Insurer restricts its sick members to generic drugs

A local medical insurer has directed that its sick clients will, starting today, receive cheaper variations of drugs when they fall sick, as part of a global push at cost-cutting.

Madison General Insurance said in a notice that all healthcare facilities will henceforth stop dispensing branded drugs, a move that could be replicated across the industry.

What is likely to follow is a major debate on whether corporate profits should override client preferences.

Implications of the directive is that patients insisting on original drugs would be forced to pay out of pocket despite having a medical cover.

In effect, insured patients have lost discretion of choice and would only make do with the drugs prescribed by their doctor.

Generic drugs sell at a fraction of the price tag of original products but are reported to be equally effective.

“…all members insured under Madison Insurance will benefit from generic treatment with effect from January 7, 2019,” reads the notice in part.

John Muhindi, who authored the memo, said the cheaper variant of drugs had the same efficacy – the potency to treat illnesses – despite the pricing differences.

“The prescription from the attending doctor should therefore be consistent with the medication to be dispensed,” he wrote.

Among the reasons generic drugs are cheaper is that the original manufacturer allows other manufacturers to use their chemical composition after recouping investment in research.

Augmentin, prescribed as antibiotic to treat various bacterial infections, for instance, is manufactured by British pharmaceutical firm GlaxoSmithKline.

Several cheaper variants of the drug with the same chemical components are however widely produced and prescribed in its place.

And that is specifically what the insurers, through their lobby AKI, have been fighting for in a bid to slash the soaring costs associated with treating sick members.

Madison’s move to insist on generic-only prescription comes amid intense pressures on medical insurers who have consistently reported losses, partly attributable to patient fraud.

Insurers have attempted to plug the avenues enabling fraud including the use of biometrics and smart cards in identifying patients.

But it is the cutthroat competition for business that has meant insurers are furiously undercutting each other to the benefit of the clients but often the premiums are insufficient to cover benefits.

Godfrey Kiptum, Chief Executive Officer of the Insurance Regulatory Authority, blamed poor pricing in underwriting as the major hurdle for insurers.

“The claims have not become too much. The root cause is poor pricing. Arising from this, the premiums paid are not sufficient to compensate the risks underwritten,” he told The Standard in a recent interview.

Such could be the situation that Madison is finding itself in at the moment, informing the decision to go for the cheapest possible medical benefits for clients.

But the preference for the cheaper options is not unique to Kenya.

National Health Service (NHS), the biggest player in the United Kingdom healthcare sector, has in the recent years demanded of its members to only receive generic drugs when they fall sick, also in a cost-cutting initiative.

A court threw out a petition filed by two original drugs manufacturers who had sued NHS over the limitation to generics within the public-funded medical cover.