Your (HIE-based) Plan Doesn’t Cover That: A Comparison of Drug Formularies On and Off the Health Insurance Exchanges


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Popular brand drugs are much more likely to face restrictions in health plans sold on the Affordable Care Act’s (ACA’s) health insurance exchanges (HIEs), as compared to health plans sold outside of the HIEs

We compared the formulary status of 11 category leading brands on HIE-based and non-HIE-based health plans.  On average, HIE-based plans were less than half as likely to carry the category leading brands in a preferred position. All 11 category leaders were covered by all non-HIE-based health plans, but 5 of the 11 category leading brands were excluded from at least one HIE-based health plan. This note provides formulary status details for each brand analyzed

Thus not only are deductibles, co-pays, and co-insurance rates higher for a given level of formulary status on the HIEs than off, the most commonly used brands are more likely to be restricted on the HIEs than off. As a result, the out-of-pocket costs for any drug – and in particularly the most commonly used brands – will be much higher for HIE beneficiaries than for non-HIE beneficiaries

This increases the likelihood that brand manufacturers will use more generous co-pay card programs to keep HIE beneficiaries’ out-of-pocket costs low, which carries the risk of proving to plan sponsors and formulary managers in the far larger non-HIE market that these plans’ drug benefits can be similarly restricted, with little or no risk of beneficiaries not being able to afford prescriptions. We see this as the single most important risk facing brand manufacturers’ US pricing power

Separately, the austerity of drug benefits for HIE-based plans adds to our conviction that potential HIE beneficiaries – especially those with modest subsidies — will not see value for money in the plans offered on the public exchanges. Increasingly, we’re convinced that limited enrollment on the public exchanges has much less to do with website problems than with something far more fundamental and enduring – a perception that coverage offered is not worth the premium charged

For our full research notes, please visit our published research site

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