The Story of the $1-million-per-month Iowa teen with Hemophilia outed by a Health Insurance Executive: Reflections from a Hemophilia Parent

On May 12, the Des Moines Register reported that a single patient’s medical bills caused a 10 percentage point cost increase for the Wellmark Blue Cross and Blue Shield Iowa healthcare exchange set up in response to President Obama’s Affordable Care Act.

This claim came from Laura Jackson, a Wellmark executive who told the story of an Iowa patient with a rare but unidentified genetic disorder that costs $1 million per month to treat. Jackson said that the cost of this patient’s treatment, in addition to others with similar diseases, were so burdensome that Wellmark was losing money on the AHA exchange.

To wit: For every $1 Wellmark collected in premiums, they allegedly spent $1.27. Consequently, Wellmark made the decision to leave the market, which has led other exchange providers in Iowa to demand premium increases or follow suit.

On May 31, the Des Moines Register reported that Jackson, during a presentation to the Des Moines Rotary Club, identified this patient as an Iowa teenager with hemophilia.

Naturally, this interested me. I’m an Iowan whose son was diagnosed with severe hemophilia a year-and-a-half ago.

I read this story this morning in the few free minutes my wife and I had before we attended to the waking cries of our son, Hank. Time was limited. It was a factor day, one of two days a week where we go to the hospital to receive the same expensive treatment that the “12 million dollar” teenager does: factor infusions.

People with hemophilia do not produce enough clotting factors, resulting in prolonged bleeding from even minor injuries. In our case, we realized something was wrong when our son’s circumcision bled for a week. Others get diagnosed when they seek care for abnormal bruising or unexpected swelling from joint bleeds.

The specific factor protein missing depends on which strain of hemophilia one has. My son has Hemophilia A, so he’s missing Factor 8. The Royal Family of Spain, for example, had Hemophilia B, or Factor 9 deficiency. Regardless of one’s strain, the treatments are similar: synthetic factor products to replace the missing proteins.

Decades ago, hemophilia-related bleeds were treated with blood transfusions. During this time, hemophiliacs simply accepted that they would probably get hepatitis, a sacrifice one made to quite literally stop the bleeding. Such a risk, however, became unacceptable with the rise of AIDS, which led to the early deaths of thousands of hemophiliacs around the world. For this reason, synthetic factor has been something like a miracle for the hemophilia community.

Nowadays, the standard of care for hemophilia patients is to “prophylax”, or in common parlance, “do prophy,” from a young age. You get an IV shot two or three times a week to prevent bleeds before they start. Improved treatment products and regimens have made hemophilia a more livable disease. Life spans are now similar to those without the disease and daily life for a kid with hemophilia often differs little from those unaffected.

This comes with a cost, however: factor drugs are expensive. Very, very expensive. My guess it that my son’s treatment costs somewhere between $100,000 and $200,000 a year. My son, however, is lucky. So far he hasn’t had an inhibitor, which is when the body reacts to factor treatment with an antibody. About 20% of hemophiliacs have inhibitors. Patients with inhibitors need a lot more factor, more frequently. The costs can add up fast. Hence, the $1-million-dollar-per-month patient reported on by the Des Moines Register.

What follows are five conclusions that have firmed up in my mind as I have thought over this story.

  1. This story should not be a story. Jackson violated this young man and his family’s privacy. Wellmark needs to make amends.

According to the CDC, about 20,000 people in the US have hemophilia. Today there are about 320 million people in the country, of which about 3.1 million people live in Iowa. Thus, Iowa comprises roughly 1% of the US population. That means there are probably around 200 hemophiliacs in the state. How many of those are teenagers? Of those teenagers, how many have inhibitors? Of those with inhibitors, how many have a case so severe to require such high costs? Only a few. Maybe only one.

It almost feels irresponsible for me to do this math in public forum, even though this information has been covered in the news. I do so to make the point that identifying this patient as a teenager with hemophilia and an inhibitor has severely put this patient’s privacy at risk. It is most likely an illegal violation of the HIPAA act.

In any event, Jackson needs to make a public apology and Wellmark needs to make this right.

2. The market for expensive drugs is distorted by copay assistance programs.

Since my son’s diagnosis, we have used three separate factor drugs from three separate manufacturers.

First, we used a drug called Advate made by a company called Baxalta, now Shire.

When we started prophylaxis, we switched to a drug called Novo8, manufactured by Novo Nordisk.

We now use a longer-acting factor product called Eloctate, made by the company Biogen.

Each time we switched drugs, we worked with our hospital to receive s0-called “copay assistance.” Under this scheme, the drug company you choose pays the family up to $12,000 to cover copay expenses. For us and many others, copay assistance is a life-saver, shielding us from out-of-pocket expenses.

For the health of the insurance economy as a whole, however, these programs are a disaster.

For an up-front investment of a few thousand dollars a year, the drug companies make thousands of dollars every week. It’s a bargain both for them and for the patient’s family, but it removes any incentive for families, with their physicians, to choose cheaper drugs among the many possible options. Consequently, it disincentives the drug-makers from lowering the retail costs of drugs. All they need to do is get people on their program, put up a few thousand dollars per patient, in exchange for what amounts to millions of dollars of profits over many years. After all, there is no cure for hemophilia, only treatments. It lasts a lifetime.

This scheme is not unique to hemophilia drugs.

3. The profit motive for drug-makers is a necessary evil to improve drug quality, however a healthy insurance economy requires patent reform.

I read some Facebook comments this morning on the above articles. A common refrain was this: “the profit motive must be taken out of healthcare.” The fact that countries with socialized medicine pay less for healthcare, and their recipients report higher satisfaction, provides support for this claim.

