Insurance coverage isn’t what it used to be when it comes to prescription drugs.
Insurance companies’ lists of covered drugs, called formularies, are shrinking. In 2010, the average Medicare formulary covered about three-quarters of all drugs approved by the Food and Drug Administration, according to new research from GoodRx, a website that helps patients find discounts on prescription drugs. Now, it’s a little more than half.
The GoodRx report is called “The Big Pinch,” because it illustrates how patients are squeezed between high drug company prices and limited drug coverage from their health insurance companies. GoodRx is a funder of NPR.
“I think too often people talk too much about the cost of their prescription, and we’re screaming about the high cost of prescriptions,” says Tori Marsh, director of research at GoodRx. “But what we’re not talking about is poor coverage.”
Commercial plans are likely to cover even fewer drugs than Medicare plans because they are not bound by the same federal coverage mandates as Medicare, Marsh says.
What’s more, according to the report, patients have more barriers to getting drugs covered by their insurance than 14 years ago.
Half of the drugs insurance companies cover require things like prior authorization, in which insurers require doctors to take an extra step to justify why they wrote a prescription. That step can cause delays and make it harder for patients to get the drugs their doctors prescribe — or prevent people from filling their prescriptions altogether.
Insurers trade patients’ access to drugs for lower prices
However, limited forms and restrictions on access serve a business purpose, says Jeromie Ballreich, a health economist at Johns Hopkins University. They provide negotiating leverage for the part of your health insurance that deals with drug coverage—called the pharmacy benefit manager.
“Their way to fight price jumps or cost increases is to negotiate with the drug companies,” says Ballreich.
For example, an insurance company will say no to a drug manufacturer’s offer, but if it lowers the price or increases deductibles, the insurer would make the drug a preferred option without prior authorization.
Negotiated prices and discounts usually do not pass directly to consumers as lower payments, but they can reduce pressure on insurance premiums.
The trade group for pharmacy benefit managers, the Pharmaceutical Care Management Association, took issue with the GoodRx report.
“PBMs make recommendations and assist employers in designing pharmacy benefits that fit the unique needs of their patient population,” says PCMA spokesman Greg Lopes. “PBMs have a proven track record of creating access to affordable medications for payers and patients.”
Drugmakers have criticized PBMs for not properly sharing the rebates they receive with patients.
If you are buying insurance, check the coverage for the drugs you need
GoodRx says formularies shrank the most before 2020. Recently, they’ve stabilized somewhat.
“It’s hopeful to see that things aren’t getting any worse,” says GoodRx’s Marsh. “But I would like to see this chart move in the opposite direction with more drugs covered and fewer of those with restrictions.”
However, so far, it has never seen drug coverage expand in any of the years of formulary data it has reviewed.
If consumers want more generous plans, they likely need to shop around and buy them even if it means higher monthly premiums, Ballreich says. But most people are just looking for a low price.
“It’s overwhelming,” he says of buying health insurance. “And I have a Ph.D. in this.”