One thing many patients may not know is that their doctor may not prescribe the treatment he thinks most effective – because he’s penalized for doing so.
States are considering new regulations to deal with this problem, but it’s a symptom of overreliance on third-party payers, a lack of transparency and existing regulations that limit competition among insurers and providers. We can solve this problem without layering on more unnecessary government intrusion.
Here’s the problem: You have an infection, and your doctor would like to order the antibiotic he thinks would work best for you. But your insurance company discourages or flat-out will not allow him to choose that drug even though he judges it to be the best treatment. So your doctor prescribes a cheaper drug that’s not as likely to work.
Unless your doctor tells you, you will never know he was forced by what’s called “step therapy” to do this. The next step might not take you to the drug he prefers, either. You might never get there.
This “fail first” policy is based on the third-party payer’s quest for cost-effectiveness. If the cheaper drug happens to work, the insurer pays less, which in the long run could result in you and other patients paying less for insurance. But if it doesn’t work, you are the one who suffers longer and loses additional time from work while waiting for the right drug to be prescribed.
Perhaps if you knew about your doctor’s first-choice treatment, you would ask him to submit the paperwork or jump through other hoops to get it for you, or maybe you would be willing to pay extra for that drug. Or perhaps you would look into changing insurance carriers or complain to your employer, who might eventually choose an insurer that doesn’t use a fail-first policy.
None of these options is easy or would work in every situation, but at least you would have the choice. Without transparency, the patient is powerless.
Insurers have very aggressively encouraged doctors to switch from brand-name drugs to generics, and more than 70 percent of new prescriptions are written for generics. Unfortunately, revenues from only brand-name drugs, not generics, are used to fund new drug research.
Payers also have begun to encourage switches from brand-name drugs to other, cheaper drugs in the bottom half of their classes. Whereas the generic’s active ingredients are identical to those found in the brand-name drug, those in the non-generic drugs in the same class are not.
Many states have enacted or are considering legislation to restrain payers from rewarding doctors who switch their drug choices and penalizing those who do not, but such regulations simply add to the complex web of mandates that already burden doctors and insurers alike. They fail to get at the underlying cause of the problem: overreliance on third-party insurance, which makes doctors and patients insensitive to the costs and benefits of the choices they make. Fail-first is an effort by payers to rein in unnecessary spending; such efforts are not always bad, and sometimes they are in the patients’ best interests.
Instead of layering on more restraints, a better and more comprehensive solution is to encourage greater transparency so patients can pursue some of the options described earlier. Public policies that reward patients for paying directly for medical expenses, such as through Health Savings Accounts, are also a step in the right direction.
Empowering consumers to choose the insurer and combination of benefits and price that are best for them is an important part of the solution. Making insurance personal and portable does this, yet the regulatory changes in the Patient Protection and Affordable Care Act (Obamacare) are driving many companies out of the individual-insurance marketplace, giving consumers fewer choices.
Allowing sales of insurance across state lines would give consumers more choices and probably would prompt more transparency among insurers. Finally, speeding up approval of new drugs by the Food and Drug Administration – or even allowing patients to gain access to new drugs before they have completed all of the FDA’s lengthy drug-approval trials – would reduce the cost of the newest and most effective drugs.
Unnecessary government intrusion has failed. To protect patients and allow doctors to practice the best medicine they can, we should go right to these patient-empowering policies – the best treatment for what ails the nation’s health care system.
Dr. Richard Dolinar is a senior fellow for health care policy at the Heartland Institute.