonna say, "Okay, well I'm gonna give you this," because they know what the rules are.
Theresa Brady (21:45):
Frank says that, of course there is a place for cost control measures. He doesn't believe, however, that this is all that's driving the business model.
Frank Watanabe (21:52):
I know the argument that comes from particularly the PBMs and to some degree the insurance companies, is that these are intended to be cost control measures. And probably in some situations they are. You know, for example, if they require to use a generic drug first, try a generic drug first before you try a branded drug that might have some cost savings validity. But we have to keep in mind that the business model, especially for the PBMs, is this, that they may their profits based on the rebates that drug companies pay to them, and consequently, they in some cases have an incentive to reimburse a more expensive drug, I, prefer a more expensive drug because it's more economically attractive to them. And so these decisions are not solely based on cost containment. I would argue in many cases are not cost containment. It's based on what is gonna maximize the profitability for the PBM and/or the insurance company.
Theresa Brady (22:42):
Efforts to require more transparency and to reform the system are gaining traction as Frank explains.
Frank Watanabe (22:48):
Congress and the FTC both have been putting a great deal of scrutiny onto the PBMs and their practices of late. And there are several interesting bills, I think winding their way through Congress that start to address some of the issues with PBMs. I think the two in particular that are particularly interesting is there's a bill called the Safe Step Act, which would mandate this appeal process that I mentioned when a step is not appropriate for patient, I think it's a very, very good bill and it's a very good first step, no pun intended, in reforming some of these practices. And we hope to see that pass the 119th Congress. It was introduced during the 118th Congress. There's also a bill in the Senate that would decouple the rebates that are paid to PBMs based on the list price. So they no longer have an to reimburse more expensive drugs necessarily for their own economic benefit.
(23:41):
They would receive a flat fee instead of a percentage as they're receiving now. And again, I think that's a really good first step. I think that even if these bills passed, there's still quite a bit more work to be done, and Congress is still holding hearings and evaluating this and trying to get to the truth of what's really going on in the system. The FTC also released a very thorough and hard-hitting report earlier this year about the PBMs and their practices. So I think we're gonna see some significant headway and certainly bio and pharma and many patient organizations, many physicians organizations are actively involved in trying to shape the debate and the upcoming legislation.
Theresa Brady (24:18):
Frank closes with some advice for all of us.
Frank Watanabe (24:22):
I think the most important thing is for everyone to understand and realize the influences on their healthcare that may not be related to what's in their best interest and they need to advocate for themselves. This is always true. I think it's important that everyone advocate for their own healthcare, but this is in particular an instance where if your doctor is changing your therapy or tells you, I think you should be on X, but you have to be on Y, that's an opportunity for everyone to get involved. Talk with the doctor about your options, about how you can get what he or she thinks is the best choice for you, and then let your Congressman and your Senator know how unacceptable you think it is for the insurance companies to be manipulating your healthcare.
Music (25:04):
(Music).
Theresa Brady (25:09):
I wanna thank Deb Constein for sharing her personal story with us and helping us understand the profound impact insurance policies have had on her treatment. And thanks to Dr. Nguyen for highlighting the challenges doctors and patients face daily due to utilization management practices. Lastly, thanks to Frank Watanabe for shedding light on the complexity of drug development and his advocacy towards a fairer system for both patients and innovators.
(25:37):
This is the final episode of the season. We hope you've enjoyed listening. We'll be back in 2025 for a new season of stories about biotech breakthroughs, the people they help and the global problems they solve. I'm Theresa Brady, and I produce this episode with help from Kourtney Gastinell. It was engineered and mixed by Jay Goodman with theme music created by Luke Smith and Sam Brady. If you liked what you heard today, be sure to let us know with the review. And remember to follow us on X, Facebook and Instagram at I am Biotech. We're also on LinkedIn at Biotechnology Innovation Organization.