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

If you’ve ever been told by your doctor to try a cheaper pill before getting the one they originally prescribed, you’ve run into step therapy. It’s not a glitch in the system-it’s by design. Insurance companies use step therapy to force patients to try generic or older drugs before covering newer, more expensive ones. For many, it’s a harmless shortcut. For others, it’s a dangerous delay that can make chronic pain worse, cause joint damage, or even lead to hospital visits.

How Step Therapy Actually Works

Step therapy, sometimes called a "fail-first" policy, is a rule built into most insurance formularies. It says: you can’t get Drug B unless you’ve tried and failed Drug A first. Drug A is almost always a generic version-cheaper, older, and often less effective for certain conditions. Drug B might be a brand-name biologic, a newer targeted therapy, or something your doctor knows works better for your specific case.

Here’s how it plays out in real life: You have rheumatoid arthritis. Your rheumatologist prescribes a biologic that stops joint damage. But your insurance says no-they want you to try two or three NSAIDs first. Even if you’ve tried them before and they did nothing. Even if you’re already in pain. Even if your joints are already deteriorating. You have to fail those first.

It’s not just for arthritis. Step therapy applies to asthma inhalers, diabetes medications, depression treatments, and even MS drugs. In fact, about 40% of all prescription drug plans in the U.S. use step therapy, according to a 2021 NIH analysis. That number has been climbing since 2018, and experts predict it’ll hit 55% of specialty drug prescriptions by 2025.

Why Insurers Push for Generics First

The math is simple for insurance companies. Generic drugs cost 80-90% less than brand-name versions. In 2022, the Congressional Budget Office found step therapy could cut drug spending by 5-15% depending on the condition. That’s millions of dollars saved per insurer per year.

But here’s the catch: those savings come from shifting costs onto patients and doctors. A patient might spend six months trying three ineffective drugs, paying copays each time, dealing with side effects, and losing time at work. Meanwhile, their condition worsens. The insurer saves money now-but might pay more later in ER visits, hospitalizations, or lost productivity.

Insurers argue they’re just making sure patients get the "most reasonably priced and effective" option. But what’s "effective"? For someone with Crohn’s disease, a generic steroid might control symptoms for a while-but not stop the inflammation. The real effectiveness? Preventing bowel damage. That’s not something a formulary algorithm can measure.

When Step Therapy Can Hurt

The biggest problem isn’t the rule-it’s the time it takes to get around it. The American College of Rheumatology says appeals for step therapy exceptions can take four to eight weeks. That’s not a delay. That’s a health crisis for someone with an autoimmune disease.

One Reddit user, "ChronicPainWarrior," shared their story: they had to fail three different NSAIDs over six months before their insurance approved a biologic for rheumatoid arthritis. By then, their joints were permanently damaged. The Arthritis Foundation’s 2022 survey found 68% of patients experienced negative health outcomes because of step therapy. Nearly half reported disease progression during the required trial period.

And it’s not just physical damage. Switching insurance plans means restarting the whole process-even if you’ve been on the same medication for years. A 2023 Healthinsurance.org report found patients often lose coverage mid-treatment because their new plan doesn’t recognize their history. That’s not just inconvenient. It’s dangerous.

What Exceptions Exist-and How to Get Them

Step therapy isn’t absolute. Federal and state laws require insurers to allow exceptions. The Safe Step Act, reintroduced in 2021, outlines five clear situations where insurers must bypass the step process:

• The required drug was already tried and didn’t work
• Delaying treatment could cause severe or irreversible harm
• The required drug is contraindicated (you’re allergic or it interacts badly with other meds)
• The required drug would stop you from doing basic daily tasks
• You’re already stable on your current drug and it was previously approved

But getting an exception isn’t easy. Your doctor has to submit medical records, lab results, and a letter explaining why the step therapy drug won’t work for you. Blue Cross Blue Shield of Michigan says they review standard requests in 72 business hours. But that’s just the rule. In practice, many patients wait weeks.

Doctors are drowning in paperwork. The ACR found physicians spend an average of 18.3 hours a week just managing prior authorizations and step therapy appeals. That’s almost half a workday-time that could be spent with patients.

State Laws Vary-And Many Don’t Cover Everyone

As of 2025, 29 states have passed laws requiring insurers to allow exceptions. But here’s the loophole: those laws usually only apply to fully-insured plans-meaning plans where the insurance company actually pays the bills.

Most large employers use self-insured plans. That means the employer pays the claims directly, and the insurer just administers them. These plans are regulated by federal law (ERISA), not state laws. That’s a problem because 61% of Americans get their insurance through self-insured employer plans.

So if you work for a big company like Amazon, Walmart, or Google, your step therapy rules are set by federal guidelines-and those are weaker. You might be stuck with the same barriers, even if your state has strong protections.

What You Can Do

If your insurance denies your prescribed medication:

1. Ask your doctor to file a step therapy exception immediately. Don’t wait.
2. Get a copy of your insurance’s formulary. Find the exact step therapy protocol for your condition.
3. Document every failed trial. Save receipts, lab reports, and notes from your doctor.
4. If the exception is denied, appeal in writing. Mention the Safe Step Act criteria.
5. Check if your drug manufacturer offers a patient assistance program. Over 78% of big pharma companies have them.

Some patients find success with co-pay cards or coupons. These don’t always bypass step therapy, but they can make the required generic drugs more affordable-so you’re not stuck paying hundreds per month just to meet the insurer’s requirement.

Is Step Therapy Ever Helpful?

Yes. For some people, the generic drug works just fine. A 2023 GoodRx survey found 17% of patients ended up managing their condition well on the step therapy-required medication. They avoided the cost-and side effects-of a stronger drug.

But that’s not the point. Step therapy shouldn’t be a lottery. It shouldn’t force people to suffer through ineffective treatments just to get the one that works. The system assumes all patients are the same. They’re not. Your body, your condition, your history-those matter.

The Future of Step Therapy

More states are trying to tighten the rules. In 2023, 14 more introduced legislation, and 8 strengthened existing laws to require faster decisions-like 24-hour turnaround for urgent cases. But without federal action, the system stays broken for millions.

The Safe Step Act could fix that. If passed, it would require self-insured plans to follow the same exception rules as state-regulated ones. That would cover the majority of Americans. But it’s still stuck in Congress.

Until then, step therapy remains a cost-cutting tool with real human costs. It’s not evil. It’s not even always wrong. But when it delays treatment for someone with a progressive disease? That’s not efficiency. That’s negligence.