Health Insurance Articles
Why Health Insurance Companies Support Pharmaceutical Copayments
2011-05-29
Health insurance companies have a vested interest in keeping premiums low for their beneficiaries. This allows them to cover medically necessary services required by patients while attracting more customers to the plans the insurers offer. Pharmaceutical copayments are one strategy insurers use to reduce their costs.
Copayments work in two different ways to affect health care costs. While a patient may find a copayment to be a nuisance, in fact, it offers substantial savings to an insurer when patients share in the cost of their medications. A copayment as low as five dollars for every prescription, multiplied over the many people who use their insurance benefits to pay for medications, can realize a considerable sum that insurance companies do not have to pay for drug claims. The more money saved on drug claims, the less the insurers will need to charge their customers for needed coverage. That savings can be directed to other life saving measures for patients who need them.
Copayments also affect utilization of medications. Pharmaceutical copayments are often structured in tiers, so that more expensive drugs require a higher cost share from the patient compared to less expensive medications that have been shown to be equally effective. Generic drugs, the least expensive of medications, often have a negligible copayment, or none at all. This encourages patients to weigh the efficacy of their options and guide them, financially, toward using the least expensive medication available.
Name brand medications are more expensive than generic. This is due to the costs of marketing the drug by its manufacturer. The active ingredients in generic medications are tested and certified to be the same as those included in name brand medications. By applying a higher copayment to name brand medications, health insurance companies continue to provide patients with the option of taking name brand prescriptions. The higher copayment is intended to make patients aware of the hidden costs of purchasing name brand medications. By increasing the cost share, insurers hope to shape patient behavior by directing them to make more cost-effective choices.
Not all name brand medications cost the same. Some are more expensive than others without providing a measurable medical benefit. The most expensive medications are placed in a higher tier, requiring a more extensive copayment from patients who desire the highest priced medications that may not have proven pharmacological benefits above and beyond less expensive alternatives. Marketing campaigns by pharmaceutical companies are pervasive and persuasive. Patients who choose to follow the recommendations of pharmaceutical companies are not denied medication, but they are expected to pay a higher share of the associated costs.
