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Tag: Rebates

The Drug Formulary Death Cage Match of Awesomeness

I got an unusual request last week.  I had written a prescription of a generic medication (which has been generic for a couple of years) and the prescription was denied by the insurance carrier.  The reason for denial: I had to try a brand-name medication first.

Stop.  Read that again.  They wouldn’t allow me to give a prescription for the (cheaper) generic drug because I had to try the brand-name medication first. This is opposite of the usual reason for denial, the availability of a cheaper alternative than the prescribed drug, and, to my knowledge, is the first time I have ever seen it upside-down like this, and I have been in the ring for the duration of the drug formulary death cage match of awesomeness.  I’ve seen it all unfold.

Here is what happened.

I am not, like many physicians and patients, against the idea of cost-control through the use of drug formularies.  Medications are very expensive (unnecessarily expensive, as I have discussed previously), and the previously strong influence of drug reps made many doctors quick to jump for the latest and greatest medication.  I did this myself, during the first few years of practice – before the advent of drug formularies.

We were constantly detailed on new NSAID’s, antibiotics, cholesterol, and blood pressure pills.   There was always a reason the latest drug was worth using over the old one (sounds a lot like fancy smart phones, doesn’t it?), and since insurance paid the same for brand drugs, I was often influenced by the drug reps.

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The Medical Loss Report: Fiddling while Rome Burns

Today’s headline was “Millions Expected To Receive Insurance Rebates Totaling $1.3 Billion.”

The Kaiser Family Foundation estimates that 3.4 million people in the individual market will receive $426 million in consumer rebates because of the Affordable Care Act’s new MLR rules. In the small group market 4.9 million enrollees will see $377 million in rebates, and 7.5 million people will get $540 million in the large group market.

Wow!

But take a closer look at the report. Only 19% of those in the large group market will be getting a rebate and that rebate will average $72.31 per person. In the small group market 28% of those enrolled in these plans will get a rebate averaging $76.37. And, in the individual market 31% of consumers who have these plans will get a rebate averaging $126.81.

The Wall Street Journal, citing a Goldman analysis, is reporting that Aetna will be paying out $177 million in rebates. But Aetna has $11 billion in premium so that’s only a 1.6% rebate. UnitedHealth will be paying out $307 billion but that is only 1% of its $28.8 billion in premium. Wellpoint will pay out $94 million in rebates but that is only .28% of its premium for the year.

The average cost of employer-provided family health insurance is now about $13,000 per year. A family rebate of perhaps $200 will amount to only about 1.5% of premium for the relatively few people who will even get one.

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