Prescription Copays More Expensive Than Full Price?

0 437

A study published this year by the University of Southern California’s Schaeffer Center for Health Policy and Economics, Overpaying for Prescription Drugs: The Copay Clawback Phenomenon, found that insurance copays can occasionally be higher than the cost of the actual drug.

A PBS article brought the study to a brighter light, citing the case of Gretchen Liu and her husband Z. Ming Ma. Liu had a transient ischemic attack while on a trip to China and upon her return to the United States, her doctor prescribed her a generic medication to manage her blood pressure, telmisartan. Liu and Ma are insured through an Anthem Medicare plan and Ma ordered the medication for his wife through Express Scripts, with the copay for a 90-day supply being $285.

While Ma was shocked at the copay for a 90-day supply, he didn’t think much of it until a month later when he and his wife were preparing for a long-term trip and needed to stock up on the medication. However, since the initial 90 days hadn’t passed, Anthem Medicare would not cover the medication. Therefore, when Ma was at his local Costco, he stopped and asked the pharmacist how much it would cost if he were to get the same prescription out of pocket. When the pharmacist told him it would be around $40, he was floored.

According to the study, however, Ma and Liu’s experience is not isolated – in fact – insurance copays are higher than the cost of the drug about 25 percent of the time.

One of the lead authors of the study, Karen Van Nuys, had a personal experience of overpaying copays of prescriptions when the cash price was actually lower, paying $120 for a year’s supply of a generic heart medication in health insurance copays versus $35 if she were paying out of pocket. Van Nuys said her experience, and media reports she had read about the practice, spurred her and her colleagues to conduct the study.

“You have insurance because your belief is, you’re paying premiums, so when you need care, a large fraction of that cost is going to be borne by your insurance company,” said Geoffrey Joyce, a USC economist who co-authored the study with Van Nuys. “The whole notion that you are paying more for the drug with insurance is just mind boggling, to think that they’re doing this and getting away with it.”

Pharmacy benefit managers (PBMs) have come under fire recently and Joyce believes that they may be to blame for the unexpected price difference between paying for certain prescriptions with a copay versus out of pocket. He noted that insurers outsource the management of prescription drug benefits to pharmacy benefit managers, which determine what drugs will be covered by a health insurance plan, and what the copay will be, opining that “PBMs run the show.”

He went on to say that drug manufacturers will make payments to pharmacy benefit managers called “rebates,” which help determine where a drug will be placed on a health plan’s formulary. Formularies have “tiers” that determine the copay for each prescription, with a “tier one” drug often being the cheapest, and the higher tiers more expensive. Pharmacy benefit managers usually take a cut of the rebate and then pass them on to the insurer. Insurers then typically use the money to lower costs for patients.

Express Scripts, the company that manages pharmacy benefits for insurers, however, has a different view of the situation. Spokesman Brian Henry said that big retailers like Costco sometimes offer deep discounts on drugs through low-cost generics programs, which can sometimes cause an imbalance in the cost of the copay versus the cost of the prescription with cash.

In any event, PBS recommends patients look at the terms of their insurance plans and do the math to determine whether it makes more sense to pay a higher copay (for example, if they have a high deductible, it may make more sense so that you cover the deductible sooner and therefore, insurance kicks in sooner), or pay out of pocket for the occasional lower copay.

Leave A Reply

Your email address will not be published.