When it comes to curing what ails many group health plan sponsors – the rising costs of providing group health benefits to their employees –there is no one cure-all. One proactive step employers can take is to focus on employee education and plan design to help curb prescription drug costs, which at least one forecast predicts will increase by as much as 63 percent over the next three years.
The old saw informs us that an ounce of prevention is worth a pound of cure. When it comes to fighting the jump in prescription drug costs, the preventive step in the process – that likely will outpace any curative plan measures – is for employers to help educate themselves and their plan participants about prescription drugs to help change expensive behaviors.
First, employers and employees must understand that not all prescription drugs are created equal in terms of their impact on rising costs. Most know that name-brand drugs cost more than generics, but there is an even larger cost escalator at play: so-called specialty drugs (e.g., drugs to treat cancer, HIV, inflammatory conditions, etc.).
Specialty drugs are outpacing all other areas of cost for prescription drug benefits. The latest Express Scripts Drug Trend Report shows overall prescription drug spend increased 5.4 percent in 2013. The report highlights, however, that this figure is comprised of a 2.4 percent increase for traditional drugs (e.g., to treat diabetes, cholesterol, etc.) and a whopping 14.1 percent for specialty drugs.
Specialty drug costs will continue to rise and will continue to comprise a larger percentage of a group health plan’s pharmacy costs. Thus, plan sponsors who want to effect any real change in their drug cost spend must target specialty drugs. Increased cost-sharing with plan participants is unlikely to solve the dilemma for specialty drugs that cost thousands of dollars per month, so employee education will play a critical role in reining in these costs.
Employees should be educated to understand, particularly if they need a specialty drug, that they can and should ask their doctors if there are generic, over-the-counter, or less expensive brand-name drugs that could work just as well as the ones initially prescribed. Patients who take a more active approach to the prescription-writing process often discover far cheaper alternatives after just a few quick questions. Having employees switch to lower-cost drugs can save an employer hundreds, if not thousands, of dollars a year.
Employers should alert participants that there are tools available to help them determine the most cost-effective outlet for certain prescription drugs. For example, www.goodrx.com allows individuals to compare prices from different outlets and even offers coupons to help offset drug expenses. Similarly, the Prescription Saver mobile app allows consumers to search for drugs at local pharmacies and provides a discount card to reduce costs.
Additionally, there are national and community-based programs like the National Patient Advocate Foundation or the National Organization for Rare Disorders that might be able to assist employees in meeting their own drug expenses. Employees can access www.benefitscheckup.org to explore these types of programs.
Though education and changing employee habits can help throttle skyrocketing drug expenses, employers also should examine their prescription drug offerings to ensure they have a proper benefit design strategy to address such costs. Every mid to large sized fully insured group should, if it can access claim data, check for the following:
- Generic drug use – If a plan’s generic utilization rate is below the industry norm, the plan should consider an upfront deductible. Low generic use often indicates consumers are unaware of the actual cost of their prescribed medications. Thus, an upfront deductible often encourages them to work with their doctors to find less expensive drug alternatives.
- Specialty drugs – These drugs are expensive, and their use is growing rapidly. Many plan designs allow for third-tier co-pays that apply the higher of the third-tier co-pay or 20 percent of the covered amount for specialty drugs (up to a per prescription amount and annual amount). Philosophically, the plan sponsor needs to decide if it wants participants who use such drugs to pay more.
- Co-payments – Plan sponsors should make sure that their co-payment amounts keep pace with inflation. Unchanged co-pay structures generally will result in richer benefits to the participant but actually will increase the overall percentage that an employer pays for prescription drugs.
- Waiving co-payments for maintenance drugs – Some believe that waiving co-pays for maintenance drugs will increase compliance and reduce large dollar episodic events in the future. If allowed, a carrier typically will price this option, and the group can consider its value.
Helping participants know they have choices when it comes to pharmaceuticals, and re-examining a plan’s prescription drug benefit design, can allow a plan sponsor to write itself a prescription to cure its drug cost blues and help heal its health plan’s hemorrhaging bottom line.