Insurer Oscar Health announced it will cap the price on roughly 100 drugs, including high-cost products such as insulin, at only $3.
The insurer said the goal of the $3 drug list is to help improve adherence. The initiative is part of a larger effort by insurers to control drug costs.
“We came up with a list of about 100 drugs that represent 90% of the use cases that somebody might need a prescription for,” said Vinod Mitta, M.D., Oscar’s vice president of pharmaceuticals, in a release.
The insurer—which offers plans on the Affordable Care Act’s exchanges, small group plans and Medicare Advantage coverage—targeted insulin because the average cost has increased to $450 a month.
“While the drug hasn’t changed dramatically over the years, it is classified differently than most drugs and has a complex manufacturing process that allows most companies to keep it out of the generic marketplace,” Mitta said. “That, coupled with some creative patent strategies, is keeping costs of drugs high.”
The $3 formulary was available to individual members as of Jan. 1, 2020.
However, it is not available in New York, New Jersey and California because state regulations currently prevent the insurer from offering the $3 formulary. Oscar spokeswoman Jackie Kahn told FierceHealthcare that it is working with state regulators to see what can be done to extend the affordable option in the coming years.
Medicare, catastrophic or small group plans also are not eligible for access to the $3 formulary. Currently, about 200,000 of Oscar’s 420,000 members have access to the $3 drugs.
Oscar was able to price the drugs so low through plan design.
“The price we pay to acquire the drug for our members has not changed,” Kahn said. “Instead, we chose to have our members pay $3 and we are covering the rest.”
Insurers have been searching for ways to address the rising costs of drugs, chief among them is negotiating with drug companies for discounts and rebates. Formulary management tools such as step therapy and prior authorization, which require insurer approval before a physician can prescribe a drug, have also picked up steam but garner major opposition from providers.