What Can I Do if My Health Insurance Company Switches My Brand Drug to a Generic Drug?
Increasingly health insurance companies require members to take a generic drug instead of its brand drug counterpart. Doctors know their patients best and select a given prescription medication for a reason. But health insurers and pharmacists may force policyholders to take a generic drug instead of the name brand drug. What’s driving this requirement? It’s likely cost and the desire to save money. Unfortunately, people often select their specific health insurance plan based on its formulary of medications and in network doctors. This FAQ reviews many questions about generic drugs and brand drugs. It also tells you what you can do to help ensure you get the drug your doctor recommends. If you have difficulties getting the medication your doctor prescribes, contact the Law Offices of Scott Glovsky.
What is The Difference Between a Brand Drug and a Generic Drug?
The company that develops a drug assigns its brand name. This company invested in research and development and almost always runs clinical trials to determine safety and efficacy. The FDA must approve brand drugs. Typically, brand drugs have patents for 10 years after they go to market and before generic counterparts can be created.
Generic drugs are chemically synthesized to be identical to their reference brand drug. As such, they are considered as effective as their brand counterparts. They are manufactured using the same process as the brand drug. The generic has the same active ingredients, strength, dosage, and method of administration as the brand drug. The generic drug has the same active ingredient as the brand drug. However, while the active ingredient must be identical, inactive ingredients don’t need to be. The differences account for consistency, color, and taste. And sometimes generics require you to take more pills than brand drugs.
Generic drugs don’t need clinical trials, but they must be approved by the FDA. The FDA performs a thorough pre-approval review to make sure that the generic’s quality and efficacy matches the brand reference drug. And generic drugs are “interchangeable” with brand drugs. Interchangeable is a regulatory designation from the FDA. It means that pharmacists can automatically swap brand drugs for generic drugs without getting permission from the prescribing physician.
Another type of generic drug is an “authorized generic.” Authorized generics are brand name drugs sold by the brand drugs’ manufacturers or licensees that don’t contain the brand name on their labels and are sold at lower prices than their equivalent brand drugs. While they can enter the market at any time, oftentimes authorized generics are launched just before or just after traditional generics enter the market. Authorized generics help brand manufacturers maintain their market share.
For the reasons outlined above, generic drugs are typically less expensive than brand drugs. According to the Health Care Cost Institute, in 2021, generic drugs comprised eighty six percent of the market in terms of utilization or “days supplied.”
Why Would I Take a Brand Drug Instead of a Generic Drug?
Reasons for taking a brand drug come down to efficacy. The inactive ingredients in a generic drug like dyes, fillers and preservatives may lead to adverse patient reactions. For example, you might be allergic to one of the inactive ingredients. Some drugs have a narrow therapeutic index, meaning that small differences in dose or blood concentration may lead to serious therapeutic failures and/or adverse drug reactions. Blood thinners such as warfarin and medications to regulate the thyroid like levothyroxine must stay consistent. As such, these patients are often encouraged to stick with brand name drugs to avoid unnecessary changes.
At times, patients may experience reduced effectiveness. An example is when a patient switches from a name brand drug to a generic drug and notices changes in their conditions or their abilities to manage these conditions. Sometimes patients notice differences in their conditions when they switch from one generic drug to another generic drug.
In any of these cases, a practitioner looks to the type of drug to help determine changes.
Do Biologic Drugs Have Generic Drug Equivalents?
Biologic drugs are often quite expensive. They are made from living cells such as microorganisms, plant or animal cells with complicated structures and different characteristics. They are difficult to manufacture. Oftentimes a patient administers them through an infusion or an injection. Popular biologics include Humira and Enbrel. Biologic drugs are often given for complex conditions like cancer, autoimmune diseases (including Crohn’s disease, MS, and Rheumatoid Arthritis among others) and other cancers.
Because of their complexity, it is nearly impossible to make identical copies of biologic drugs. That said, biosimilar drugs are biologic drugs that don’t have clinically meaningful differences from other FDA-approved biologics (known as “reference products”). A biosimilar drug has the same strength, dosage form and potential side effects as its reference biologic drug. It is also administered in the same way. Biosimilars must undergo additional studies and sometimes even clinical trials to prove to the FDA that there are no clinically meaningful differences in efficacy and safety from the reference product.
Are Biosimilar Drugs Interchangeable with Brand Biologic Drugs?
