Grassley Seeks Answers on Reported “Brand Penalty” Charged to Patients Over Name Brand Prescription Drugs

Sen. Chuck Grassley is asking a health insurer to explain an apparent practice of charging customers more for receiving a brand name prescription drug than a generic drug when the insurer’s own doctors explicitly prescribed the brand name drug for medical reasons.  This “brand penalty” reportedly is the difference between the price of the branded drug and the generic drug.  The increased cost is expensive for patients and has medical implications because a brand name drug works better than the generic in some cases.  Grassley also noted due process concerns about this potential practice if the insurer, CareFirst, is not complying with its own policies.  

“The imposition of a brand penalty causes due process concerns,” Grassley wrote to Chet Burrell, president and chief executive officer of CareFirst, Inc.  “If CareFirst has entered into thousands of contracts with individuals based upon a certain set of policy promises, it must provide proper notice to policyholders when contracted-for terms change. It is not clear whether CareFirst is providing notice, and it would be helpful to the Committee if it could describe, in detail, how it handles the notice requirement and whether it comports with the standard in the industry.

“… The issues at stake not only have a financial impact but a medical impact. Many patients have tested generics but have found that their body simply does not react positively to them and therefore require brand name drugs. Understanding how CareFirst, and the industry in general, approaches these situations is important not only to the consumer but Congress as well.”

Grassley noted that a brand penalty appears to be in conflict with CareFirst’s own guidelines and possibly federal law.  He asked the company several questions to better understand its policies and practices in this area, as well as the general practice in the industry.

Grassley wrote to CareFirst because individuals reported to him that the insurer charged them a brand penalty even when the branded drug was deemed medically necessary by doctors.  

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