As prescription drug costs continue growing and pricey new pharmaceuticals add to health plans’ cost burdens, some carriers are starting to reduce the number of medications they’ll cover and are imposing new barriers to accessing the most expensive ones.
According to a new study by GoodRx, a website that helps people find discounts and rebates on prescription medications, Medicare Part D insurance companies in 2024 cover 54% of all drugs approved by the Food and Drug Administration, compared to 75% in 2010.
During that same time, the percentage of drugs that Medicare drug coverage plans put restrictions on rose to 50% from 25% of all FDA-approved drugs.
GoodRx notes that the statistics are likely worse for group health plans because they are not subject to the same regulations as Medicare plans are.
This trend makes it vitally important that your employees review formularies of covered medications during open enrollment to ensure they choose a health plan that covers drugs they may need for a chronic condition, or which they need to take regularly for other issues.
It’s also important that they understand how much of a certain drug their health plan will cover and what their estimated out-of-pocket costs will be, so that they can budget accordingly.
Formularies explained
The list of drugs that an insurance plan will cover or pay for is called a formulary. Pharmacy benefit managers, which health insurers contract with to manage drug costs, set these formularies, which determine how much a patient will pay out of pocket for their medication.
PBMs regularly add and remove drugs on their formularies based on their effectiveness, price, demand and available alternatives.
These formularies also dictate copays and coinsurance — the patient’s out-of-pocket costs for each drug.
Getting squeezed
The title of the GoodRx report — “The Big Pinch” — reflects the trend of the past 14 years that’s resulted in patients being pinched between high drug costs and their health plans’ limiting coverage through prior authorizations.
First, copays and coinsurance have been increasing since 2010, usually after PBMs move certain drugs from one tier to another, according to the report. As well, more American workers are now in high-deductible health plans, which require more out-of-pocket layouts in exchange for lower premiums.
Also, a growing number of people have a separate deductible applied to prescription medications. This is referred to as a pharmacy deductible. These deductibles can be anywhere from $134 to $465 per month.
On top of it all, pharmaceuticals are getting more expensive.
Meanwhile, prior authorization rules imposed by PBMs and health plans require doctors to not only prescribe, but also justify why they are prescribing a medication, which may cause delays and make it more difficult for patients to receive drugs. In some cases, prior authorization may dissuade people from filling their prescriptions.
Eight in 10 doctors surveyed by the American Medical Association said that prior authorization leads to patients abandoning treatment.
Also, if patients encounter too many problems trying to fill a prescription, they may opt for paying out of pocket, which means absorbing the exorbitant cash price of the drug.
Help your staff pick the right plan
For workers who are healthy and young, these increasing restrictions may not have a great effect on their pocketbooks and quality of life. But for individuals with chronic conditions and other health problems that require certain medications, it’s vitally important that they are diligent and do their homework during open enrollment to ensure continued access to the medications they need.
If they want to stay in their existing plan, they need to review the formulary every open enrollment to make sure their drug is still covered. And if they are looking to change plans, they’ll need to do the same homework.
If an employee is struggling to pay for their medications, they may need to scale up to a more generous health plan, but it will likely cost them more in higher premiums in exchange for a lower deductible and/or lower copays and coinsurance. That’s the trade-off.
The worst thing is for someone to choose a plan that doesn’t cover medications they’ve come to rely on, or if their plan drops their medication.