SAN FRANCISCO (MarketWatch) — Several years ago, Melanie Rowen got a diagnosis that plunged her into debt and thrust her into the heart of the debate over how the U.S. distributes and pays for health care.

Rowen, 33, an attorney for a San Francisco nonprofit group, found out she had multiple sclerosis in 2007 and immediately started a drug regimen to try to prevent M.S. attacks that could rob her of long-term neurological function.

The drugs, which typically are produced in small quantities and aren't available in generic form, can help prevent months-long foot numbness that throws off her balance and bouts of low vision that make it impossible for her to read, among other effects of the disease.

But the price of her medication has been higher than she imagined. Since her diagnosis, she's paid at least $25,000, or between $650 and $880 a month, for drugs that promise to cut the number of disabling M.S. attacks she has to suffer. That's because the expensive therapies fall into the last tier of her health plan's drug benefit, known as tier 4 or the specialty tier, and her coinsurance leaves her on the hook for 30% of the cost. She spent through her savings first and then began racking up credit-card debt to stay on her meds.

"I'm paying off my law-school loans and supporting my mother, who's in an assisted-living facility. This is sort of additional rent every month," she said of her out-of-pocket costs.

"My neurologist has been consistent about it's important to avoid stress," Rowen said with a laugh. "This is causing stress…You have this really serious neurological condition you need to deal with, and on top of it you have this crushing financial load that seems really unfair."

Last fall, Rowen finally qualified for a drug company's financial-assistance program that has made the monthly bill for her infusion therapy more manageable. But in six months she'll have to go through another drug change and all the bureaucracy and uncertainty that entails.

Patients in her circumstance have little choice but to pay what it takes, said Dr. Douglas Goodin, medical director of the Multiple Sclerosis Center at the University of California at San Francisco, who isn't involved in her care.

"M.S. is a very unpredictable disease," Goodin said. "All of the drugs, which are only partially effective, lower the biological activity of M.S., so they make the attacks less likely and the disability you get from them less."

California takes a stand

A bill introduced earlier this month by California Assemblywoman Fiona Ma seeks to ease the financial burden on Golden State patients such as Rowen. Starting in 2012, the proposal would ban insurance companies from creating specialty tiers that use coinsurance to require patients to pay a percentage of their medication costs as opposed to a flat copay rate. It also would cap out-of-pocket drug costs to $1,000 a year for California patients and $2,000 a year for their covered dependents.

The bill argues that reining in patients' out-of-pocket costs would save money by keeping them from having to go on disability or stopping their medication, leading to poorer health and expensive emergency care down the line.

Specialty drugs are used to treat 5% of the population, including people with hepatitis, neuropathy, cancer, transplants and autoimmune disorders, but that figure is expected to grow as new drugs come on line and existing ones are used to treat a wider variety of conditions, according to the legislation.

"People shouldn't have to make a choice between their medicines or food or going bankrupt or being healthy," Ma said. She noted that New York already has such a law, and seven other states have introduced similar legislation this year.

The use of tiered drug plans has grown in the last seven years. The portion of employer-sponsored health plans that carve out a fourth or higher tier for specialty drugs grew to 13% in 2010 from 3% in 2004, according to annual survey data from the Kaiser Family Foundation and the Health Research & Educational Trust.

Ma objected to the idea of saddling individual patients with the highest costs rather than distributing them more evenly among the entire pool of insured people, which is how insurance has worked traditionally but often results in higher premiums.

"You're supposed to have a pool and share the risks along the whole pool," she said, "but insurance companies want to take less and less risk. They want to insure the healthiest risks, which is virtually no one these days. They're abdicating their responsibility as insurance plans to keep people healthy as their priority."

Unintended consequences?

The California proposal looks to go a step beyond standards set in the new health-reform law, which gradually reduces health plans' annual dollar limits on benefits until 2014, when certain annual limits will be eliminated. Many regulations in the Affordable Care Act remain unclear, and the Obama administration has been granting interim waivers to companies that say they would have to cut benefits or jack up premiums substantially if forced to comply with such provisions.

Not everyone is convinced California is on the right track because of concern about unintended consequences.

It's not uncommon for cancer patients to incur large out-of-pocket drug costs. But the Washington-based American Cancer Society's Cancer Action Network neither supports nor opposes the legislation, said Senior Policy Director Stephen Finan.

"We have reservations because we don't know how that cost ultimately gets paid. The insurance companies aren't going to eat that lost cost," Finan said.

Should the bill pass, would some employers respond by cutting pharmaceutical benefits completely?

"That's a possibility," he said, "at least until 2014."

"We think dealing with reforms through the Affordable Care Act is the best way to go because it's taking a comprehensive look at the system rather than trying to deal with one specific issue at a time and not being able to deal with the secondary effect of that," Finan said.

Health insurers oppose the bill. The legislation would place the cost burden solely on the pool of people who buy coverage, making it "too restrictive," said Patrick Johnston, president of the California Association of Health Plans, a trade group in Sacramento.

The solution to the problem of prohibitively high drug costs should involve more than just health insurers, he said.

"A law that compels minimal copays for expensive drugs that pharmaceutical companies have obtained 12-year patent protection for by Congress ignores the source of the high cost," Johnston said.

"Why not look at the patent length, the need for generics and the decision by the drugmakers to price their products so high?"