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The Catch: Generic Backlash

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Washington State Insurance Commissioner Mike Kreidler says a strict generic-only prescription plan is not a real prescription plan. 

Kreidler has adopted an emergency rule that bans generic-only drug plans that make no exceptions at all for brand-name drugs. 

The rule is set to take effect Aug. 1.

“Some medical conditions require prescription medication for which there is not a therapeutically equivalent generic alternative or for which the generic alternative is not efficacious based on a person’s clinical response,” Kreidler says in an explanation of the rule.

Because of the limits of generic drugs, “a generic-only drug benefit prevents a covered person from being able to use their purchased insurance plan to help pay for medically necessary medicine or drugs, unreasonably restricting their treatment,” Kreidler says.

The rule applies to any health benefit plan with a prescription drug benefit offered or issued in Washington state by a health carrier.

Carriers still can use formulary, or drug list, designs that strongly encourage patients to use generic drugs, and they can limit coverage to coverage for generic drugs when therapeutically equivalent generic alternatives to brand-name drugs are available, Kreidler says.


The federal Patient Protection and Affordable Care Act of 2010 (PPACA) requires the new health insurance exchanges that are supposed to distribute insurance starting in 2014 to offer nonprofit “Navigators” to help consumers understand health care and health insurance.

Health insurance agents and brokers have objected to the Navigator system provision, in part because it’s not clear whether they can be Navigators, how they could be paid to be Navigators, whether Navigators would have appropriate training and licenses, and whether Navigators would compete with agents and brokers.

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But it turns out that the existing, private-sector equivalent of Navigators — health advocates — are popular.

Optum, a unit of UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH), recently conducted a survey of 459 consumers and found out that the more survey workers told consumers about the idea of advisors who could help them understand the health care system and possibly cut through red tape and negotiate with providers, the more the consumers said they liked the idea.

About 57% of the survey participants started out giving the concept a rating of 7 to 10 on a 10-point scale. After survey workers explained the concept further, the percentage of participants who gave the idea a rating of 7 or above increased to 68%.


The new U.S. Department of Health and Human Services (HHS) Summary of Benefits and Coverage (SBC) final rule “is expected to set off a mad dash by insurers to update their systems in order to issue the SBCs later this year, and for self-funded plans to coordinate preparation of their SBCs by their claims administrator, consultant or other vendors,” according to health compliance analysts at Lockton Companies L.L.C., Kansas City, Mo.

“The stakes are high for noncompliance, as the law applies penalties of up to $1,000 per willful failure to provide a compliant SBC,” the Lockton analysts say.

Analysts at Ballard Spahr L.L.P., Atlanta, says employers and their benefits providers and advisors should get to work on SBC development quickly.

“If your plans operate on a calendar year, you should consider developing your SBCs this spring and summer to ease the burdens during the traditionally hectic weeks leading up to annual enrollment,” the analysts say.

HHS and other federal agencies developed the SBC standards to implement provisions in PPACA that require insurers and plans to offer brief but comprehensive health coverage summaries, in an effort to make plans easier to compare and easier to shop for.

Health insurers have argued that SBC regulations require plans to produce individually tailored SBCs in a way that will be challenging for the SBC providers to create.