Unlike synthetic generic drugs, biosimilar drugs are not all interchangeable with their brand biologic reference products. In other words, a pharmacist cannot substitute all biosimilar drugs without the prescribing doctor’s approval. For a biosimilar to be “interchangeable” with a biologic reference product, its manufacturer must conduct “switching” studies that show its biosimilar product has comparable efficacy and safety to the reference biologic product. The manufacturer must also meet other FDA criteria.
It is important to note, however, that every state has different biosimilar interchangeable laws. In California, for example, pharmacists can substitute a biosimilar drug for a biologic drug unless the prescriber informs them not to. To prevent this substitution, the prescriber writes, “dispense as written” or “brand medically necessary” on the prescription. If pharmacists make a substitution, they must tell the provider within 5 business days. But pharmacists don’t need to inform the patient. That said, the law says that pharmacists should inform the patient when they dispense a biosimilar medication.
There are over 35 FDA-approved biosimilar drugs on the market today. Nearly 80% of these biosimilars are for cancer treatments. There are biosimilars for drugs including Humira, Fituxan, Remicade, Lantus, Rituxan, Enbrel, Herceptin, and more.
Why Do Insurance Companies Prefer Generic Drugs Over Brand Drugs? And Why Do Insurers Prefer Biosimilar Medications Over Their Brand Counterparts?
Health insurers and pharmacists substitute generics or biosimilars to lower costs. These substitutions save the health insurance company money. How much do these alternatives save? The FDA has reported that generic drugs may cost 80-85% less than brand name medications. It also found drugs with 6+ generic competitors led to a price reduction of 95%. And biosimilar list prices at launch are usually priced 15 to 35 percent lower than their brand reference biologics.
Physicians know their patients best. Sometimes doctors think a generic drug or biosimilar drug is fine. But other times they want their patients on brand name drugs. Physicians use their knowledge of and experience with available drugs when prescribing medications. They have good reasons to select the drugs they prescribe. It is unfortunate that physician decisions are questioned and altered by others who don’t understand the unique circumstances of each patient.
Policyholders under the age of 65 who aren’t on Medicare and who take biologic drugs face another challenge. Oftentimes very expensive biologic drugs have pharmaceutical company co-pay programs (see below). These programs enable policyholders to take very expensive drugs because the drug manufacturer pays some or all of their co-pays. But not all biosimilar drug manufacturers have co-pay assistance programs. So when an insurer switches these policyholders to biosimilar drugs, they may actually need to spend more out-of-pocket. In these cases, the insureds pay more for biosimilar drugs than for brand drugs.
Can Health Insurance Companies Dictate My Drug?
Health insurers regularly override your doctor’s prescription. Why? Perhaps your doctor’s drug is not in the formulary. Or perhaps your doctor’s drug has a generic equivalent that is less expensive and thus preferred by the insurer. But don’t be discouraged because there are steps you can take.
Can I Request Non Generic Medication?
Fortunately, you can ask for the brand drug. Have your prescribing physician write “do not substitute” or “dispense as written” or “brand medically necessary” on the prescription. It is helpful to understand your health insurer’s coverage of the brand vs. generic medication.
Can Pharmacists Automatically Give Me Generic Drugs Instead of Brand Drugs?
Oftentimes pharmacists substitute generic medications for what your doctor prescribed. In fact, some pharmacies require their pharmacists to do so. However, your doctor can prevent this by writing on the prescription “brand name only” or “do not substitute” or something similar.
Can My Doctor Override the Health Insurance Company’s Generic Drug or Biosimilar Decision?
Your doctor may very well be able to reverse your health insurer’s decision. In fact, a January 2023 study found that 77% of surveyed physicians were not in favor of “non-medical” biosimilar switching. They wanted their patients to take the brand biologic drug they prescribed. Non-medical switching refers to switching a patient’s medication not for medical reasons like efficacy, side effects or adherence. Instead, this switching is for non-medical reasons such as a change of insurance company, a formulary change, availability of a lower priced option, and so on.
There are a variety of things your doctor can do. S/he can request a prior authorization, a peer-to-peer meeting with your health insurer, or help you appeal the decision. It is important not to give up. Most doctors understand health insurers very well. They understand the system. It can be as frustrating and time consuming for them as it is for you. The important thing is not to give up.
