Summary and Conclusions
The prescription drug formularies of health plans sold on the Affordable Care Act’s (ACA’s) public health insurance exchanges (HIEs) are significantly more restrictive than the drug formularies of health plans sold outside of the HIEs
The practical relevance of these findings is twofold. First, the pressure on drug manufacturers to offset severe HIE-based formularies with more generous co-pay card programs is significant; and, any such steps by drug manufacturers may embolden plan sponsors and formulary managers in the far larger non-HIE markets to substantially tighten their drug benefit designs – all of which has the potential to meaningfully reduce the large cap drug makers’ real US pricing power, on which all but one (Roche) are wholly reliant. For a comparison of deductibles, co-pay amounts, and use of co-insurance in HIE-based and non-HIE-based drug coverage, please see our January 19 note: “Drug Benefit Chicken – An Analysis of Drug Benefit Design on the Health Insurance Exchanges”. Second, the fact that market-leading brands are less likely to be available in HIE-based health plans – or only available at substantially higher out-of-pocket costs – reflects the reality that the amount of coverage received in exchange for the amount of premiums paid is, for many potential beneficiaries, unlikely to be perceived as value for money. This underscores our belief that low enrollment has more to do with customers not liking the product at the prevailing price than with enrollment difficulties – and that enrollment will remain weak until and unless the rules of the HIEs are changed. For more details on price for value on the health insurance exchanges, please see our December 1st, 2013 note: “Higher Premiums – and Higher Deductibles: An Analysis of Health Plans on Offer in 2014”
Method and Results
Using the Express Scripts Drug Trend Report, we identified the major prescription drug categories that include significant brand sales, and identified the leading brand(s) in each of the categories (Exhibit 1). Using healthcare.gov data, we then accessed prescription drug formulary information for the major issuers offering coverage in the 13 states that contain just more than half of the nation’s uninsured[1]. For each issuer in each geography, we then determined the formulary status of each of the category-leading brands for that issuer’s HIE-based health plans, as well as for its non-HIE-based health plans. Results were rolled up from the geographic level to a total estimate for all 13 states, with results from any individual geography being weighted according to that geography’s share of the 13 states’ non-elderly uninsured
For all of the 11 category-leading brands analyzed, formulary positioning on the HIE-based plans was significantly more restrictive than formulary placement on plans sold outside of the health insurance exchanges (Exhibits 2 thru 12). Using Humira (Exhibit 2) to illustrate, the four bars on the top of the exhibit represent formulary status for HIE-based plans, and the four bars at the bottom formulary status for the non-HIE-based plans. The percent of formularies carrying a product in a preferred formulary position is shown in green (19% for Humira on HIE-based formularies, 39% on non-HIE-based); non-prefe rred in yellow; specialty in grey; and, not covered is shown in red. On average, the category-leading brands were less than half as likely to be preferred on HIE-formularies as on non-HIE formularies. And, while none of the 11 category leaders was excluded from a non-HIE formulary, 5 of the category leaders were excluded on at least one HIE formulary