Yet, being a hemophilia parent has made me a believer in the necessity of profit margins in the pharmaceutical industry. Without profits to be made, drug companies simply will not invest in the research and development needed to continually improve the drug options for treatment of extremely rare conditions like hemophilia. I hope I am wrong, but I doubt it.

As noted above, my son has been on several hemophilia drugs. In consultation with our hematologist, we chose a drug called Novo8 when we started prophylaxis treatments about one year ago. It’s a fine drug.

In the mean time, research on Eloctate proved its safety and efficacy. Eloctate was designed to have a longer half-life, so factor levels stay closer to those of a normal factor producer for a longer period of time.

Since we switched, my son’s outcomes have improved dramatically. Before, large, dark-blue, bulbous hematomas that stuck around for weeks at a time were just a fact of life. We would to try to comfort ourselves by saying: “they don’t seem to hurt him.” However, they hurt us, providing a constant reminder of the life-threatening risks our son would face in the event of a serious trauma.

Every hemophilia parent fears the moment when they have to explain to a well-meaning but not-yet-informed caretaker why their kid arrives to school or daycare everyday with large bruises all over his body.

So far, this new drug has removed such bruising from our son’s life, and by extension, our life. He now just gets “normal kid bruises,” as we call them. A normal kid bruise doesn’t bulge, and it doesn’t stick around for weeks.

Maintaining higher factor levels between doses, which the longer-acting factor allows for, lowers my son’s risk for joint bleeds, which are painful and can cause immobility later in life. More importantly, it has lowered the window of time where my son is at the highest risk for potentially fatal brain bleeds. (One of which reportedly led to the death of Roger Ailes, who had hemophilia.)

All hemophilia parents long for new drugs and treatments which will simplify our lives and give our children the opportunities to “be normal.” And the advancements made by pharmaceutical companies sometimes make such longings a reality.

This has forced me to reckon with the fact that absent the substantial profits to be had from getting patients to switch to their new-and-improved drugs, no companies are going to make expensive investments in drugs targeted at relatively small populations, like those with hemophilia. It just does not make economic sense. Profit margins make these investments happen, and for families like mine, it almost feels like a miracle.

Introductory economics students will be taught that drug-making is an example of an industry where preliminary investment costs are very high, but the marginal cost for producing the product at scale is relatively low. This is fancy way of saying drugs like factor cost a lot to design up front, but relatively less to produce once the science is figured out.

This case brings to the fore how important patent reform related to drug production is. Currently, generic drugs in America are affordable, but drugs for rare conditions like hemophilia or even cancer can be prohibitively expensive. We need to find a way to let companies like Biogen continue to have the profit-motive to improve drugs for rare conditions like hemophilia, or semi-rare conditions like cancer, while not allowing them to profit so much that a single patient can tank a a small health insurance exchange. It won’t be easy, and I have no idea how to achieve that.

4. High-risk health insurance pools are Fake Insurance.

Cases such as this one are cited as why we need high-risk health insurance pools. Under this scheme, low-risk people pay a lower premium, while high-risk people pay more. Ostensibly, this will allow for reasonably priced healthcare for the majority, with exceptions for the rest.

This is fake insurance.

My wife and I are both healthy. I’m a part-time college teacher, part-time computer programmer, sometimes marathon runner. At one time, I was able to run close to six-minutes per-mile for the 26.2 mile distance. While my wife may not run marathons, she is a pediatrician with an active research agenda who stays healthy. We were the among the low-risk people who “did things right:” we worked hard, exercised, and paid into our health insurance policies dutifully. And then hemophilia hit.

The May 31 Des Moines Register article notes that Iowa has a decades-old high risk pool, which at one point had 3000 members, and now has 300. If the $1-million-per-month patient were insured in this pool of 300, it would cost each member about $3,300 per month just to cover the million dollar patient. Of course, this is untenable, especially when everyone in the pool has more expensive medical needs than the average person.

However, when you start to do the math, you realize the value in having one big pool. If the pool still had 3,000 members, it would be $330 per month for that patient. Still too expensive. With 30,000 members, it would be $33 a month. Again, prohibitive. With one million members, it would be a dollar per patient to support the most expensive patient in the pool.

The point is that insurance only works when there’s a large pool of mostly low-risk, low-expense people. Splitting off the high-risk members results in impossibly high premiums for a few, while the others slowly age into a situation where they soon will be high-risk. That, or they face a life-changing event like having a child with hemophilia.

The point of insurance is to pay a little more than you usually spend in order to hedge against catastrophic unexpected illness. Once you move the rare people who experienced such unexpected illnesses out of the insurance pool, it’s no longer insurance. It’s fake insurance. We need a lot of people in big pools.

5. Continuity of care is crucial for lowering costs. The demise of the Affordable Care Act health exchanges will make the chronic condition problem worse in the long-term.

I make this point last because its relation to the $1-million-per-month patient is speculative, but the general point is not.

The fact that the $1-million-per-month patient uses insurance provided by an Affordable Care Act health exchange suggests that this patient’s family did not have continuous coverage over time. No hemophilia parent with an option would switch from an employer-provided health care plan to an AHA exchange without being forced to. We hemophilia parents all live in fear of losing healthcare and going almost immediately bankrupt and watching our kids suffer. Who can afford $200,000 a year for healthcare out of pocket? The prospect of choosing financial solvency over our kids’ health causes literal nightmares.

With that in mind, chronic diseases costs more to care for when they are neglected. Pay now or pay later. The only way we do not pay at all is if we forsake our commitment to guaranteeing that everyone, especially the young and the elderly, can obtain healthcare when they need it.