Insurance companies may take some of the responsibility for generic drug price increases.
This week, we highlighted reader questions about generic drug prices, high-deductible health plans and health plans covered under the Health Care Act.
Q: I take levothyroxine, a generic Synthroid, to treat a thyroid condition. For as long as I can remember, this generic has been on the list of drugs that cost $10 for a 90-day supply at my pharmacy. Since June, this drug has been taken off the list and its price has gone up 300%. According to the pharmacist, all generic manufacturers have raised their prices. Why has this drug gone up in price so quickly?
Widespread drugs like levothyroxine and digoxin (heart disease drugs) for which consumer co-payments have been modest for years.
What happened. Health care professionals such as pharmacists often accuse drug makers of raising prices simply because they can, says Dan Mendelsohn, president of Avalere Health, a consulting firm. There’s no doubt about that. But there are other reasons why the price of generic drugs may be going up.
The most common reason pharmacies are charging consumers more for generic drugs is that insurers have changed the benefit structure of health plans, making generic drugs more expensive, Mendelson says.
Drug prices can also rise because of the increased costs of manufacturing and distributing drugs.
However, consumers simply don’t have to pay. Drug costs vary widely from pharmacy to pharmacy, so it’s often financially advantageous to shop here and there. In addition, retailers like Wal-Mart offer cash-paying customers dozens of generic drugs at low prices: instead of paying a $30 co-payment, they pay $4 cash. That can be calculated.
Q: Do you know of insurance companies that sell high deductible plans, where the insurance company pays 100% of all further costs after the deductible is exceeded? In other words, the deductible and co-payment limit are the same thing.
In the health insurance marketplace, it’s not uncommon to find plans, especially bronze-level plans, with the structure you describe, says Linda Blumberg, a senior fellow at the Center for Health Policy at the Urban Institute. Blumberg and her colleagues analyzed the availability of such plans in the federal marketplace, which operates insurance exchanges in about two-thirds of states.
For example, such plans have a $6,850 deductible for individual insurance.
Some insurers advertise this type of plan as simple and requiring only one number. However, at the Bronze level, the deductible is likely to be several thousand dollars for a plan that covers all costs after the deductible is reached. Bronze plans are the least generous of the four levels of coverage on the exchange: on average, they cover 60% of costs.
However, some services are covered up to the deductible, such as preventive services, even in plans with higher deductibles. Under the Medicare law, consumers don’t have to pay a co-payment for preventive services if they are recommended by the U.S. Preventive Services Task Force. Some insurers also offer plans that waive deductibles, such as by covering a certain number of primary care physician visits or generic drugs.
If you’re considering a plan with the same deductible and copayment limits, “make sure those plans cover care up to the deductible,” Blumberg says.
QUESTION: Are plans enrolled in the program subject to the Medicare Act’s nondiscrimination provisions, particularly the protections against discrimination in benefit design? Kathy Keith, a member of the steering committee of Out2Enroll, an advocacy group for the lesbian, gay, bisexual and transgender community in the health insurance industry, said that in general, the health insurance law’s nondiscrimination provisions do not apply to plans operating under the law.
Insurance plans that were in effect in 2010, when the Health Insurance Act was enacted, and have not undergone significant changes in their benefits and costs since then may be considered “permanent” and be exempt from many of the requirements of the Health Insurance Act. According to the Kaiser Family Foundation, the number of such plans is declining, but in 2015, 35% of companies offering health plans had at least one plan that met the law’s requirements. (KHN is a program independent of the Foundation’s editorial board).
The health care law prohibits discrimination in health care coverage on the basis of race, color, national origin, age, disability, or sex. Discrimination in benefit design is also prohibited, but the federal government usually does not specify exactly what this means.
The clearest provision of these protections is the prohibition against discrimination against transgender people. The provision explicitly prohibits excluding health care services for transgender people, including transition-related services, from coverage. They also say that other benefit designs, such as including all drugs that treat high-cost conditions in the highest cost-sharing levels, can be discriminatory. However, it does not prohibit them.
The nondiscrimination provisions of the health care law apply to insurers that receive federal funding, such as premium subsidies for eligible health plans and those that cover people under Medicaid and Medicare.
If your regular insurance plan is a plan that must comply with the nondiscrimination provision, “the plan may have to eliminate transgender exclusions and cover medically necessary services, including transition-related services,” Keith says.