Copayment/coinsurance in drug plans:
The amount you pay for each prescription after you've paid your Deductible (if your plan has one) is either:
Copayment: With a copayment, you choose the price you would like to pay (ex: $10) for all drugs on a tier. Additionally, you may pay a lower copayment for generic drugs compared to brand-name drugs.
Coinsurance: With coinsurance, you pay a percentage of the cost (ex: 25%) of the drug.
Some Medicare Prescription Drug Plans have different Tiers of copayments/coinsurance, with varying costs for different types of drugs.
Some insurance companies set the copay percentage for brand-name drugs higher than for generic drugs. Occasionally if a brand-name drug is reduced in price, insurers will agree to classify it as generic for copayment purposes (as occurred with simvastatin). Pharmaceutical companies have a very long term (frequently 20 years or longer) lock on a brand name drug which for patent reasons cannot be produced/classified as a generic. However, a significant portion of this period is exhausted during pre-clinical and clinical research.
To cushion the high copay costs of brand name drugs, some pharmaceutical companies offer drug coupons or temporary subsidized copayment reduction programs lasting from 2-12 months. Thereafter, if a patient is still taking the brand name medication, the pharmaceutical companies may remove the option and require full payments. If there is no similar drugs available, the patient is forced to either use the drug with the high copays, or they will have to accept the repercussion of non-treatment.