In the state of California, AB 347 requires a health insurance or managed care plan to “expeditiously” grant a step therapy exception request if the health care practitioner submits justification and supporting clinical documentation. Among other things, the law also allows practitioners to appeal a health insurance company’s denial of an exception for coverage of a medication that isn’t in the formulary, a prior authorization, or step therapy exception request. Download the Prescription Drug Prior Authorization Or Step Therapy Exception Request Form here and give this to your healthcare practitioner to complete.
In California, when a generic equivalent drug is available for its brand drug counterpart, a patient can no longer receive copay assistance from the pharmaceutical company for the brand drug. And sometimes copay assistance translates to patients paying nothing for the drug. The challenge is that copay assistance is often not available to patients for generic drugs. In this case, a patient could end up paying more for the generic drug than for the brand drug. Doctors can sometimes assist in these situations by prescribing a different brand drug in the same class of drugs as the original brand drug that doesn’t have a generic equivalent and may have pharmaceutical manufacturer copay assistance.
What is a Formulary and How Does It Impact the Drug I Can Take?
Formularies are lists of prescription drugs covered by health insurance plans. Each health insurer has its own formulary. Formularies often change throughout the year for several reasons. New drugs enter and old drugs exit the market. Prescription drugs may turn into over-the-counter drugs. (OTC drugs are usually not in formularies.) Brand name drugs lose their patents and generic versions enter the market.
Unfortunately, oftentimes people select a specific health insurer and plan because it covers specific doctors and/or drugs they take. This selection is especially true with expensive drugs. And health insurance companies often mandate that their policyholders switch to generic or biosimilar drugs when they become available.
What are Pharmacy Benefit Managers (PBM) and What Role do They Play in My Access to Medications?
PBMs are 3rd party companies that manage drug benefits for health insurers, Medicare Part D plans, and some pharmacies and employers. They are middlemen between drug companies and pharmacies. And PBMs help define medication costs for health insurers, policyholder access to these medications via formularies, and the amount pharmacies are paid for the drugs. So PBMs have a major impact on formularies and your accessible medications.
PBMs are incredibly powerful. In fact, some consider them a monopoly. Why? Because three PBMs control 80% of medication benefits for 260 million people in the US. And PBMs are not always entirely 3rd party. Some have merged with health insurers and chain pharmacies or even have their own pharmacies. The three largest PBMs are Caremark (CVS Health – Aetna), Express Scripts (Cigna), and OptumRx (UnitedHealthcare). Read more and watch a short video about PBMs and their history here.
Why Are Pharmacy Benefit Managers Criticized?
Some criticize PBMs because there is not a lot of transparency or government oversight of PBMs. Sometimes they direct policyholders to fill specialty drugs at their own mail order pharmacies. Some claim they don’t pass along negotiated pharmaceutical company rebate and discount savings to independent pharmacies, unaffiliated health insurance companies, or policyholders taking the drugs.
The Senate introduced the Pharmacy Benefit Transparency Act of 2022 to address some of these issues. If passed, this bill would require PBMs to charge health insurers the same amount they reimburse pharmacies. It would also forbid PBMs from “arbitrarily, unfairly, or deceptively (1) clawing back reimbursement payments, or (2) increasing fees or lowering reimbursements to pharmacies to offset changes to federally funded health plans.” And it has other protections including FTC oversight. In March 2023, the House Committee on Oversight and Accountability opened an investigation into PBMs over their questionable practices. The committee sent letters to the three largest PBMs noted above requesting documents. Potentially harmful practices mentioned in the letters include “fail first” (“tried and failed” or step therapy) policies, spread pricing, and retroactive rebates.
Sometimes PBMs drop medications from their recommended national formularies. These “formulary exclusions” are powerful negotiating tools for PBMs against pharmaceutical manufacturers. The reason is that, to avoid being excluded from formularies, pharmaceutical companies may offer larger rebates to PBMs. This widens the “gross-to-net” cost of a medication. GTN is the difference between a drug’s list price, also called the “wholesale acquisition cost,” and the net price it actually sells for to the PBM, health insurer, and so on. The net price incorporates rebates, contract discounts, cash discounts, and returns. KPMG estimates the average GTN at 55%. How does this impact you as the policyholder? First, you may no longer have access to your medication. Second, as mentioned above, the savings on pharmaceutical medications may not be passed to you.
