Co-pays for generics: A vanishing breed

This article examines the dropping of copays by insurance plans for generics and the link to increased patient compliance.


The idea is simple: Medications are beneficial in controlling chronic diseases; increasing copayments decreases compliance; and decreased compliance results in poorer outcomes. "The basic message is consistent. When co-pays go up, people use their medications less, and bad things happen," said Michael Chernew, a health policy economist at Harvard Medical School.

What plans are doing

More than 35% of BCBSMN's 2.7 million members are not charged for generics, and, according to Heaton, the program "has paid for itself by encouraging the use of generics instead of branded drugs." Self-insured clients went from an aggregate of about 55% of all prescriptions to about 73% in the last year, he said.

Two regional health plans, Independence Blue Cross (IBC) in Philadelphia and AmeriHealth New Jersey in Mount Laurel, N.J., waived co-pays on generics. The AmeriHealth program ended in June, but the IBC program will continue until the end of the year. IBC officials said they have already seen a 5% increase in generic utilization as a result of the program.

Cigna offers what it calls "evidence-based benefit design." Employers offering both medical and pharmacy benefits can choose to lower or even eliminate copayments for the drugs, including generics, that have demonstrated effectiveness in treating chronically ill employees, said Sperling. "Employers are showing an increasing interest" in the design, he said.

A recent initiative by Humana Inc. is a clear example of a move toward lowered or eliminated co-pays to encourage generic utilization for chronic diseases. The health plan announced earlier this year that it would waive the first co-payment on generics in a half-dozen therapeutic classes to all commercially insured members on tiered formularies. The classes are proton pump inhibitors, COX-2 inhibitors, and hypertension, cholesterol, depression, and diabetes oral medications.

The company recently announced it saved members about $1 million on co-pays already this year and that it plans to expand the program to more therapeutic classes. And on June 18 Humana announced that all mail-order enrollees will have their first co-pay for a generic copayment waived for all drug categories.

"We believe this adds value to our products and that it improves compliance," said William Fleming, Pharm.D., VP of pharmacy at Humana. In fact, he said, the company selected the initial six drug classes for the program because they treat chronic diseases for which medication compliance is critical.