Health insurers cover fewer drugs and make them harder to get

Insurance coverage isn’t what it used to be when it comes to prescription drugs.

Insurance companies’ lists of covered drugs, called formularies, are shrinking. In 2010, the average Medicare formulary covered about three-quarters of all drugs approved by the Food and Drug Administration, according to new research by GoodRx, a website that helps patients find discounts on prescription drugs. Now, it’s a little more than half.

The GoodRx report is called “The Big Pinch,” because it illustrates how patients are pinched between the drug companies’ high prices and their health insurance companies’ limited drug coverage. GoodRx is an NPR funder.

“I think far too often people talk way too much about the cost of their prescription and we're screaming about the high cost of prescriptions,” says Tori Marsh, director of research at GoodRx. “But what we're not talking about is the poor coverage.”

Commercial plans likely cover even fewer drugs than Medicare plans do because they’re not bound by the same federal coverage mandates as Medicare, Marsh says.

What’s more, according to the report, patients have clear more hurdles to get the drugs that are covered by their insurance than they did 14 years ago.

Half the drugs insurance companies cover require things likeprior authorization, in which insurers require doctors to take an additional step of justifying why they’ve written a prescription. This step can cause delays and make it harder for patients to get drugs their doctors prescribe -- or deter people from filling their prescriptions altogether.

Insurers trade patient access to medicines for lower prices

Still, limited formularies and restrictions on access serve a business purpose, says Jeromie Ballreich, a health economist at Johns Hopkins University. They give negotiating leverage to the part of your health insurance that deals with drug coverage — called a pharmacy benefit manager.

“Their way to kind of combating the jump in prices or the jump in spending is to really kind of hardball negotiate with drug companies,” says Ballreich.

For instance, an insurance company will say no to a drugmaker’s offer, but if it lowers the price or increases rebates, the insurer would make the drug a preferred option without prior authorization.

The negotiated prices and rebates don’t typically get passed directly to consumers as lower copays but they can reduce pressure on insurance premiums.

The trade group for pharmacy benefit managers, the Pharmaceutical Care Management Association, took issue with the GoodRx report.

“PBMs make recommendations and assist employers in designing pharmacy benefits that fit their unique patient population needs,” says PCMA spokesman Greg Lopes. “PBMs have a proven track record of creating access to affordable medications for payors and patients.”

Drugmakers have criticized PBMs for not adequately sharing the discounts they receive with patients.

If you’re shopping for insurance, check the coverage for medicines you need

GoodRx says formularies shrank the most before 2020. Lately, they’ve stabilized somewhat.

“It's hopeful to see that things are not getting worse,” GoodRx’s Marsh says. “But I would love to kind of see this chart move in the opposite direction with more drugs covered and fewer of those having restrictions.”

So far, however, she’s never seen drug coverage expand in any of the years of formulary data she’s reviewed.

If consumers want more generous plans, they likely need to shop around and buy them even if it means higher monthly premiums, says Ballreich. But most people just look for a low premium.

“It's incredibly overwhelming,” he says of shopping for health insurance. “And I have a Ph.D. in this.”