As individuals retire or age into Medicare, their insurance situation can change dramatically. There are a multitude of options open to those with Medicare. The terms are different, the prices are different, the products offered are dramatically different each year.
The purpose of this column is to give those who are eligible for Medicare, or soon to be eligible for Medicare, some understanding of their insurance options and how it could impact their health and finances.
These questions and answers are meant as a guide to help you understand the complex questions you are now thinking about. Each individual's specific situation may create a different solution. You shouldn't necessarily do what your friends, family and neighbors do.
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Janell Sluga
Q: I used to get a name brand medication for my diabetes, and the last time the name was different. The pharmacists said it was a generic. What is the difference between name-brand medication and generic medication in my prescription drug coverage?
A: I hear this type of question a lot. Let me first say I am not a medical professional. I cannot answer the question of how these medications work. I can address the questions of what happens with regard to your prescription drug coverage. I also will say I am using some commonly prescribed medications in this article. I don't endorse these medications; they are just commonly prescribed medications that I am using to illustrate the different costs with Part D coverage.
There are a number of medications that have gone generic in recent months. This continues to happen into 2013. When a medication is available in brand name form only (under patent), the different insurance companies make a decision to cover it or not cover it. The term we use for their list of covered drugs is "formulary."
If a company includes it on their formulary, they then decide if there are restrictions to that coverage. The restrictions include, prior approval, quantity limits or step therapy. These can be defined as: prior approval, a term used for medications that the insurance company must be informed about and approve before you are allowed to fill the prescription at the pharmacy. If you do not receive a prior approval first, the insurance company may not cover the cost of the medication. Quantity limit - this term usually refers to medications. This means the insurance company will limit the number of pills or doses you are given each day/week/month. A medication taken once weekly will have a quantity limit of four per month. This quantity limit may be waived if your physician requests this from the insurance company. Step therapy - this term applies to a category of medications for which your insurance company would like to limit coverage. In this situation, the insurance company usually denies the filling of the medication. The insurance company will require you fill a less expensive medication to try it. If that works, everyone saves money. If it doesn't work, you can work with the plan and your doctor to "step-up" to the originally prescribed medication.
Now back to brand name versus generic medication. The medication is not available generically (like Pradaxa). Your physician has prescribed Pradaxa. The insurance company could cover that Pradaxa and decide how it was tiered within their plan. In this case, we will assume it is a preferred name brand tier. The medication is covered and the co-pay structure of the tier applies (maybe $35, maybe $90) during the initial coverage. During the coverage gap, if you reach it, the medication would become 50 percent of the total cost ($240 becomes $120 co-pay). If you reach catastrophic coverage that co-pay becomes 5 percent of the total cost ($12). You can see there is a significant cost difference between the phases of coverage with Part D.
If a medication is available in name brand or generic, the scenario can be very different. Let's use Lipitor, which is now available generically as Atorvastatin Calcium. In 2013 many of the Part D plans are limiting access to name brand medications that are available generically. Some plans may use the above described step-therapy, prior approval as ways to discourage use of name brands. If you and your physician feel strongly you want that name brand medication, you may work towards getting it filled as a name brand. Some plans may not cover name brand medications that are available generically. So if you need to take Lipitor instead of Atorvastatin, you should be sure your Part D plan will cover that and switch to a different plan if it doesn't cover that medication.
When you fill your Lipitor, your plan may have it as a preferred or non-preferred name brand. The co-pay can differ significantly ($40 or $95) during the initial coverage. When you fill your Atorvastatin it could be a preferred or non-preferred generic ($0, $4.42 or $10). During the coverage gap, the name brand Lipitor goes to 50 percent (Lipitor $122 equals $61) the generic goes to 79 percent in 2013 (Atorvastatin Calcium $45 equals $35.55). There is a significant difference in co-pay in this phase of coverage. Sometimes during the coverage gap the name brand becomes less expensive than the generic. Each medication has a different outcome due to the pricing differences.
When a medication first comes off of patent, it usually does not drop in price right away. The name brand might drop down a little in price to stay more competitive. The generic is newly manufactured, so it isn't that much cheaper. The tiering of your insurance plan makes the biggest difference in your pricing at the pharmacy. The medication may have a generic name, but your insurance company can still make it a Tier 3 medication (which is classified as a name brand) and therefore has a higher co-pay.
Basically a lot of the decision making for choosing a Part D plan comes down to math. Which plan costs more and what do you pay at the pharmacy, and how often do you pay for that medication. I love the www.medicare.gov website. It does all the math and then tries to illustrate how the math impacts our decision making. The difficulty always comes in reviewing and understanding the information.
I hope this helped in explaining one aspect of the difference between brand name and generic medication. I cannot address effectiveness, or medical issues, but I can talk about cost. Good luck and work with your physician on the other part of the decision.
Janell Sluga is a geriatric care manager certified and works for Senior Life Matters, a program of Lutheran Senior Housing, and has worked in Chautauqua County with seniors for more than 18 years. She is HIICAP (Health Insurance Information, Counseling & Assistance Program) counselor-trained by Office for the Aging. She does not sell insurance or represent any insurance company. She is an unbiased source of insurance and education to help seniors choose the best option for them.
You may submit questions to be answered in later columns to Janell Sluga at Senior Life Matters, 737 Falconer St., Jamestown, NY 14701, or call 716-720-9797, or by email at janells@lutheran-jamestown.org.
Please remember that not all questions can be answered in this format, but as many as can be, will be.