Step Therapy Rules: What You Need to Know About Insurance Requirements to Try Generics First

When your doctor prescribes a brand-name medication, but your insurance says you have to try a cheaper generic first-this isn't a suggestion. It's a rule. This is step therapy, and it’s now part of how nearly half of all U.S. health plans handle prescription drugs. You might not have heard the term, but if you’ve ever been denied coverage for a medication until you tried something else first, you’ve experienced it.

What Exactly Is Step Therapy?

Step therapy, sometimes called a "fail-first" policy, is a cost-control tool used by insurance companies. It forces patients to try lower-cost medications-usually generics-before the insurer will pay for the drug your doctor originally recommended. The idea is simple: if a cheaper drug works just as well, why pay more?

But here’s the catch: not all drugs work the same for everyone. A generic arthritis medication might help one person but do nothing for another. Still, insurers require you to go through a sequence: Step 1 (generic), Step 2 (another generic or older brand), Step 3 (the drug your doctor wanted). Only after failing the first two steps do you get approval for the original prescription.

This isn’t just paperwork. It’s a process that can take weeks. In some cases, patients with conditions like rheumatoid arthritis, multiple sclerosis, or severe depression have waited months just to get the right medication. By then, their condition may have worsened.

Why Do Insurers Use Step Therapy?

The numbers tell the story. About 40% of U.S. health plans now include step therapy in their formularies, according to a 2021 analysis from the National Institutes of Health. That’s up from 25% in 2018. Employers, Medicaid plans, and private insurers are all using it.

Why? Drug prices. Brand-name biologics for conditions like Crohn’s disease or psoriasis can cost over $10,000 a month. Generics? Often under $50. The Congressional Budget Office found that step therapy can cut drug spending by 5% to 15% in some therapeutic areas. For insurers, that’s real savings.

But the real driver isn’t just cost-it’s the lack of government action. When lawmakers don’t cap drug prices, insurers step in. They’re not trying to be cruel. They’re trying to manage costs in a broken system. Still, that burden falls on patients.

When Step Therapy Makes Sense

Let’s be fair: sometimes it works. For many conditions, generics are just as effective as brand-name drugs. Take high blood pressure. Lisinopril, a generic ACE inhibitor, works just as well as the more expensive brand versions. For asthma, albuterol inhalers are widely available as generics. In these cases, step therapy saves money without hurting outcomes.

A 2023 GoodRx survey found that 17% of patients who went through step therapy ended up doing better on the cheaper drug. They avoided side effects, saved money, and didn’t need the pricier option at all.

But this only works if the first drug actually fits the patient. That’s where the system breaks down.

When Step Therapy Hurts

The American College of Rheumatology doesn’t support step therapy. Why? Because it delays effective treatment. In their 2022 patient survey, 68% of people with autoimmune diseases reported negative health effects from being forced to try cheaper drugs first. Over 40% said their disease got worse during the waiting period.

One Reddit user, "ChronicPainWarrior," shared their story: they had rheumatoid arthritis. Their doctor prescribed a biologic. Insurance said no-try three NSAIDs first. Six months later, after the third drug failed, they finally got approval. By then, joint damage was irreversible.

It’s not just physical harm. The administrative burden is crushing. Physicians spend an average of 18.3 hours a week just handling step therapy appeals and prior authorizations. That’s nearly half a workday. Patients, meanwhile, are stuck in limbo-calling insurers, filling out forms, waiting for decisions that can take four to eight weeks.

And if you switch jobs or insurance plans? You might have to start the whole process over-even if you’ve been on the same medication for years.

What Are the Exceptions?

You’re not powerless. Federal and state laws require insurers to offer exceptions. The Safe Step Act, introduced multiple times in Congress since 2017, would make these rules uniform across all plans. But even without federal law, 29 states have passed their own protections.

Insurers must grant exceptions in five clear situations:

• The drug they want you to try has already failed you in the past.
• Delaying treatment could cause serious or permanent harm.
• The required drug is medically contraindicated for you.
• The drug would stop you from doing basic daily tasks like walking, dressing, or working.
• You’re already stable on your current medication and have had prior approval.

These aren’t loopholes. They’re legal requirements.

How to Fight a Step Therapy Denial

If your insurance denies your prescription, here’s what to do:

1. Ask your doctor for a letter of medical necessity. This isn’t optional. It needs to clearly state why the step therapy drug won’t work for you-cite your medical history, past failures, side effects, or risk of harm.
2. Submit the request through your insurer’s formal appeals process. Most have online portals or fax numbers listed on your member handbook.
3. Call your insurer’s customer service. Ask for the exact reason for denial and the expected timeline. Insurers are required to respond within 72 hours for standard requests and 24 hours for urgent cases (like those involving cancer or neurological conditions).
4. If denied, file a formal appeal. Your doctor must re-submit with additional documentation. Some insurers require a second opinion.
5. If still denied, escalate to your state’s insurance commissioner. Many have consumer advocacy offices that can intervene.

Blue Cross Blue Shield of Michigan, for example, says their standard review time is 72 business hours. But that’s not always the case. Some insurers drag their feet. Don’t assume your appeal is lost-keep pushing.

What About Self-Insured Plans?

Here’s the biggest gap in protection: self-insured employer plans. These are run directly by companies (like Walmart, Apple, or your local hospital system), not insurance companies. They’re regulated by federal law (ERISA), not state laws.

That means even if your state requires step therapy exceptions, your employer’s plan might not follow them. About 61% of Americans get coverage through self-insured plans-meaning most people are still vulnerable.

The Safe Step Act would fix this by applying the same rules to self-insured plans. But as of 2025, it hasn’t passed. Until it does, patients in these plans have fewer legal protections.

What You Can Do Right Now

- Know your plan’s formulary. Log into your insurer’s website and search for your medication. If it’s in Tier 3 or higher, step therapy is likely required.

- Ask your pharmacist. They often know which drugs trigger step therapy before you even get to the doctor.

- Use patient assistance programs. Many drugmakers offer co-pay cards or free samples that can bypass step therapy. Check the manufacturer’s website.

- Keep records. Save every denial letter, email, and phone call. You’ll need them if you appeal.

- Connect with patient advocacy groups. Organizations like the Arthritis Foundation or Step Therapy Awareness offer templates for appeals and direct support.

The Future of Step Therapy

By 2025, analysts at Avalere Health predict step therapy will cover 55% of specialty drug prescriptions-up from 40% today. That means more people will face this hurdle.

But pressure is growing. Patient groups are pushing for mandatory response times. Some states are now requiring insurers to respond within 10 business days. Others are banning step therapy for life-threatening conditions entirely.

The system isn’t going away. But it’s changing. More people are speaking up. More doctors are refusing to play along. And slowly, insurers are being forced to listen.

You’re not alone. And you don’t have to accept a denial without a fight.