All posts tagged prescription drugs

Modern medicines have resulted in longer, more productive lives for many of us. Prescription drugs soothe sore muscles after a strenuous workout or manage the conditions of a chronic disease. Unfortunately, this use of prescriptions drugs can come with a hefty price tag.

Americans are spending more money on prescription drugs than ever before and the United States as a nation spends more per capita on prescription drugs than any other country. With the cost of some drugs exceeding thousands of dollars for a 30-day supply, this can translate into financial hardship for many Americans.

For employers sponsoring a medical plan, managing the cost of these prescription drugs is also becoming a task. Insurance companies and employers struggle with the ability to provide affordable medical plans, and the ever-increasing prescription drug costs are a primary driver of this difficulty. As a result, prescription drug plan designs are changing shape – moving to a model that helps push more of the cost of these drugs to the member along with increasing awareness of the true cost of the prescriptions.

Flat dollar copay plans have become an expected norm in medical plans for almost a decade. However, insurance companies underwriting fully insured medical plans and employers sponsoring self-funded medical programs now need to make modifications to these plan designs to manage the ever-increasing prescription drug costs. As a result, we are seeing more prescription drug plans combining some aspect of coinsurance along with or in place of the flat dollar copayments.

According to the 2016 UBA Health Plan Survey, copay models are still the most popular, with a three-tier copay structure the most prevalent. Median retail copayments for these three-tier plans are $10 for generic drugs, $35 for preferred brand drugs (drugs on the carrier’s prescription drug list) and $60 for non-preferred brand drugs (drugs not on the carrier’s prescriptions drug list). While 54.5 percent of all prescription plans are copay only, approximately 40 percent of all prescription drug plans have co-insurance along with (or in lieu of) copays–a plan design that is particularly common among four-tier plans.

Coinsurance models have many unique designs. Some plans are a straight percentage of the cost of the drug; some may involve a maximum or minimum dollar copayment combined with the coinsurance. For example, a plan may require 40 percent coinsurance for a preferred brand drug, but there is a minimum copayment of $30 and a maximum copayment of $50. Typically, we see a higher coinsurance percentage for non-preferred brand drugs and specialty drugs. The member cost of the drug is calculated after any negotiated discounts, so members covered by a coinsurance plan are reaping the benefits of any discounts negotiated with the pharmacy by the pharmacy benefit manager (PBM).

Coinsurance plans do provide several advantages to managing prescription drug costs. Under a flat dollar copay plan design, members may not truly understand the full cost of the drug they are purchasing. Pharmacies are now disclosing the full cost of drugs on the purchase receipts. Yet, most consumers do not take note of this disclosure, focusing only on the copayment amount. When a member pays a percentage of the cost of the drug as in a coinsurance model, the true cost of the drug becomes much more apparent.

Another advantage of the coinsurance model is that it automatically increases the member share of the cost as the price of the drug increases. Under the flat dollar copayment model, as the true cost of the drug increases, the member pays a smaller portion of the total cost. When the member’s portion is determined by a coinsurance percentage, the member pays more as the cost of the drug increases.

As the costs of health care overall continue to increase, we all need to become better consumers of our healthcare. Members covered by a prescription drug plan with a coinsurance model will have a better understanding of the true cost of their prescriptions. As members become more aware of the true costs of their care, they make better health care decisions, managing the overall cost of care.

We expect to see prescription drug benefit plans change even more as the cost of health care – especially prescription drugs – escalates. These changes will likely result in more of the cost being pushed to the patient. There are resources available to patients for assistance with some of these out-of-pocket costs. It is vital for the patient to understand their costs and know how to maximize their benefits. In a few weeks, the UBA blog will highlight some of these resources and provide information on how to educate employees on maximizing their benefits and the industry resources available to them.

For all the cost and design trends related to health and prescription drug plan costs by group size, industry and region, download UBA’s Health Plan Survey Executive Summary.

