Specialty Tier Pharmacy Benefit Designs in Commercial Insurance Policies

A person holds several bottles of prescription medicine.

Issues presented by specialty tier benefit designs in health insurance plans can best be addressed by the combined efforts of state and federal legislators, insurance regulators, advocates, and other interested groups

As health care costs rise, one of the chief determinants of the rate of increase has been the cost of prescription drugs. Over time, additional tiers have been included in pharmacy benefit designs and, as they were added, cost-sharing in the new, higher tiers has increased.

With the enactment of the Affordable Care Act (ACA), which eliminated underwriting and imposed the federal minimum loss ratio (MLR), a limit on administrative and other non-health care spending, health insurers have looked to pharmacy benefit designs as one of the few remaining mechanisms for controlling costs. As a result, tiered pharmacy benefit designs with as many as five or six tiers are emerging. These tiered pharmacy benefit designs could significantly affect the affordability of prescription drug therapies for those who need them most, and could also potentially violate the anti-discrimination policies of the ACA.

This issue brief, prepared by the Georgetown Health Policy Institute’s Center on Health Insurance Reforms, examines these issues and explores several regulatory approaches for how best to address them.