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Why won’t insurers cover some generic drugs?

Written by Diane Archer

Some people are finding that they cannot fill their prescriptions for generic drugs at the pharmacy; their insurers will only cover the brand-name versions. Why won’t health insurance companies cover some generic drugs? It appears that insurers and the pharmacy benefit managers (PBMs), who set up their list of approved drugs, can benefit financially when they require their members to take brand-name drugs rather than generics.

We all know that in almost every case, generics are the equivalent of the brand-name drugs. They must have the same active ingredients and must be the “bioequivalent” of the brand name drug, delivering the same strength ingredients at the same time. They must have the same purity and stability and come in the same form—e.g., tablet, liquid—as brand name drugs. And, they must have the same therapeutic effect as brand name drugs with the same risks and benefits.

But, the New York Times and Pro Publica report that the insurer practice of requiring people in some cases to use brand-name drugs has been around for some time and is becoming increasingly common. Since forcing people to take the brand-name drug does not lower costs for consumers and can increase their out-of-pocket costs, it stands to reason that PBMs and their insurer clients make more money by requiring people to use brand-name drugs. PBMs are responsible for designing the list of approved drugs or “formulary” for insurers.

Humana is one of the insurers that, in some cases, only covers brand-name drugs when a generic is also available.

To be clear, pharmaceutical companies are also responsible for this bizarre state of affairs. They are handing over a lot of money to the PBMs and the health insurers to keep their brand-name drugs on their formularies and to steer their members to their higher-cost drugs.

Of course, everyone ends up spending more as a result–taxpayers in the form of higher Medicare expenditures, consumers in the form of higher insurance premiums overall, and patients who need these drugs, when they are forced to pay out of pocket for them to meet their deductibles.

If you find yourself being required to buy a brand-name drug instead of the generic, at a greater out-of-pocket cost, appeal to your health plan and report it to your local legislators. There is no justification for this practice, only greed.

If you want Congress to rein in drug prices, please sign this petition.

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