Mandatory Generic Drugs on Group Plans: Has Your Broker Explained the Impact?

Generic drugs will be the only variety
group plans will cover from now on.

In an effort to cut drug costs, group health insurance companies have announced that they will now only pay for generic drugs and individuals will be required to cover brand name prescription drugs out of their own pockets.

“In the past, you were able to say to your doctor, ‘Just put on the prescription, “No Substitution,”‘ so insurance companies had to pay the brand name drug premium in full and not the generic drug one,” says Joel Cadesky, a senior account executive specializing in group insurance. “What’s happening now is it’s going to be mandatory generic drugs for all prescriptions.”

However, some clients have adverse allergic reactions to generic drugs and must get the brand name. In that case, Cadesky says, you have two options:

“One is you pay the difference, which is fine because you’ll get the brand name, but the difference will be yours, or you can go to your doctor and there’s a form letter that all insurance companies are making that says, ‘I need my client to have brand name because we’ve put him on generic and he has had the following reaction.’ If your doctor signs that letter, then the insurance company will pay for the brand name drug.”

The biggest impact of this ruling will no doubt be the expense to the client who wants brand name medication. Drugs have gone up across the board, but Cadesky estimates that they cost 40% to 50% more than the generic variety.

“I think people are going to be very surprised come January and February when they try and claim their prescription drugs but they’re not being paid and they’ll want to know why and nobody except for us has informed them,” says Cadesky.

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