Brand-Name Drugs

What are brand-name drugs?

Brand-name drugs may be available by prescription or over-the-counter. However, over-the-counter drugs are seldom covered by insurance.

All drugs have a chemical name, which is too complicated to say and impossible for the average person to remember.

The drug company patents the drug to protect it from being copied.

♦ They give the drug a name more suitable for marketing purposes. That name is what is called the brand name.

Crestor is a brand name for a famous cholesterol medication.

Most patents protect for 20 years. The actual lifetime of the drug’s protection in the marketplace will be considerably less than 20 years. Protection starts from the date of the patent filing. It can take years before the patent is actually approved.

Once the patent expires the drug can be made by other companies and sold as a Generic drug instead.

Sometimes the company holding the original patent will try to renew the patent by creating a new version of the drug. This approach may require new clinical trials and a new patent application, all of which take time and cost a lot of money. At the same time the generic version could potentially compete with them.

Preferred brand & Non-preferred brand

Many traditional insurance plans use a tier system for deciding how much to pay for a drug. These are designed to require different levels for copay. A preferred brand is a drug your plan would prefer that you take before taking a non-preferred one.

• It is common to have a copay of $25 for a preferred brand and a $55 copay for a non-preferred brand.

Your plan may prefer one drug over another because of greater cost savings and / or greater experience. The preferred brand may have been on the market longer than the non-preferred brand. Your insurance plan may consider the preferred brand more effective based upon a longer history of treating a particular condition.

• It does not mean you cannot take the non-preferred brand. It just means you need to expect some push back from your insurance company. Some plans may insist you show that you have tried other drugs before approving this brand drug. And you must expect to pay more for a non-preferred brand over a preferred one.

♦ The non-preferred brand is almost always the most expensive for the insurance company to cover. Having a higher copay for a non-preferred drug helps encourage people to try a less expensive drug.

Prescription deductible

It is becoming more common to see plans require a prescription deductible first be met before the plan covers any brand or specialty drugs. Typical prescription deductibles have been running $150 - $300.

♦ Most employer sponsored health plans have a prescription benefit. The majority do not require a separate prescription deductible.

However, according to a Kaiser Foundation survey about 15% of plans do require a separate prescription deductible.

Many plans purchased at the Marketplace (Exchange) have gone to offering what are called "combined deductible."

• What this means is if you have a combined deductible your medical and prescription costs will count toward one total deductible.

Should you have large medical expenses you could easily meet your total deductible and then your prescriptions would not be subjected to a separate deductible. You would still have cost sharing for prescriptions like a copay.

• In 2023, most Bronze and Silver plans offered a combined deductible while 10% offered at separate drug deductible.

28% of Gold plans offered a separate drug deductible.

Platinum plans were different in that 55% offered at separate drug deductible.

Plans may require the prescription deductible be paid first before any drug is covered. But the majority of plans specify that that some drugs like generics are not subject to the deductible.

You need to review your plan’s description of benefits document first before deciding if the plan will work well for your situation.

Prior authorization

Prior authorization is a method insurance plans use to discourage the over use of expensive brand drugs. Before the plan will cover the drug your doctor may need to document why you need a particular drug.

The process is similar to obtaining prior authorization for a medical service.

Step therapy

Step therapy is a term used to refer to trying other less expensive drugs first before stepping up to drugs that cost more. Some plans go so far as to make it a requirement that you or your doctor documents that you have tried less expensive drugs first.

If you have already tried similar drugs this should not be a problem for your doctor. However, if you have not tried cheaper alternatives step therapy can feel pretty restrictive.

When is it best to use brand drugs?

Some medical experts believe that a specific brand drug is essential for some patients. These experts tend to be referring to highly specialized drugs with a very narrow window of effectiveness.

Some experts argue that new brand drugs have been developed because of a need not met by older brands or generics and we should not be focused on keeping costs down but rather on the providing the most effective medication as possible.

This is a subject best discussed with your doctor.

Do doctors make money prescribing brand-name drugs?

Sadly, some doctors earn money or special perks from pharmaceutical companies for prescribing expensive brand drugs.

• A study by the American Medical Association found that doctors that received free meals from a pharmaceutical company were more inclined to prescribe that company’s brand rather than another medication in the same category.

It has gotten a little easier to find out who is doing this.

♦ One of the requirements of the Affordable Care Act is that there be a disclosure of incentives provided to doctors by pharmaceutical companies. Finding this information is not so straight forward. Several online sites now have searchable database to take advantage of this new disclosure.

If you are wondering if your doctor is making money by prescribing brand-name drugs, you might try the website Dollars For Docs.

It may surprise you to learn some really big money goes to doctors promoting specialized medical devices like implants. That is a topic for a later date.