Megan Thompson, PBS NewsHour:
Two years ago Gretchen Liu, 78, had a transient ischemic attack — which experts sometimes call a “mini stroke” — while on a trip to China. After she recovered and returned home to San Francisco, her doctor prescribed a generic medication called telmisartan to help manage her blood pressure.
Liu and her husband Z. Ming Ma, a retired physicist, are insured through an Anthem Medicare plan. Ma ordered the telmisartan through Express Scripts, the company that manages pharmacy benefits for Anthem and also provides a mail-order service.
The copay for a 90-day supply was $285, which seemed high to Ma.
“I couldn’t understand it — it’s a generic,” said Ma. “But it was a serious situation, so I just got it.”
A month later, Ma and his wife were about to leave on another trip, and Ma needed to stock up on her medication. Because 90 days hadn’t yet passed, Anthem wouldn’t cover it. So during a trip to his local Costco, Ma asked the pharmacist how much it would cost if he got the prescription there and paid out of pocket.
The pharmacist told him it would cost about $40.
Ma’s experience of finding a copay higher than the cost of the drug wasn’t that unusual. Insurance copays are higher than the cost of the drug about 25 percent of the time, according to a study published in March by the University of Southern California’s Schaeffer Center for Health Policy and Economics.
USC economist Karen Van Nuys, a lead author of the study, had her own story of overpayment. She discovered she could buy a one-year supply of her generic heart medication for $35 out of pocket instead of $120 using her health insurance.
Van Nuys said her experience, and media reports she had read about the practice, spurred her and her colleagues to conduct the study. She had also heard industry lobbyists refer to the practice as “outlier.”
“I wouldn’t call one in four an ‘outlier practice,’” Van Nuys said.
Rebates help determine where a drug will be placed on a health plan’s formulary. Formularies often have “tiers” that determine what the copay will be, with a “tier one” drug often being the cheapest, and the higher tiers more expensive.
Pharmacy benefit managers usually take a cut of the rebate and then pass them on to the insurer. Insurers say they use use the money to lower costs for patients.
Joy said a big rebate to a pharmacy benefit manager can mean placement on a low tier with a low copayment, which helps drives more patients to take that drug.
In the case of Ma’s telmisartan, Express Scripts confirmed to PBS NewsHour Weekend that the generic drug was designated a “nonpreferred brand,” which put it on the plan’s highest tier with the highest copay.
Joyce said sometimes pharmacy benefit managers try to push customers to take another medication for which it had negotiated a bigger rebate. “It’s financially in their benefit that you take the other drug,” said Joyce. “But that’s of little consolation to the person who just goes to the pharmacy with a prescription that their physician gave them.”
In recent years, the industry has taken a lot of heat from the media and elected officials over a controversial practice called “clawbacks.” This happens when a pharmacist collects a copay at the cash register that’s higher than the cost of the drug, and the pharmacy benefit manager takes most of the difference.
The three largest pharmacy benefit managers – Express Scripts, CVS Caremark, and OptumRx – all told PBS NewsHour Weekend they do not engage in clawbacks.
But Howard Jacobson, a pharmacist at Rockville Centre Pharmacy in Long Island, NY, showed PBS NewsHour Weekend several recent examples of clawbacks.
Websites like GoodRx and WellRx can help consumers find the best prices at local pharmacies. They provide coupons and savings cards for certain drugs as well as out-of-pocket price information, which could be less than a copay.
Z. Ming Ma said he does find the Express Scripts home delivery service convenient. But he wasn’t happy about the price of his wife’s medication, and is glad he found another way to buy it.