According to Drug Channel, as of January 9, 2024, the three largest PBMs (OptumRx, CVS Caremark, and Express Scripts) each eliminated 600+ prescription drugs from their formularies. You can view the formularies for commercial clients for OptumRx here. for Caremark’s Performance Drug List here and for Caremark’s Advanced Control Specialty Formulary here, and for Express Scripts’ formulary exclusions here. And the research firm explains that excluded prescriptions usually fall within one or more of the following categories:
- Brand name drugs with generic equivalents or different therapeutic options
- Non-preferred drugs that aren’t prescribed often
- Drugs that treat chronic conditions
- Drugs that are advertised or promoted a lot that have many generic alternatives
- Biosimilar and reference biologic drugs that have biosimilar options on the market
Do Health Insurers and Their PBMs Ever Encourage Me to Use a Brand Instead of a Generic Drug?
There have been a handful of situations where health insurers required policyholders to take brand drugs instead of their generic counterparts. In one case, that of Adderall XR, the drug’s manufacturer Shire tried to retain profits and market share when the drug went off patent. One of its tactics was to give PBMs and health insurers rebates. The rebate savings went to PBMs and health insurers rather than to patients. In another case, AbbVie, manufacturer of the brand Humira, warned health insurance companies that if they directed policyholders towards Humira biosimilars, it would remove rebates on some of its other expensive branded drugs including Skyrizi and Rinvoq that don’t have generic equivalents.
On January 31, 2023, Amgen launched Amjevita, a biosimilar for Humira with two price tiers. The first tier offers Amjevita at a 5% discount to Humira. The other tier is roughly half the price of Humira. The reason why health insurers and pharmacy benefit managers may opt for the more expensive tier is because the majority of policyholders’ coinsurance costs are a set percentage of a medication’s retail list price. So very likely, most policyholders’ costs will be set off the higher list price that delivers more money to the insurer or PBM. UnitedHealthcare and Cigna, representing two of the three largest PBMs, said they will charge the same out-of-pocket costs for Humira and its biosimilars. Elevance Health (formerly Anthem) is doing the same as of December 2023. With the same OOP costs, there is less incentive for doctors to prescribe the biosimilar. After all, Humira has been around for a longer period of time and existing patients might already take Humira.
In January 2024, CVS Caremark announced it would remove Humira from many of its major national commercial template formularies and only cover Humira biosimilars effective April 1, 2024. That said, as of January 2024, Humira had only lost 2 percent of its market share to Humira biosimilars. This is partly because its manufacturer AbbVie had been offering rebates to the PBMs.
Another situation is when a health plan encourages members to take brand drugs by not including their generic counterparts in the formulary. An Avalere study found the percent of generic or biosimilar medications included on the generic tier of one health plan decreased from 93% to 43% over a ten year period. The lowered percent removed the incentive for members to take the lower cost generic drugs. Of course PBMs make more money from brand drugs while plan participants incur higher out-of-pocket costs.
This KFF article explains the pricing dynamics among Humira, some biosimilar equivalents, health insurance companies and Pharmacy Benefit Managers.
What Can I Do if My Health Insurance Company Wants Me to Take a Generic Drug?
When an insurer forces a policyholder to switch to a generic, it is sometimes known as “non-medical switching.” The reason is that the switch isn’t dictated by your doctor. How do insurers do this? They may eliminate the drug from their formulary. Or they may make your out-of-pocket or copay cost for the brand drug extremely expensive. So, what options do you have?
Start by getting advice from a qualified attorney. When your brand drug is denied, speak briefly with an attorney who specializes in healthcare. Why? Because it’s difficult to navigate health insurers and there are a variety of actions you might take. Speaking with someone who understands this industry will not only save you time, but it may make the difference between having your request reversed or upheld. Contact our office for a free consultation.
Ask for the brand drug. Many plans allow you to ask for a formulary exception. Formulary exceptions also exist for drugs that aren’t covered in the formulary. Of course, your physician requests the brand medication on your behalf. Your doctor can request a prior authorization based on medical necessity.
Will the Brand Drug’s Manufacturer Help Me Pay For My Medication?
Some pharmaceutical companies offer copay assistance, and you can call them to see if they do for your medication. Co-pay assistance programs help policyholders pay for expensive medications by covering all or some of the insured’s deductible, copay, or coinsurance. For example, your doctor prescribes a drug that costs $100,000 a year. Your insurance covers 80% of the cost leaving you responsible for 20% of the cost. Most people cannot afford to pay $20,000 a year for a drug. But the pharmaceutical company that developed the drug makes more money if you take its drug than if you don’t. So when they pick up your $20,000 share, they get $80,000 from the health insurer. Co-pay programs enable a person to take a drug that they otherwise couldn’t afford. All co-pay programs are different. Many programs only help commercially insured people until they turn 65 and go on Medicare.
