Recent articles in mainstream publications have raised questions on some quarters regarding the use of Rx (pharmacy) profiles in underwriting.
Does this work to the detriment of the best interests of insurance seekers?
The short answer is absolutely not, as the following will clearly demonstrate.
What does Rx profile mean? Pharmacy benefit management (PBM) firms gather prescription records for use primarily in ways unrelated to the life insurance industry. But some industry service providers have business arrangements with PBMs which allow the providers to access certain bits of information on prescriptions filled by the majority (roughly 70%) of insurance applicants.
This is not done surreptitiously. Profiles can only be obtained with proper signed authorization from the proposed insured, in the same manner as is done with Medical Information Bureau and physicians’ records.
The pharmacy records tell underwriters the medications prescribed for the individual in the recent past as well as when the prescriptions were first filled, if and when the prescription were refilled, details such as dosage and the identity of the prescribing physician.
In essence, use of Rx profiles is really no different than the industry’s longstanding practice of screening urine or oral fluid for the presence of the nicotine byproduct called cotinine. By doing this, underwriters identify individuals who have failed to disclose their use of tobacco or nicotine products used primarily in quitting smoking.
The premise is the same with Rx profiles. Insurers routinely ask on their applications if the proposed insured takes prescription medication. When the answer is “yes,” the person is asked for more details to put the use of each drug in its clinical context.
Thus, Rx profiles and cotinine tests do essentially the same thing: pinpoint potential nondisclosure. However, this is only one–and often not the most important–way that Rx profiles impact risk appraisal.
Say the proposed insured is taking an antidepressant for a comparatively minor condition like fibromyalgia, which has few if any mortality implications. When this happens, tele-interviews used in tandem with Rx profiles will clarify the association between that antidepressant and the real reason for its use. More often than not, this empowers underwriters to take favorable action, and not wait for medical records.
Rx profiles also distinguish those who take medication as prescribed from others who are noncompliant. Affirmation of compliance paves the road to preferred eligibility for many being treated for high blood pressure or elevated cholesterol.
There is just one caveat: Underwriters must not jump to conclusions based solely on knowing that a given medication was prescribed. It’s important to see potentially significant medications in context with the whole risk.
The longer drugs are on the market, the more approved uses they often have. Now add the growing volume of “off-label” (unapproved) uses and it is obvious why underwriters have to know why a medication is being taken … before making the underwriting decision.
With tele-underwriting, there should be only a comparative handful of cases where the reason for a drug cannot be sorted and its risk implications (if any) correctly assessed.
Legitimate concerns do exist about using so-called “credit scores” as well as credit card purchase records in risk appraisal. If similar issues existed about using Rx profiles, this article would never have been written.
There is also a “big picture” inherent in this. As the life insurance industry embraces modern underwriting requirements like Rx profiles, tele-interviews and motor vehicle records, more applicants get coverage, as applied for, with far fewer delays.
The protective value the insurers derive from these client-friendly assets then allows the industry to get rid of cumbersome antiquities (such as treadmill tests and chest x-rays) while also greatly reducing underwriter’s dependence on the attending physician statement.
If this isn’t a win-win-win for advisors, clients and the industry, what is?