Indiana health officials say ‘white bagging’ should be regulated, but do not call for a ban

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Indiana must find a way to address the high price of specialty drugs, which represent one of the fastest growing areas of health care spending, says a new report from the state department of health.

The report was issued earlier this month to the Indiana General Assembly in response an escalating battle between some health insurers, who say hospitals and physicians often mark up the price of specialty drugs by as much as 500%, which health providers say is often necessary to cover specialty care for patients.

Specialty drugs, including chemotherapy medicines for cancer, account for just 2% of all prescriptions but represent almost half of the nation’s medicine costs, the report said.

In response to hospitals and clinics marking up the price of specialty drugs, some insurers, including Indianapolis-based Anthem, have required health providers to buy many of those drugs from certain specialty pharmacies at a lower cost, or lower their prices to match.

The practice of requiring hospitals to buy drugs from an outside pharmacy, which delivers them premixed ahead of time, is known by its nickname, “white bagging.”

Anthem said Indiana patients and their insurers could save tens of millions of dollars if hospitals bought drugs from outside pharmacies at a lower cost, or slashed their prices for the specialty medicines.

Hospitals, doctors and pharmacists say white bagging is difficult and disruptive to their operations—and often impractical.

At cancer centers, for example, patients are evaluated on the same day as their scheduled infusion. During the evaluation, the oncologist might need to change the treatment plans—and the types and doses of the chemotherapy drugs—on the spot, rather than using drugs pre-ordered from an outside pharmacy.

The new report from the Indiana Department of Health says only a few states have taken action to regulate or prohibit white bagging.

Louisiana was the first state to outright ban white bagging last month. New Jersey and Georgia have laws that prohibit steering or sending a prescription to a specific pharmacy.

“The practice of white bagging has resulted in many different experiences and outcomes for patients and their families, both positive and negative,” the Indiana Department of Health report said. “Drug shipments can be delayed, sometimes by several days, thereby impacting chemotherapy schedules for oncology patients. Prior authorization and network issues not only place significant time and labor burden on healthcare personnel but also result in delayed treatment.”

The report included several examples of patients who died or suffered setbacks due to complications caused by white bagging mandates.

In one case, a patient with metastatic lung cancer was prescribed a drug. But the insurance company required prior authorization to be enrolled in a specialty pharmacy program.

“The total elapsed time for approval of this claim was two weeks, and the patient passed away prior to the final authorization approval,” the report said.

The report did not include specific recommendations for the Legislature, except to say that any requirement by a health insurer to require white bagging “should be well planned, thoroughly communicated, and should have multiple concessions for exceptions to the process in the interest of patient safety.”

It added that payers should have a “robust exception policy” to allow for a weather-related emergency, dose change, or administrative issues.

The report was submitted to the Indiana Legislative Council to inform lawmakers on the safety of white bagging and action they can take to regulate the practice.

The report was prepared in conjunction with the Indiana Board of Pharmacy, Indiana Department of Insurance, and the Indiana Family and Social Services Administration.

“Patients who are already dealing with catastrophic and life-altering illness should not be asked to suffer the additional distress and harm of delayed or missed treatment,” the report said. “Indiana has more work to do to protect and provide the best outcomes for our citizens.”

The report found that drug shipments can be delayed, sometimes by several days, thereby affecting chemotherapy schedules for oncology patients.

Hoosiers for Safe Meds, a coalition of Indiana patient and provider organizations committed to protecting patients from mandatory white bagging, has called on state lawmakers to limit the practice, which they say threatens patient safety, delays care, and compromises the integrity of specialty drugs.

“Insurance companies have represented that these measures will reduce costs, but when it comes to patient safety, no cost saving measure is worth the risk,” said Darren Covington, executive vice president of the Indiana Pharmacists Association and Chairman of the Hoosiers for Safe Meds Coalition, in a written statement.

In response, Anthem pointed to a section of the report that underlined the soaring cost of health care, and the need to address it.

“Specialty medication development and approval continues to grow exponentially with many new agents in the pipeline,” the report stated. “These agents contribute substantially to overall healthcare spending. … The issues identified in this report are but a symptom of a much larger problem: skyrocketing costs of healthcare. Indiana must find a way to bring payers and providers together to address the root of this issue to prevent Hoosiers from bearing the negative effects of the negotiation.”

State Rep. Steve Davisson, a Republican from Salem who is a pharmacist and vice chair of the House Public Health Committee, said he is concerned that white bagging could delay patient care, because a hospital or doctor might have to reorder a drug based on an evaluation on the day of treatment.

“If you don’t get the infusion when you’re supposed to, it can delay care and affect the outcome of a patient’s overall health,” said Davisson, who also is a cancer patient and has undergone chemotherapy treatments.

He said the Legislature is likely to consider new legislation to address the issue, but added he knows of no bills now written on the topic.

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