Thinking About Health: Insurers shift higher prices for generic drugs to patients
September 27, 2014
What I like to call The Great Cost Shift in American health care marches on with the approach of this year's insurance enrollment season. That's when all of us who get coverage from employers, the new state exchanges, Medicare Advantage plans or from a Medicare prescription drug plan are likely to find that choosing drug coverage just became harder. Not that it was ever easy.
Instead of paying a single lower amount for any generic drug — either a copayment (a set amount) or coinsurance (a higher percentage of the bill) — many Americans who use pharmaceuticals are finding themselves paying lower prices for what insurers are calling a "preferred" generic drug and higher prices for drugs it places in its "non-preferred" category.
Yep. That's exactly what health insurers have been doing for the last several years with brand drugs, trying to force consumers to pick ones with the lowest out-of-pocket costs. The theory was that if patients wanted the highly advertised brand drug, they could dig into their pockets to pay for it. Those drugs, of course, are more expensive for insurers, too, since they are paying a portion of the drug's cost. When patients choose cheaper drugs, that lowers their outlay as well.
Now though, they are applying that concept to generics apparently because it's costing them more to buy the drugs from pharmaceutical manufacturers. So instead of a $5, $10 or $15 copay for a particular generic drug, a patient may now find that drug comes with a copay of $25 or $30 or more because the insurer has placed it in its non-preferred category.
Do those higher out-of-pocket costs deter patients from buying the prescribed medication? Yes, says Dr. A. Mark Frederick who directs the Center for Value-Based Insurance Design at the University of Michigan, a group that's trying to encourage the use of medical treatments based on clinical and scientific evidence rather than advertising claims.
Research from the RAND Corp. has shown that even small price increases are enough to make patients stop buying a drug.
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"There's been very strong evidence for quite some time that even a $1 difference in out-of-pocket expenditures changes Americans' (medical) behavior," Frederick said.
What's more, researchers at the center discovered that some insurers don't include the drugs recommended by clinical guidelines in their preferred tiers for generics. These include diabetes medications such as metformin, those like calcium channel blockers to treat hypertension and antivirals for HIV/AIDS. If patients want these life-saving, clinically effective medicines, they have no choice but to pay the higher prices.
"This is something that makes it more difficult to provide high quality care," Frederick told me, adding "it will harm national efforts to put incentives in place to improve care."
I must say I am not surprised by this latest example of the medical marketplace at work. Dollars and cents have almost always trumped quality, and that's one of the reasons legislators who wrote the Affordable Care Act eliminated cost-sharing for some crucial preventive services like mammograms and colonoscopies. The idea was that high copays or coinsurance should not prevent people from getting those tests.
All this means you'll need to be sharp-eyed when you select new coverage for next year and understand what you now pay for generics you take. The plan you currently have might have changed its requirements. You may find that metformin, for example, has now become a non-preferred drug leaving you with much higher out-of-pocket expenses for the drug.
If that's the case, looking for a new plan is a good idea. This is one time when shopping for a health care service could pay off. In a future column I'll discuss other twists and turns in insurance company formularies.
We want to hear your questions and comments about your health care experiences. Write to Trudy at email@example.com.
Editor’s note: The Rural Health News Service is funded by a grant from The Commonwealth Fund and distributed through the Nebraska Press Association Foundation, the Colorado Press Association, the South Dakota Newspaper Association and the Hoosier (IN) State Press Association.