Reprinted from DRUG BENEFIT NEWS, biweekly news and proven
cost management strategies for health plans, PBMs, pharma companies and
employers.
By Angela
Maas, Managing Editor
May 5, 2017 Volume 18 Issue 9
CareFirst BlueCross BlueShield has become the latest health
care/pharmaceutical stakeholder to draw congressional scrutiny. But it’s
unclear at this point whether that attention is, in fact, warranted.
On April 17, Sen. Chuck Grassley (R-Iowa) sent a letter to the
insurer’s president and CEO, Chet Burrell, questioning the company’s use of
so-called “brand penalties.” Imposed on members when they fill prescriptions
for a brand drug when a generic is available, the penalty requires members to
pay the difference between the cost of the brand and the generic rather than
the copayment or coinsurance for the brand. Grassley, who is the chairman of
the Senate Judiciary Committee, calls brand penalties “a concerning trend” that
“can potentially cost patients thousands of dollars per year through no fault
of their own.”
He requested that the health plan respond to a series of
questions, including whether it is the company’s “general practice to impose a
brand penalty even when a doctor has noted that a drug is ‘medically
necessary,’” as well as whether other insurers also follow this practice.
Responses were due by May 1.
CareFirst’s prescription guidelines state, “there may be
cost-sharing implications for choosing non-preferred brand medications when
generics are available. Your cost share depends on which of the three generic
substitution coverage levels you have — voluntary, mandatory or restrictive.
Refer to your benefit summary or enrollment materials for more information.”
The website also has a form by which a physician can request an
exception “for a patient to receive a brand-name drug instead of a generic
alternative and pay only the appropriate brand cost-share.” Grassley’s letter
does not indicate whether an exception was requested, only that the physician
had included “a ‘medically necessary’ annotation, such as ‘Dispense as
Written,’…on the prescription.”
Tactic Is One That Plans Frequently Use
“A brand penalty, also called a Dispense as Written or ‘DAW’
penalty, has been implemented by plan sponsors and health plans across the
country,” says Josh Golden, area senior vice president, client development at
Arthur J. Gallagher & Co.’s Solid Benefit Guidance consulting arm. “I would
go so far as to say it is one of the most frequently used plan management
strategies within the world of pharmacy.”
In fact, he tells AIS Health, the practice has “stood the test of
time as a management tool. To my knowledge, there is nothing remotely illegal
about this approach.”
According to Bill Sullivan, principal consultant at Specialty
Pharmacy Solutions LLC, “Benefit language is very specific as it is reviewed
and approved by state insurance departments and (in the case of Medicare plans)
by CMS, which is really the only area where federal oversight could apply.”
Sullivan points out that “As long as the clearly stated language
is approved for state insured policies (ERISA-self-insured benefit policies are
broadly exempt) or CMS (or state Medicaid) there is nothing illegal about it.
However, if the payer adjudicates payment using a formula other than that
detailed in the plan’s Summary of Benefits (SoB), then they would be in
violation and subject to state or federal oversight.”
Grassley essentially echoed this in the letter, saying, “if
CareFirst has entered into thousands of contracts with individuals based upon a
certain set of policy promises, it must provide proper notice to policyholders
when contracted-for terms change. It is not clear whether CareFirst is
providing notice, and it would be helpful to the Committee if it could
describe, in detail, how it handles the notice requirement and whether it
comports with the standard in the industry.”
Penalty Paid Isn’t Applied to Annual Deductible
Another Grassley concern is that when the member pays a brand
penalty, it is not applied to the member’s annual deductible. However,
according to Golden, “Under group insurance, this is a decision that the plan
sponsor makes when they set up their pharmacy plan with the PBM. For individual
policies, the health insurer decides how this is handled. The rationale for
excluding these payments from the annual deductible is that they are penalties
and not copayments. Excluding the DAW penalty from deductible accumulation
creates a stronger financial incentive to use generics instead of multi-source
brands.”
Adds Sullivan, “If the patient is not given credit for their
spending, that would have to be specifically stated in the SoB [for that to] be
actionable.”
Interestingly, Grassley’s letter maintains that “Many patients
have tested generics but have found that their body simply does not react
positively to them and therefore require brand name drugs.” But according to
the FDA, the agency “requires generic drugs to have the same quality and
performance as brand name drugs. When a generic drug product is approved, it
has met rigorous standards established by the FDA with respect to identity,
strength, quality, purity, and potency. However, some variability can and does
occur during manufacturing, for both brand name and generic drugs. When a drug,
generic or brand name, is mass-produced, very small variations in purity, size,
strength, and other parameters are permitted. FDA limits how much variability
is acceptable.”
In addition, it points out that “Research shows that generics work
just as well as brand name drugs.”
“Generics are, by design, always as effective as their
multi-source brand counterparts, unless there has been some kind of
manufacturing deficiency,” says Golden. “But the brand drug could also
experience manufacturing problems, so that is not an issue that is unique to
generics. The FDA ensures that generics have the same safety, strength,
quality, route of administration and overall performance as their originator
brand product. Some generics may contain different inactive ingredients such as
dyes or preservatives, but these are specifically designed to be inert, so
adverse reactions to these are extremely rare.”
Golden points out that “The FDA is clear on their position
regarding generics. Their website states that generics are just as effective as
their brand counterparts and are subjected to the same rigid standards of
review and approval. These products are designed to be interchangeable — and
the DAW penalty is just a financial mechanism to encourage that interchange.”
According to a STAT Pharmalot article, Grassley “is not confining
his interest only to this one insurer, which covers Maryland, Washington, D.C.,
and northern Virginia. As his letter indicates, he is curious to know whether
other insurers similarly impose such penalties and a source familiar with the
matter suggested the senator plans to pursue the topic with other health plans
as more is learned.”
When asked about Grassley’s letter and CareFirst’s responses,
which were due May 1, the health plan declined to comment. A spokesperson said
he did not know whether the insurer’s responses would be made public.
View Grassley’s letter at http://tinyurl.com/mch747q and
CareFirst’s prescription guidelines at http://tinyurl.com/lku7cgl.
https://aishealth.com/archive/ndbn050117-04?utm_source=Real%20Magnet&utm_medium=email&utm_campaign=112415381
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