One in three Americans with health insurance will be prescribed a medication this year that their insurer won’t cover. That’s because the nation’s largest pharmacy benefit managers are excluding more than 600 drugs from coverage in 2024.
Growing Rx Exclusions
Pharmacy benefit managers, the middlemen who handle prescription drug coverage for health insurers, publish an “exclusion list” each year of the medications they will no longer cover.
Exclusion lists for the three major pharmacy benefit managers – Caremark/CVS Health, Express Scripts/Cigna and OptumRx/UnitedHealth – have exploded. In 2014, fewer than 100 prescription drugs were excluded by each of these pharmacy benefit managers. This year that number has reached 600 or higher.
The most common reason for exclusion is the availability of a generic equivalent or biosimilar alternative for a name-brand drug or a drug produced by a single manufacturer. These drugs often remain on formularies because pharmacy benefit managers have negotiated lower purchasing prices, savings for which are rarely passed on to patients. Treatments for chronic conditions and medications used by few patients — however crucial they may be to those few — are likely to be axed.
Meanwhile, novel medications with generic alternatives that avoid exclusion may still get saddled with step-therapy requirements.
The possibility of exclusion is intended to motivate manufacturers to offer greater drug rebates to pharmacy benefit managers. But those savings rarely make their way to patients. Net prices for brand-name drugs have fallen for over half a decade, but pharmacy benefit manager practices can obscure that reality for patients.
Patients Pay Higher Prices, Face More Barriers
As exclusion lists have grown, pharmacy benefit managers have steadily increased their profits through “specialty fees.” Patients, meanwhile, face the prospect of paying more for health insurance that covers less of what they need.
Many patients will lose access to a drug when it is removed from a formulary, which may lead to new side effects and disease progression, along with additional doctor’s or emergency department visits. Patients whose medications aren’t excluded are nevertheless likely to face greater barriers and higher costs. They may also grapple with greater uncertainty and unpredictability when it comes to their prescription medication. One study found that a single drug under the same pharmacy benefit manager and purchased at the same retail pharmacy was calculated at five different prices during a single day. Reimbursement for the medication ranged from $9 to $96.
Potential Policy Solutions
Prior authorization, step therapy and other burdensome controls are meant to steer patients toward medications that are less expensive for their health plan. But forcing patients to abandon or switch a medication that’s working for them can have serious medical risks. And it may generate added costs as symptoms re-emerge.
Growing exclusion lists make it harder for patients to access the care their clinician prescribed. Legislative fixes and regulatory scrutiny of pharmacy benefit managers are underway — and much needed.