Wednesday, September 17, 2014

qotd: The nefarious plot of generic drug tiers
September 17, 2014
Is All "Skin in the Game" Fair Game? The Problem With "Non-Preferred"
By Gerry Oster, PhD, and A. Mark Fendrick, MD

The new blockbuster drug sofosbuvir (Sovaldi) is offering hope to many
patients with hepatitis C, but treatment is expensive and many insurers
are demanding that patients shoulder a large portion of the cost. The
demand that patients pay a larger share of their drug costs, however, is
not limited to expensive new medicines. In fact, many patients are now
facing substantially higher co-pays for various generic drugs that their
insurers have designated "non-preferred," often including those
recommended as first-line treatment in evidence-based guidelines for
hypertension, diabetes, epilepsy, schizophrenia, migraine headache,
osteoporosis, Parkinson's disease, and human immunodeficiency virus
(HIV). We are concerned about this relatively recent development.

For many years, most insurers had formularies that consisted of only 3
tiers: Tier 1 was for generic drugs (lowest co-pay), Tier 2 was for
branded drugs that were designated "preferred" (higher co- pay), and
Tier 3 was for "nonpreferred" branded drugs (highest co-pay). Generic
drugs were automatically placed in Tier 1, thereby ensuring that
patients had access to medically appropriate therapies at the lowest
possible cost. In these 3-tier plans, all generic drugs were de facto
"preferred." Now, however, a number of insurers have split their
all-generics tier into a bottom tier consisting of "preferred" generics,
and a second tier consisting of "non-preferred" generics, paralleling
the similar split that one typically finds with branded products.
Co-pays for generic drugs in the "non-preferred" tier are
characteristically much higher than those for drugs in the first tier.

To better understand coverage policies in plans with 2 tiers for generic
drugs, we identified several such offerings, including both commercial
plans and those under the Medicare Part D program, via an informal
search of the Internet. For 6 such plans, we examined coverage policies
for 10 widely used drugs—all generically available—that are recommended
as first-line treatment in current evidence-based guidelines.

While 2 of the plans provide access on a "preferred" basis to all of the
medicines we considered, 1 or more of the drugs are "non-preferred" in
all of the remaining plans. Metformin, for example, is a "non-preferred"
drug in 1 plan, despite being a first-line treatment for type 2 diabetes
mellitus. Two plans have no "preferred" generic anticonvulsant drugs; 3
plans have no "preferred" generic antipsychotic medicines; levodopa is
designated a "non-preferred" agent in 3 plans; 4 plans have no
"preferred" generic triptans (for migraine headache); and all generic
antiretrovirals are Tier 2 agents in 4 plans. When there are no
"preferred" generics from which clinicians and patients with particular
diseases can choose, it may be argued that the diseases themselves
effectively are "non-preferred."

It is sometimes argued that patients should have "skin in the game" to
motivate them to become more prudent consumers. One must ask, however,
what sort of consumer behavior is encouraged when all generic medicines
for particular diseases are "non-preferred" and subject to higher
co-pays. The answer is informed, we believe, by a 2007 JAMA study of
cost sharing by researchers at RAND, which was based on a review of 132
published studies. The authors report that "(i)ncreased cost sharing is
associated with lower rates of drug treatment, worse adherence among
existing users, and more frequent discontinuation of therapy" and that
"for certain conditions, the evidence clearly indicates that more cost
sharing is associated with increased use of other medical services, such
as hospitalizations and emergency department visits.

When insurers designate clinically important generic medicines
"nonpreferred" and there are no therapeutically equivalent "preferred"
alternatives from which to choose, it cannot be argued that patients are
thereby motivated to become more prudent consumers. The existence of
clinically sound therapeutic choices is a precondition for any
meaningful effort intended to make patients put "skin in the game."
Without choice, such policies are simply punitive and run counter to
established principles of formulary design and management.

Charles Ornstein of ProPublica provides an excellent discussion of this
in today's New York Times:


Comment by Don McCanne

Why are the insurers establishing tiers of generic drugs with different
levels of cost sharing? Cost sharing does shift some of the
responsibility of paying for care from the insurer to the patient, but
this goes far beyond that.

Establishing tiers of drugs with different levels of cost sharing
originally was to encourage patients to select generic drugs which were
much less expensive for the insurer to cover. Unfortunately, with our
let-the-market-work policies, drugs are being priced in the
stratosphere. Even generics have seen skyrocketing price increases. You
might think that this is why the private insurers have decided to place
generics in tiers, but you would be missing their nefarious strategy.

What we are seeing is the placement of generic drugs used to treat
serious chronic diseases into the non-preferred tier which then exposes
the patient to greater cost sharing. The shopping behavior that the
insurer is encouraging is to have patients with chronic disorders leave
their plans and enroll in their competitors' plans instead. Thus the
tier of non-preferred generic drugs has been established to chase away
patients who have "non-preferred" chronic diseases - non-preferred by
the insurer, that is.

This really does demonstrate how much more evil the private insurers
have become. They will continue to find new ways to swindle us. What is
insane is that we continue to tolerate them when we know that there is a
far better solution - a single payer national health program. Why is the
nation not outraged?

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