Covering OTCs

Why don’t insurance companies cover selective OTCs (over-the-counter)?  I always heard clients talk about opening pandora’s box.  If I cover one OTC then I have to cover aspirin and vitamins.  Hopefully, us consumers aren’t stupid enough to look a gift horse in the mouth.

But, I like to make rational economic arguements.  So, let’s look at the math around Proton Pump Inhibitors (PPIs) such as Nexium.  If a client covers these, they probably pay somewhere around $100.

• The AWP (average wholesale price) of the drug might be $150.
• Their cost might be 15% discount off AWP.
• The member might pay $22.
• They might get a 10% rebate from the manufacturer.

But, whatever the assumptions, it has to be cheaper for them to give the OTC product which might cost $20, to the members for free.  Why not?