Will Health Insurance Cover Brand Name Drugs?
Many health insurance plans cover prescription drugs. Some employers also offer separate prescription drug plans as part of your total employer-sponsored healthcare coverage. You can also choose a private insurer or company to handle your prescription drug coverage. Whatever type of insurance you have, the chances are there are medications that are not covered by your plan. In many cases, insurance companies do not cover brand-name medications or pay less money on these drugs than on generic drugs. However, every company is different so it is important to review your particular company’s policy.
A Brief Lesson in Prescription Drug Manufacturing
Insurance companies are reluctant to simply offer blanket coverage for all drugs. According to the Food and Drug Administration, generic drugs are much cheaper than name-brand and offer the same benefits as the original formulations of these drugs.
The reason that generic drugs are so much more affordable than name-brand drugs lies in the sequence of events that lead to the manufacture of a generic drug. When a drug company decides to research and formulate a new drug, it often spends years of time and millions of dollars on the research and creation aspects of the medication. By law, when a drug company receives a patent for creating a new drug, it has 20 years to sell the drug at retail cost in order to recoup its losses. After that time, other manufacturers can make the same drug in a generic form. Generic competition among companies usually drives the price down for these drugs.
Which Drugs Does My Insurance Company Pay For?
Insurance companies have several methods they use to figure out the cost to you of prescriptions medication. Most companies have a formulary, a list of the drugs that are covered and the rates at which they are covered. Some companies use a straight formulary, simply listing the drugs that are covered by the plan without any differentiation among the types. If that is the case, you will probably find that there are many drugs, including brand-name instead of generic, that are not covered.
Other formularies are more complicated and rely on a tier system. The tier system has three tiers or levels into which drugs are classified. If a drug is not on any of the three tiers, it is not covered at all. Tier one drugs generally consist of generic drugs, those that have been on the market for many years and have leveled in price. This means that the drug company can predict what these drugs will sell for and can reduce the consumer’s copayment accordingly.
Tier Two drugs many include some generics and some name-brand drugs. Tier Two drugs are usually more expensive for the consumer and require larger copays. Tier Three drugs are primarily name-brand drugs, and insurers may pay little to nothing on these drugs, meaning that the patient’s payment will be much larger.
As an example:
John is filling three medicines, A, B, and C. He uses X Health Insurance Company. When John arrives at the pharmacy, he is told that drug A will have a copay of $10, B will have a copay of $25, and C will have a copay of $100. It turns out that drug A is a generic Tier One drug, B is a generic Tier 2 drug, and C is a name-brand Tier 3 drug. Although the insurance company did pay something on each drug, it paid far more of the cost for drugs A and B than for drug C.
Do Any Companies Pay for Name-Brand Drugs?
There may be certain circumstances in which a health insurance company will offer to pay for name-brand drugs. Generally, this occurs when:
- A generic is unavailable
- The name-brand drugs is relatively inexpensive
- The patient has already met his or her deductible for the year
However, companies may refuse to pay anything at all if a patient insists on name brand drugs rather than generics when there is a generic available.
Are Generics the Same as Name-Brand Drugs?
Many people suspect that generics may not be as effective or may have other ingredients that cause them to operate differently than their name-brand counterparts. However, according to the FDA, drug makers must pass rigorous tests before releasing a generic on the market. The FDA’s rule is that a generic must have the same active ingredients as its name-brand counterpart and must have the same ability to fight disease.
If you are interested in saving money on your prescription medicine give generic medications a try. You can save a great deal of money and get the same safe and strong medicine you need.