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What Is a Drug Reimbursement?

Reimbursement occurs when the drug company or the patient is fully paid for othe cost of the treatment by the insurance company or other third party.
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  • Written By: Ken Black
  • Edited By: Andrew Jones
  • Last Modified Date: 29 September 2014
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A drug reimbursement denotes a situation where either a drug company is paid by a third party for all or part of a prescription, or where a third party repays the consumer a portion or all of the prescription's price. Various insurance companies may handle the process in different ways, and in some cases it may depend on the drug's manufacturer. A drug reimbursement is often a benefit of a medical insurance plan, though not all plans offer prescription drug benefits.

In cases where the drug manufacturer is reimbursed, the consumer is responsible for doing very little other than going to the location and picking up the medicine. Depending on the plan, the consumer may need to offer some money toward the cost of the prescription known as a co-payment. The pharmacy then handles the rest of the transaction by turning in a claim to the insurance company noting the drug of choice, the prescription, date filled, and other relevant information. This may be done either in paper form or via electronic network.

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For drug reimbursement plans that rely on the patient to handle the claim, the patient generally must pay the entire cost of the prescription up front. This can create at least a temporary hardship for the patient until the money is reimbursed. Often, this may be a method insurance companies choose to encourage a patient to take a generic medication, which will create less temporary out-of-pocket expense for the patient and the insurance company. The turnaround for the drug reimbursement can vary with each company and the amount of claims being processed.

No matter which method is being used, the general trend in drug reimbursement strategies is to encourage the use of more generics. This can significantly cut down on the costs to the insurance companies. For example, in the second quarter of 2009, the average price of a brand name drug was approximately $143 US Dollars (USD). The generic equivalent cost $20.48 USD on average. In addition to the strategy of making the patient pay for the costs up front, some drug companies encourage the use of generics by only paying a small portion of a name brand drug if a generic is available, versus paying for all or nearly all of the generic.

Not all companies offering a drug reimbursement will make all drugs available under the plan. For example, some drugs may be considered enhancements to quality of life, and therefore be optional and not subject to reimbursement. Certain insurance providers may also have relationships with certain drug manufacturers, and have exclusive benefits with those manufacturers. Moreover, newer drugs must usually go through an evaluation process before being subject to reimbursement. Those unsure of what their drug reimbursement plan offers should check with their insurance companies before filling a prescription.

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