By Mary Drueke-Collins
Originally Posted By www.ubabenefits.com

UBA’s Special Report – Trends in Prescription Drug Benefits explores our Health Plan Survey findings in more detail, particularly examining what’s happening with prescription drug plan design among different group sizes, regions and industries. When it comes to copay amounts, median retail prescription drug copays are $10/$30 for two-tier plans, $10/$35/$55 for three-tier plans, and $10/$35/$60/$100 for four-tier plans. These amounts have remained largely flat from 2014.

Generic drugs in the lowest tier generally cost less than $10, so employees are paying all or most of the generic cost with the tier 1 copay. This makes it difficult to raise that amount, especially if employers are concerned about medication adherence. But in four-tier models, the tier 3 copay increased 20%. Since this tier covers non-formulary brands, copay increases may continue as drug costs in this category soar.

Median Prescription Retail Copays by Plan Design            © 2016 United Benefit Advisors. All rights reserved.

While median copays in four-tier plans see no fluctuation among region, size or industry, three-tier plans show some creative cost management among some groups. For example, the largest employers (1,000+ employees) and Northeastern groups are pushing up the tier 3 copay above average. With employers flocking to 4+ tier plans, copay hikes in three-tier models may become more common for those hesitant to expand drug tiers.

As five-tier plans emerge, the median copays are $10/$10/$40/$70/$100. This will be an important baseline to watch now that the UBA Health Plan Survey will start to break this out separately. In predictable fashion, small groups tend to set copays higher than average, while the large groups are below average. Regionally, the West is experimenting with driving the fifth tier copay significantly higher than average ($150) while keeping the other copays at or below average. The Central U.S. is pushing most copays in five-tier plans higher than average.

Originally published by United Benefit Advisors – Read More

pills0805According to UBA’s new Special Report – Trends in Prescription Drug Benefits, 61.8% of plans required employees to pay more when they elect brand-name drugs over an available generic drug (a 5.5% increase from 2014); 37.9% of those plans require the added cost even if the physician notes “dispense as written.” On the other hand, only 1% of plans offer no coverage for brand-name drugs if generics are available and 37.2% offer no added cost coverage. So while most employers aren’t completely penalizing those who choose brand-name drugs, more and more plans are requiring employees to pay higher copays when they elect brand-name drugs. Some plans have a mandated step therapy program that makes sure employees try a lower class alternative before they move to a medication in a higher class (or try a generic or generic equivalent in a particular therapeutic class). Some plans exclude certain drugs altogether. This cost pressure has made employers more aware of drug costs, so many are beginning to educate employees about using benefits cost-effectively. Here’s what our Health Plan Survey data shows about which employers are steering employees to generics:

  • Predictably, the larger the employer, the more generous it is in covering brand name drugs either with no added cost or at least not incurring added cost when the physician notes “dispense as written.” Seventy-seven percent of plans for groups with 1,000+ employees fall in this category while only 51% of small group plans offer this benefit.
  • Plans in the central U.S. and within the construction, agriculture, mining, and transportation industries are making the most aggressive push to generic drugs, with only 46.3% and 53.8%, respectively, providing relief for brand name drugs.

While injectable drugs are often watched as a significant liability when it comes to cost containment, nearly all plans have no separate deductible for these medications. Additional tiers, coinsurance models and mail order benefits are overwhelmingly the way employers are dealing with the highest cost drugs.

In 2015 alone, 38 specialty drugs received FDA approval, and more are in the pipeline. “The latest development among aggressively managed drug plans is to move specialty drugs (oral and injectable) to the major medical portion of the policy, delivering an initial 7- to 15-day supply to confirm the drug’s effectiveness before dispensing a full 30-day supply” says Scott Deru, President of UBA Partner Firm Fringe Benefit Analysts. “Requirements also include frequent patient follow-up to verify adherence to the prescription schedule, any adverse reactions, and to verify that mail order drugs amounting to tens of thousands of dollars are being tracked and received by the patient. Other cost containment strategies include bringing a registered nurse to a patient’s home for infusion therapy to avoid the facility and prescription mark-up costs from inpatient and outpatient facilities.”

Originally published by United Benefit Advisors – Read More