Sometimes a pharmaceutical company’s copay assistance can help a policyholder meet his or her deductible, coinsurance, annual out-of-pocket maximum, or any other cost-sharing limit. This may occur with one or more large copays for an expensive medication. However, some insurance companies have a copay accumulator program. A co-pay accumulator may also be called “copay maximizer” or “copay adjustment program” or even something else. This program means that the health insurer (or PBM) takes the pharmaceutical company’s copay assistance but doesn’t apply this assistance to a policyholder’s cost-sharing limit. In other words, with this program, an insurer or PBM is collecting more money from the policyholder. As of June 2023, 19 states have banned copay accumulator programs and mandated PBMs and health insurers to count copay assistance towards policyholders’ cost-sharing limits. You can ask your health insurance company or PBM if it has a copay accumulator.
Fortunately for health insurance policyholders who take expensive medications, on September 29, 2023, a federal judge ruled that health insurance companies may no longer implement copay accumulators on brand drugs that don’t have generic equivalents. So for brand drugs without generic equivalents, policyholders may apply pharmaceutical company copay assistance towards their out-of-pocket health insurance costs.
Since pharmaceutical companies want policyholders to take their medications, some have created solutions around the accumulator or maximizer programs. The solutions include altering copay benefit design and payment procedures, and giving prepaid debit cards directly to policyholders. These solutions not only help policyholders afford medications, they also address increased pharmaceutical company costs.
Are There Situations Where Pharmaceutical Companies Cannot Provide Brand Drug Copay Assistance?
Some states, including California and Massachusetts, have laws stipulating that health insurance companies cannot accept pharmaceutical company copay assistance in certain circumstances. In California, for example, AB-265 became law in October 2017. According to this law, if a branded prescription medication has a generic equivalent, then 3 months after the generic is available in the market, pharmaceutical companies cannot offer copay assistance on their brand medication. However, there are exceptions including if a patient has been on step therapy or if the health insurance company give prior authorization for the brand. Massachusetts passed a similar law in 2012. In Massachusetts, however, as soon as a generic medication is available, pharmaceutical companies may not provide copay assistance on their brand drugs.
Can a Biosimilar Drug Be More Expensive Than A Biologic Drug?
As mentioned earlier, biosimilar medications are typically 15-35 percent less expensive than their brand drug counterparts. However, a patient’s price is dependent upon a number of factors including insurance. If a biologic drug’s pharmaceutical manufacturer offers a generous co-pay assistance program, then eligible patients may save money. Eligible patients may save money when the manufacturer of the biosimilar drug does not offer a co-pay assistance program. In this scenario, patients with insurance and co-pay assistance could pay less or even nothing at all for the brand biologic drug.
Can I Appeal My Health Insurance Company’s Decision?
Yes, you can appeal the decision. You must start with an internal appeal – meaning one directly with your health insurer. Health insurers have appeal processes with timelines. Most allow peer-to-peer evaluations between your doctor and a healthcare professional associated with your health insurer. In these meetings, your doctor explains why your brand drug is medically necessary.
Remember that health insurers have duties when making decisions. Insurers need to fully investigate your request (a “full and fair” review). Insurers must examine all possible justifications supporting your request. They must get back to you promptly. Qualified health practitioners need to make their decisions. It is important to keep in mind that before you appeal the decision, it is best to speak with an attorney who understands health insurers. Why? Because there are different routes to take depending on the type of insurance you have.
If your health insurance company won’t reverse its denial, you can appeal with a 3rd party. In California, you go to the Department of Managed Healthcare or to the Department of Insurance (depending on your specific insurance plan) and request an Independent Medical Review (IMR). You can do this only after you’ve appealed your health insurer’s denial directly with the insurer. Learn more about filing a California Independent Medical Review/Complaint here. Please keep in mind that if the IMR upholds the health insurer’s decision, you will have very little recourse. As such, speak with a qualified health insurance attorney before asking for an IMR.
Contact Law Offices of Scott Glovsky if Your Health Insurance Denies Your Brand Drug
The Law Offices of Scott Glovsky has represented health insurance denial victims for 22 years. Having worked at firms representing insurance companies before starting this firm over 20 years ago, I understand how insurance companies operate. Our firm will use our expertise to get you the drug your doctor deems medically necessary.