Companies Look for Prescription Drug Alternatives

November 11, 2003 ( - The ever-escalating cost for prescription drugs has some companies looking for alternative drug programs to roll out to employees.

The trends emerge at a time when employers are passing on more and more of the cost of health care to employees. While employers still pay the majority of the cost – on average 73% – the employees’ share of the premium has risen 50% in the past three years, according to an A.M. Best Company Inc. report, citing a Kaiser Family Foundation and the Health Research and Education Trust survey (See Survey: Health Costs Highest Since 1990 ).

Thus, a major shift in benefit design is on the way, with a change in focus from cost control to strategies that link health outcome with drugs, said Jon Maesner , vice president of pharmacy strategy and policy at CIGNA HealthCare said at a Managed Healthcare Industry Forum held in New York on November 6 and 7, according to the A.M. Best report.

Of the emerging benefit structures, one plan is a reference-based benefits plan, or maximum allowable costs. This plan structures prescription drugs by effectiveness rather than cost. While the concept is not exactly new – generic drugs have been embedded in maximum-allowable-cost fee structures – it does extend the concept to groups of drugs that have similar effects, such as cholesterol, blood pressure, anti-allergy and stomach acid-reduction drugs.

Other Trends

Also speaking at the forum was Alice Sloan, vice president of clinical account management for pharmacy benefit manager (PBM) AdvancePCS . Sloan told attendees that health plans have asked AdvancePCS to study several other benefit designs. Among them is a reverse copay structure, in which a health plan would pay a certain amount per prescription, and the member would pick up the rest of the cost. For example, a plan might pay $10 for a generic drug and $20 for a brand-name drug. Because the average generic drug costs about $17, the member would pay on average $7 out of pocket.

Additionally, Sloan pointed to a trend among self-insured organizations to consider the use of member-risk premiums, which require members to take more responsibility for their risk behavior. For example, employees who smoke cigarettes would be given a full reimbursement to participate in a two-year smoking-cessation program. However, if they continue to smoke once they have finished the program, they would pay higher premiums. Members would also pay more out-of-pocket expenses for auto-accident injuries that occur from not wearing a seat belt or accidents that result from intoxication.

There are some possible negative consequences to such a plan though, Sloan said. Although such a plan is intended to improve members’ health status, it would be difficult to prove someone is or is not smoking, and it could lead to litigation, Sloan cautioned.

Asheville Plan

Another model health plans have looked at is a program done in Asheville, North Carolina in 1997. Under the Asheville plan, specially trained pharmacists were called in to “coach” employees about the necessary diet, exercise and medications for people living with diabetes. Additionally, the pharmacists would provide regular monthly health examinations including foot exams, glucose-monitor readings and consultations with doctors.

Incentives to participate in the voluntary program included, waiving co-payments on diabetic specific items, such as insulin and glucose strips, and providing free glucose monitoring devices, as long as patients maintained monthly appointments with the pharmacists. Apparently, the effort has paid off, as the results of the study, currently involving 98 patients, showed lowered healthcare costs, from an average of $6,127 per diabetic patient per year in February 1997 to an average annual cost of $4,651 in February 2002, reduced blood sugar levels and a decline in the number of sick days taken.

Impressed by these numbers,drug maker Aventis announced a program at the end of last year involving the launch of a similar program in 2003 at five undisclosed companies. The quintet of participants, said to include companies in the Fortune 500, were to use specially trained pharmacists to educate at least 500 diabetic employees about proper diabetes care (See Employers Hope for Cost Savings with Diabetic Care Program ).