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fter months of targeting drug makers over their pricing, Senator Chuck Grassley is now probing one of the biggest insurers in the mid-Atlantic region, opening what may become another front in the battle over the cost of prescription medicines.

The lawmaker has asked CareFirst BlueCross BlueShield to explain a complicated policy that he suspects may force patients to overpay for brand-name medications that doctors have specified must be dispensed. Grassley is also concerned that some people may instead feel they have no choice but to opt for lower-cost generic drugs that, in such situations, may not be as effective.

“The issues at stake not only have a financial impact, but a medical impact,” the Iowa Republican wrote in a letter to CareFirst chief executive officer Chet Burrell on Monday. “Many patients have tested generics, but have found that their body simply does not react positively to them and, therefore, require brand name drugs.”

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Specifically, Grassley is looking at something called a “brand penalty.”

Here’s the scenario: A CareFirst beneficiary is prescribed a drug by a doctor, who purposely notes that only a brand-name drug should be dispensed. But when the patient pays at the pharmacy, they are charged the difference in cost between a brand-name and corresponding generic, instead of the expected co-pay which, invariably, would be lower.

Considering the higher cost involved, Grassley wonders about the extent to which patients may try to persuade a pharmacist to call the physician to authorize that a generic be dispensed instead. But given that these are believed to be scenarios in which physicians specifically write “dispense as written” on the prescriptions, it is uncertain how often they would comply. Grassley did not cite such data.

Nonetheless, he contended that “the brand penalty can potentially cost patients thousands of dollars per year through no fault of their own,” according to his letter, in which he described brand penalties as a “concerning trend.” He also suggested that these so-called penalties may violate federal law that “appears to place emphasis on a doctor’s decision to make a drug medically necessary.”

A CareFirst spokeswoman declined to comment.

Grassley, by the way, is not confining his interest only to this one insurer, which covers Maryland, Washington, D.C., and northern Virginia. As his letter indicates, he is curious to know whether other insurers similarly impose such penalties and a source familiar with the matter suggested the senator plans to pursue the topic with other health plans as more is learned.

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On that note, we asked America’s Health Insurance Plans, the trade group, for comment about branded penalties as well as the probe, and will update you with any reply.

Over the past year, Grassley has also looked into Medicaid rebates for EpiPen, launched an investigation into potential loopholes exploited by drug makers seeking lucrative orphan drug designations from the Food and Drug Administration, and introduced a bill to allow Americans to import medicines from Canada.

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  • It​ appears that no actual pharmacist has sat down and given a good explanation so that he can understand the concept of generics and drug costs and pricing if this opinion and waste of the public tax money is spent on a wonder journey by Mr Grassley. He is so concerned about this ‘red herring’ when he could better focused on the real problems of corporate greed by PBMs colluding with drug companies, which tie the government payers in knots and ultimately the tax-payer citizens which bear the brunt of exorbitant and artificial prices. Show me any scientific data supporting the contention that generic drugs as a whole or specifically do not work, and I will tell you about the physician that insisted his patients needed brand-name Lasix even if they had to pay cash, and this was 25 years ago when the efficacy of generic medications had already been established, as well as the good doctor had investments in the brand-name company. Bogus argument. Why should we as a nation support the tax-supported prescription drug operation of another country when we could clean up our own act?

  • I would be curious to see his data that would suggest that there are so many ineffective generic drugs that brand name only need to be dispensed.

  • Mr Grassley is quite right in his assumption that insurers are overcharging. Even worse, the Pharm Benefit Managers that are the hatchel men for these people further penalize the patients by demanding that patiets try lower cost alternative treatments (not generic equivalents)before thay will approvea drug. This leads to weeks of appeals and denials before something is approved. ThePharm Managers can then turn to their insurance company and say “see we saved you 12% this year!!!!”

    • It is not the insurance company that starts with the overcharge; they’re along for the collusion with the manufacturer, and since there are no other suppliers, the argument that ideological ill-informed politicians keep handing out as relevant about a free market economy also plays into self-interested greed by law-makers.

  • This is a new approach to me. The insurers I have experience with simply have what feels like a high Tier 4 ‘co-insurance.'[ ’33 percent of the cost for Tier 4 drugs’]

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