Health plans put gener­ics in tiers as prices rise

Modern Healthcare - - NEWS - By Vir­gil Dick­son

Faced with the ris­ing costs of generic pre­scrip­tion drugs, health in­sur­ers in­creas­ingly are turn­ing to tiers and pre­ferred lists on their for­mu­la­ries to keep costs down. Those strate­gies pre­vi­ously were used only for brand-name and spe­cialty drugs. Ex­perts say those ap­proaches will in­crease out-of-pocket costs for pa­tients and could make them less likely to ad­here to drug reg­i­mens.

Over the past year, the cost of generic drugs has sky­rock­eted, in­clud­ing for prod­ucts that have been on the mar­ket for years. A study by Pem­broke Con­sult­ing found that half of the generic drugs listed rose in price be­tween July 2013 and July 2014, with a me­dian in­crease of nearly 12%. Some drug prices saw ex­treme in­creases. The price for a 500mg cap­sule of tetra­cy­cline, a common an­tibi­otic, soared from 5 cents to $8.59.

Ex­perts say a com­bi­na­tion of lack of gov­ern­ment over­sight over generic pric­ing, man­u­fac­tur­ers ex­it­ing the generic mar­ket, and short­ages of ac­tive in­gre­di­ents have con­trib­uted to the in­creases. This month, Rep. Eli­jah Cum­mings (DMd.) and Sen. Bernie San­ders (I-Vt.) sent let­ters to 14 generic-drug mak­ers seek­ing ex­pla­na­tions for price in­creases.

For many health plans, the so­lu­tion has been to cre­ate tiers and pre­ferred lists, re­quir­ing mem­bers to pay higher co­pay­ments for drugs that are not on low-tier or pre­ferred lists.

Min­nesota-based HealthPart­ners Plans said it in­tends to in­tro­duce tiered generic lists in its com­mer­cial and ex­change plans in Jan­uary, a spokesman said.

The 80,000-mem­ber Group Health Co­op­er­a­tive of South Cen­tral Wis­con­sin no longer de­fines tiers in terms of gener­ics and brands. While most gener­ics re­main in the low­est-cost tier, the in­surer has moved more ex­pen­sive gener­ics up to tier 2 and has shifted some pre­ferred brand-name drugs down to tier 1.

In a writ­ten state­ment, the Generic Phar­ma­ceu­ti­cal As­so­ci­a­tion said “the generic in­dus­try is un­ri­valed in its com­mit­ment to pro­vide ac­cess to lower-cost drugs for pa­tients.”

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