The Dangers of Step Therapy

Step therapy is a health insurance protocol that requires patients to first try a less expensive drug on a Prescription Drug list before moving up a "step" to a more expensive drug. This approach is also called "fail first” protocol. Unfortunately, the more expensive drug is often the more appropriate and effective drug prescribed by the patient’s doctor.

The step therapy process can take weeks, months or even years – and in the meantime the patient’s health can suffer, especially if the patient is living with cancer, multiple sclerosis, mental illness, rheumatoid arthritis, epilepsy and other chronic or life-threatening health conditions.

Step Therapy policies are used by health insurers to control costs. However, they are time-consuming for the physician and patient, and are actually more expensive from a direct and indirect out-of-pocket cost perspective. Insurance companies are applying step therapy broadly and in so doing, restricting physicians’ discretion, interfering with the practice of medicine and placing patients in jeopardy.

How Georgia Can Fix Step Therapy

Step Therapy can have a place in a reasonable drug plan design. However, sometimes the cheapest drug works and sometimes it doesn’t. Therefore, the plan should be transparent to patients and physicians, and allow for speedy appeals when the insurer-mandated drug is not in the best interest of the patient. We strongly believe the physician should make this decision, not health insurance companies. A dozen states, including Louisiana, West Virginia and Kentucky, have passed legislation to address step therapy. Learn more about the step therapy legislation we support.

The Problem with Specialty Tiers

Insurance plans have traditionally included a three-tiered structure for prescription drugs each with its own patient co-pay limits. Insurance companies are increasingly moving medications to so-called “specialty-tiers,” where there are no limits on what the patient is required to pay. 

Although any Georgian can be affected, drugs frequently placed on specialty tiers include those that treat conditions such as cancer, rheumatoid arthritis, hemophilia, hepatitis C, multiple sclerosis, HIV/AIDS, lupus, and other chronic diseases that can be debilitating or fatal without treatment.

Instead of a manageable fixed copay, patients with these conditions may now be forced to pay 20-50 percent or more of the total drug cost each time they fill a prescription. This percentage can translate to thousands of dollars each month out of pocket.

The burden of high out-of-pocket costs can cause patients to make the dangerous choice to stop treatment – jeopardizing their safety and causing increased strain on the health care system. In fact, non-adherence to medication regimens results in $100 billion spent each year in the U.S. on avoidable hospitalizations.

Why Specialty Tiers Are Discriminatory

People pay for health insurance with the expectation that when they or someone in their family needs treatment, it will be covered. Health insurance is based on the principle of cost-sharing: healthy and sick patients pay into the system in order to afford care when they need it.

Specialty tiers, however, undermine this concept. They provide a way for insurers to transfer the bulk of treatment costs directly to patients who need the medications, often with little to no notice.

Why Reform Insurance Practices?

Health insurers may claim that specialty tiers are a response to rising drug costs, but the reality is that the cost of medications has remained relatively stable over the last 10 years, even as patient out-of-pocket costs have risen and continue to climb. Prescription drug prices make up only a small portion of health care spending.

Health insurers are simply using specialty tiers to drive up their own bottom lines, but they can and should manage costs in other ways.

In Louisiana, Maryland and other states that have enacted similar out-of-pocket cost caps, there has been minimal or no financial impact on health insurance plans.


Why Obamacare Doesn't Fix the Problem

Though now a growing problem, specialty tiers, predate the Affordable Care Act (ACA) which is also known as "Obamacare." Even with the new protections provided by the ACA, patients can still be exposed to substantial cost-sharing. 

The maximum annual limit on out-of-pocket spending established by the ACA (currently $6,600 for individuals and $13,200 for families) does not extend to spending on individual services and drugs, so patients can still be forced to shell out hundreds or thousands of dollars on out-of-pocket expenses to pay for medications.