Prescription Cost 1050x350
Issue Background

Specialty Tiers / Out of Pocket Cap

Where We Stand

  • Use of specialty tiers for prescriptions has grown to unmanageable cost levels for patients.
  • Specialty tiers are being used intentionally and unintentionally to block patients from accessing life-saving medications.
  • Limits should be placed on out-of-pocket costs patients are required to pay for medications.
  • Cost limits should apply regardless of whether or not a plan's deductible has been reached.
  • Insurance plans must be required not to place all drugs from the same class on higher prescription tiers.

Traditional health insurance prescription coverage has placed prescription medications on formulary tiers with a fixed co-payment amount for each tier. Typical copays are $5 for generic (Tier I), $30 for preferred brand-name (Tier II), and $60 for non-preferred brand-name drugs (Tier III).

As the cost of biologic drugs has increased, a growing number of insurers have begun placing them on Tier IV or higher, requiring patients to cover a percentage of the medication price, ranging from 25% to 50%, rather than a fixed co-payment. The annual price for biologics ranges between $12,000 to $48,000 or more.

The increased out-of-pocket costs may preclude some patients from complying with treatment protocol prescribed by their doctors, which may result in serious adverse effects. In rheumatoid arthritis patients, not adhering to treatment regimens may result in permanent joint damage and disability, expensive surgeries, and higher health care costs.

In response, Congress as well as several states are considering proposals to limit the use of specialty tiers. CSRO supports state and federal legislative proposals limiting the copayment or coinsurance amount that insurers may require patients to pay for prescriptions on specialty tiers when the insurer provides coverage for prescription drugs subject to a tiered formulary.

Legislative Map

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