Some drug companies are striking deals with insurers to favor their brand-name medications over generic competitors, potentially creating obstacles for some patients to access lower-cost generic drugs, according to an article by ProPublica and the New York Times.

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Under such deals, drug companies offer rebates to insurers and pharmacy benefit managers so that they give their brand-name drugs preferential treatment in their coverage decisions.

Underlying trends

According to ProPublica/Times, memos and prescription drug claims provided by pharmacies show some insurers in recent months have insisted that patients use brand-name drugs, such as the cholesterol treatment Zetia, the pain-relieving gel Voltaren, the stroke-prevention drug Aggrenox, the attention deficit hyperactivity disorder treatment Adderall XR, and about a dozen others.

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Lawrence Diller, a behavioral pediatrician in Walnut Creek, California, said the shift was a striking change from insurers' longstanding practice of pushing patients toward generic drugs: "It's Alice-in-Wonderland time in the drug world," he said.

According to ProPublica/Times, CVS Caremark, one of the largest benefit managers in the United States, in a December 2016 memo told pharmacies that some of its Medicare prescription drug plans would cover only the brand-name versions of 12 drugs, including the antipsychotic medication Invega and the multiple sclerosis treatment Copaxone—a brand-name drug sold by Teva Pharmaceuticals, the world's largest generic drugmaker.

UnitedHealthcare reportedly also has favored brand-name drugs, including Shire's Adderall XR over generics, and Johnson & Johnson's rheumatoid arthritis drug Remicade over lower-cost biosimilars.

The practice, ProPublica/Times suggests, stems from deals struck between pharmaceutical companies and "insurers and pharmacy benefit managers to give priority to their versions of the drugs," adding, "Consumers are given no details about these deals."

Matthew Wiggin, a spokesperson for UnitedHealthcare, confirmed that the insurer does sometimes favor brand-name drugs. "By providing access to these drugs at a lower cost, we are able to improve affordability for our customers and members." However, he said pharmacies and doctors can request an exemption if they prefer the generic version of a drug.

Trend could lead to higher prices for patients

According to ProPublica/Times, about 29 percent of U.S. residents with employer-sponsored coverage have a high-deductible plan, meaning they often have to pay the full price for brand-name drugs until they meet their deductibles, which can run up to thousands of dollars.

FFor instance, a pharmacist recently told Brooklyn resident Naomi Freundlich that her insurer would no longer cover the generic version of Adderall XR, which helps manage her son's attention deficit hyperactivity disorder. Freundlich found herself with two options: Pay about $50 more per month to purchase the brand-name Adderall XR, or opt for the cheaper generic—but if she chose the latter approach, the spending would not count toward her health plan's annual $3,000 deductible.

However, ProPublica/Times reports that some insurers and pharmacy benefit managers do not charge customers more for brand-name drugs than for generics. For instance, Christine Cramer, a spokesperson for CVS Caremark, said in the few instances in which CVS favors a brand-name drug over a generic, it does not charge patients more. She said, "This generally occurs when there is limited or no competition among generics."

The pharmaceutical industry responds

Gwendolyn Fisher, a spokesperson for Shire, which makes Adderall XR, said, "Shire is helping to deliver cost savings to the system and greater patient access to an important medicine," though she noted that the drugmaker does not control how much patients pay out-of-pocket for its drugs.

In regard to its multiple sclerosis treatment Copaxone, Teva said it wanted to ensure that patients who "wish to remain on therapy continue to have access," though the drugmaker noted many patients have moved to a different version of the drug for which there is no generic (Ornstein/Thomas, ProPublica/New York Times, 8/6).

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Lindsay Conway, Managing Director

Prior authorization (PA) processes have long been an administrative burden for providers. In recent years, securing PAs has become even more difficult due to increasing requirements and greater variation in health plan benefit structure.

To help provider organizations streamline PA processes, this webconference will provide best practices for staffing, process redesign, improving information flow, and working with payers to reduce PA requirements.

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