Coverage without Access

An Analysis of Exchange Plan Benefits for Certain Medicines


A central goal of The Patient Protection and Affordable Care Act (ACA) was to expand access to insurance so patients, particularly those with chronic disease, could access the treatments and medicines they need. Recognizing that coverage would have limited value without basic access and affordability, the ACA included a non-discrimination provision, an out-of-pocket spending cap, mandatory coverage of “essential health benefits,” and financial assistance for low-income enrollees.

Health insurers typically design “tiered” prescription drug benefits in which a patient’s cost varies depending on a drug’s tier placement (e.g., preferred, non-preferred, etc.). Tiering structures are therefore critical factors in affordability. Plans submit their formulary tiering structure, along with other aspects of the plan’s design, for review by the appropriate state or federal regulator to ensure they meet relevant requirements under the ACA.

Following a recent report that some exchange plans have placed all covered HIV/AIDS medicines on the highest tier, PhRMA engaged Avalere Health to determine the prevalence of such practices, which would appear to be at odds with the patient protections at the core of the ACA. Formularies that require high cost sharing for all medicines of a specific therapeutic type or “class” (e.g., insulins, statins, etc.) create access barriers for patients.

Avalere analyzed 123 “silver” exchange plan formularies to evaluate tier placement. The analysis looked at all brand and generic drugs within 19 classes to determine the potential patient cost sharing burden for these medicines. The data show a substantial number of plans requiring high cost sharing for all medicines in several classes:

  • In seven classes, more than 20 percent of the plans require coinsurance of 40 percent or more for all medicines in the class.
  • Over 60 percent of the plans place all covered medicines in the class for treating multiple sclerosis on the formulary tier with the highest cost sharing.
  • Similarly, over 60 percent of the plans place all covered medicines in certain classes for treating cancer on the formulary tier with the highest cost sharing.
  • Almost all plans (86%) place all medicines in at least one class on the highest cost-sharing tier.

The analysis exposes plan designs that are placing significant barriers in front of needed care for many enrollees. Its findings also suggest a lack of adequate formulary scrutiny on the part of state and federal regulators. Requiring high cost sharing for all medicines in a class is exactly the type of practice the ACA was designed to prevent.

When plans are not prohibited from designing formularies in this manner, high out-of-pocket costs are concentrated among a subset of patients, potentially undermining the very purpose of insurance. Additional oversight and stronger standards for formulary design would help prevent the practices described in this report.