Ann: Ryoncil Pricing Set and Available This Quarter, page-539

Hi JC, I was delghted to read your elaborate explanation about the US insuranece system.
But as usual with my curious mind, I asked three AI engines and the answer was in contrast to what you said.

I tried ChatGPT, Deepseek and Grok and they all tend to think otherwise.

With a very clear question of this being the only treatment available, recomended by doctors, all 3 AI enginess contrdict what you said.
According to them, each drug/treatement has to be agreed upon with each insurer (sometimes individually at state level, especially if it's a very high priced treatement).

ChatGPT response below:

Q:

Hi, I'm looking for more information how the insurance industry works in America, the medical insurance industry. So if a new medicine is approved by FDA and they have set a wholesale price on that, wholesale acquisition cost, and if it's above a million, do all the insurance companies cover it or they have to, the company has to negotiate with each insurance company for the coverage.

Response:

Hey! So if a new medicine gets FDA approval and has a super high price tag, insurance coverage isn’t automatic. The pharmaceutical company often has to negotiate with each insurer individually. Insurers will look at things like clinical effectiveness, cost-benefit analysis, and their own internal policies before deciding if they’ll cover it and to what extent.

Q:

So each insurance company means once they negotiate with a single insurance company, do the company in all 50 states cover it or they have to go and negotiate for each state?

Response:

Yeah, it can get even more complex! Some insurers operate nationwide, while others might be more regional. Even within a single insurance company, there can be variations in coverage based on the state, plan, or network. So negotiations often have to happen at different levels and sometimes even repeatedly.

Q:

So you mean if a company is launching a new treatment for something and it has a super high...

For example, above $1 million. Unless the company actually says it's covered by all insurers, it doesn't mean that they are covered.

Response:

Exactly! A high price tag means each insurer has to decide whether they’ll cover it and under what conditions. It’s not automatic unless there’s a specific agreement in place.

Q:

So continuing our last conversation regarding insurance coverage of the FDA-approved, high-priced medicine, what if the doctor says that that's the only option and we don't have any other option and mortality is the only outcome if the medicine is not given? Do insurance companies – and still the price is super high, that means above a million dollars for a full treatment – do insurance companies still cover it or do they have an option to say no, unless already agreed upon with them?

Response:

So, if a doctor says a super expensive medication is the only option, insurers will still assess it based on their policies. They may require extra documentation, clinical justifications, or exceptions. If it’s not pre-approved, they can still deny coverage or suggest alternatives. But there are often appeals processes, and sometimes state laws or special programs come into play.

DeepSeek response:
### **Key Takeaway**A coverage agreement with an insurer is just the **first step**. Geographic variability in U.S. healthcare means manufacturers often need to negotiate **state-by-state** (especially for Medicaid) and plan-by-plan. Always assume coverage is **localized** unless explicitly confirmed as nationwide. Patients and providers must verify coverage in their specific state and plan.

Elaborate response:

No, even if a pharmaceutical/biotech company secures a coverage agreement with an **insurance company**, this does **not** guarantee the drug will be covered in **all 50 U.S. states**. Insurance coverage in the U.S. is highly fragmented due to differences in **state regulations**, **plan types**, and **payer policies**. Here’s why:

### **Key Factors Limiting Nationwide Coverage**
#### 1. **State-Specific Medicaid Policies** - Medicaid is administered by **individual states** (with federal guidelines). Each state: - Maintains its own **drug formulary** (list of covered medications). - May require additional negotiations or impose **supplemental rebates** beyond federal requirements. - Example: A drug covered by Medicaid in California might be excluded in Texas unless the manufacturer agrees to state-specific pricing terms.

#### 2. **Employer-Sponsored and Commercial Plans** - Large insurers (e.g., UnitedHealthcare, Aetna, Cigna) offer **multiple plans** (e.g., HMO, PPO) with varying formularies. - **Employers** (especially self-insured companies) can exclude certain drugs from their plans, even if the insurer’s broader formulary includes them. - Example: A drug covered under a New York-based employer’s plan might not be covered by the same insurer for an employer in Florida.

#### 3. **Medicare Part D Regional Variability** - Medicare Part D plans are offered by private insurers and vary by **region** (e.g., a plan in Arizona may have a different formulary than the same insurer’s plan in Maine). - Part D plans can also impose **prior authorization**, **quantity limits**, or **step therapy** differently across regions.

#### 4. **State Insurance Mandates** - Some states have **mandates** requiring insurers to cover specific drugs (e.g., contraceptives, HIV medications). However, these mandates don’t apply universally. - Example: A state like Illinois might require coverage for a certain drug class, while neighboring Indiana does not.

#### 5. **Specialty Drug Restrictions** - Specialty drugs (e.g., biologics, gene therapies) often face **limited distribution networks** or are only available through select pharmacies, which may not operate in all states.

### **When Might Coverage Be Uniform Across States?**1. **National Commercial Agreements**: - If an insurer agrees to include the drug on its **national formulary** (e.g., Aetna’s standard commercial plans), coverage *may* apply across states—but **employers or state policies can still override this**.2. **Federal Programs**: - Medicare Part B (for drugs administered in clinics/hospitals) has **national coverage rules**, but only if the drug meets specific criteria (e.g., “reasonable and necessary” use). - VA (Veterans Affairs) and DoD (Department of Defense) formularies are standardized nationwide.

### **Common Scenarios Where Coverage Varies by State**- **Medicaid**: A drug covered in 40 states might be excluded in 10 others due to cost concerns or prior authorization requirements.- **ACA Marketplace Plans**: While ACA-compliant plans must cover essential health benefits, formulary details (e.g., tier placement, restrictions) differ by state.- **Prior Authorization (PA) Criteria**: Insurers may apply stricter PA rules in states with higher utilization rates or fraud risks.

### **Steps for Patients/Providers to Verify Coverage**1. Check the insurer’s **state-specific formulary** (e.g., Blue Cross Blue Shield of California vs. BCBS of Texas).2. Confirm whether the employer plan (if applicable) **adopted the insurer’s formulary** or customized it.3. For Medicaid: Contact the state’s Medicaid office or check the **Preferred Drug List (PDL)**.4. Use tools like the insurer’s **online coverage portal** or Medicare’s **Plan Finder**.