Step Therapy Rules: How Insurance Forces You to Try Generics Before Approved Medications

Imagine your doctor prescribes a medication that works for your condition. You’re ready to fill the prescription-until your insurance says no. Not because it’s unsafe. Not because it doesn’t work. But because you have to try three cheaper drugs first. This isn’t a hypothetical. It’s step therapy, and it’s in your insurance plan right now.

What Exactly Is Step Therapy?

Step therapy, also called a "fail-first" policy, is when your health insurer makes you try one or more lower-cost drugs before they’ll pay for the one your doctor actually prescribed. These cheaper options are usually generics-medications that have been around for years and cost a fraction of brand-name drugs. The idea sounds simple: start with what’s affordable, and only move up if needed.

But here’s the catch: the drugs you’re forced to try might not work for you. They might cause side effects. Or worse-they might do nothing at all while your condition gets worse.

According to a 2022 NIH study, about 40% of health plans in the U.S. use step therapy for prescription drugs. That means nearly half of all people with chronic conditions-like rheumatoid arthritis, psoriasis, or depression-are being told to go through this process before getting the treatment they need.

How It Works: The Three-Step Ladder

Most insurers organize drugs into a sequence, like a ladder. You have to climb each rung before you can reach the top.

• Step 1: Generic drug (often the cheapest, most common option)
• Step 2: Another generic or older brand-name drug
• Step 3: The drug your doctor actually prescribed

For example, if you have rheumatoid arthritis and your doctor recommends a biologic drug like Humira, your insurer might require you to try methotrexate first, then sulfasalazine, then maybe a different biologic like Enbrel-before finally approving Humira. Each step can take weeks. Each failure means another doctor’s visit, another blood test, another copay.

Blue Cross Blue Shield of Michigan and Aetna both publicly outline these sequences in their member guides. The rules aren’t secret-they’re just buried in fine print.

Why Insurers Use Step Therapy

Insurers don’t do this to be cruel. They do it because drug prices are skyrocketing. A single dose of some specialty medications can cost over $1,000. Generics? Often under $10.

A 2021 Congressional Budget Office report found step therapy can cut pharmaceutical spending by 5% to 15%-depending on the condition. That’s real money for insurers. And since they’re the ones paying the bills, they’re incentivized to push patients toward cheaper options.

But here’s what they don’t always say: those savings come at a cost to patients.

The Human Cost of Delayed Care

It’s not just about waiting. It’s about damage.

The American College of Rheumatology (ACR) says step therapy can lead to irreversible joint damage, nerve injury, or worsening depression. In a 2022 survey by the Arthritis Foundation, 68% of patients reported negative health outcomes because of step therapy. Over 40% said their disease got worse while they were stuck trying drugs that didn’t work.

One Reddit user, "ChronicPainWarrior," shared how they were forced to try three different NSAIDs over six months before getting approval for a biologic. By the time they got it, their joints were permanently damaged. They needed surgery.

And it’s not just autoimmune diseases. Step therapy is common for asthma, diabetes, multiple sclerosis, and even mental health conditions like bipolar disorder or treatment-resistant depression.

When Step Therapy Actually Works

Let’s be fair: sometimes it works.

A 2023 GoodRx survey found that 17% of patients ended up doing just fine on the generic drug they were required to try first. For some, the cheaper option worked just as well-and saved them money.

But that’s not the norm. Most people aren’t trying step therapy because they want to. They’re doing it because their insurance won’t cover anything else.

How to Get an Exception

You’re not stuck. There’s a way out: the step therapy exception.

Federal and state laws require insurers to allow exceptions under certain conditions. The Safe Step Act (still pending at the federal level) outlines five clear cases where insurers must approve your doctor’s original prescription right away:

• You’ve already tried the required drug and it didn’t work
• It would cause severe or irreversible harm to delay treatment
• The drug is contraindicated for you (due to allergies, side effects, or other conditions)
• It would prevent you from doing daily activities
• You’re already stable on the prescribed drug and were previously covered

To get an exception, your doctor has to submit paperwork-medical records, lab results, notes on previous failures. Some insurers require a letter of medical necessity. Others want phone calls.

Blue Cross Blue Shield of Michigan says they review standard requests in 72 business hours. Urgent cases? 24 hours. But in practice, many patients wait four to eight weeks.

What You Can Do

If you’re caught in step therapy:

1. Ask your doctor to file an exception immediately. Don’t wait. The sooner they start, the sooner you might get approved.
2. Keep every record. Save emails, prescriptions, denial letters, and doctor’s notes. You’ll need them if you appeal.
3. Call your insurer. Ask for a copy of their step therapy protocol for your condition. They’re legally required to give it to you.
4. Check your state’s laws. 29 states have passed step therapy protections. Some require insurers to respond within 72 hours. Others ban step therapy for life-threatening conditions.
5. Look into patient assistance programs. Many drugmakers offer free or discounted medications for people stuck in step therapy. Over 78% of major pharmaceutical companies have these programs.

The Big Problem: Self-Insured Plans

Here’s the twist: most of these state laws don’t apply to you if you get insurance through your employer.

About 61% of Americans get their health coverage through self-insured employer plans. These are regulated by federal law (ERISA), not state laws. That means even if your state has strong step therapy protections, your employer’s plan can ignore them.

That’s why the Safe Step Act matters. It would force self-insured plans to follow the same exception rules as state-regulated plans. But as of 2026, it’s still stuck in Congress.

What’s Next?

Step therapy is growing. Avalere Health predicts it will cover 55% of specialty drug prescriptions by 2025. That’s up from 40% today.

Patients are pushing back. Advocacy groups are suing insurers. Some states are tightening time limits. Others are banning step therapy for cancer and neurological conditions.

But until federal law changes, you’re still at the mercy of your insurer’s formulary-and the people who write it.

Final Reality Check

Step therapy isn’t evil. It’s a cost-control tool that sometimes works. But when it delays care for people with chronic illness, it becomes dangerous.

You have rights. You have options. But you have to fight for them.

Don’t assume your doctor will handle it. Don’t assume your insurance will make it easy. Start now. Gather your records. Ask for the exception. And don’t let a formulary decide what’s best for your body.