Public Employee Press

Part 2 of a series on prescription drug costs
Drug plans tackle cost crisis

Throughout the nation, prescription drug plans run by unions and employers are implementing changes as they confront skyrocketing medication prices, which in recent years have far outpaced inflation.

As they restructure their programs, the plans face the challenge of limiting new expenses and inconveniences for members while upholding the quality of the benefits.

In recent years, the DC 37 Health and Security Plan has taken steps to control expenses. But despite that action — including administrative improvements, the adoption of a three-tier generic drug program and competitive bidding — soaring costs continue to drain the plan.

In 1998, prescription drugs accounted for 59 percent of the spending by the plan, which provides several other benefits, including dental care, eye exams and glasses, hearing tests, podiatry and legal services. This year, the plan expects drugs to consume 69 percent of its spending.

“Perhaps the most striking sign of how the drug crisis has become a crucial issue for our entire country is that Washington is now at least seriously working on providing a Medicare prescription drug benefit for retired Americans,” said DC 37 Executive Director Lillian Roberts.

“Together with our national union, we are fighting against negative aspects of the proposed legislation, which could lead to the privatization of Medicare and a loss of coverage for millions of retirees,” Ms. Roberts said. “But the fact that a prescription drug benefit is on the radar screen of our national politicians and that they are actually trying to take action in this crisis is a positive step.”

“Unfortunately, until there is some kind of government control, prescription prices will probably continue to outstrip inflation,” said Rosaria R. Esperon, administrator of the DC 37 Health and Security Plan. “Meanwhile, prescription drug plans struggle to find their own solutions to keep costs down,” she said.

Following are some ways union and employer plans are attempting to control costs without cutting back on the quality of their benefits:

• Upfront deductibles: A growing number of employer plans are requiring individuals and families to pay an annual deductible.
  
  
• Mandatory preferred lists: Increasingly, plans are not covering brand-name drugs that are not on their “preferred list.” Preferred lists provide for a selection of drugs according to treatment category. Using the lists cuts costs by limiting the number of covered drugs and the duplication of medications.
  
  
• Step therapy: Some drug plans require patients to use traditional and less costly “tried-and-true” medications before taking more expensive and newer drugs. Plans encourage this option for the treatment of illnesses that have many drug choices, such as diabetes, arthritis, high-blood pressure, depression and sleep disorders.
  
  
• Lower annual caps: The annual limit for families covered by the DC 37 plan is $100,000. One city union that used to have unlimited coverage now has a $10,000 annual maximum for the families of active employees and $11,000 for the families of retirees.
  
  
• Changing co-pay structures: For a 30-day medication supply purchased at a pharmacy, the DC 37 plan requires members and retirees to pay $3 for generics, $8 for drugs on the preferred list and $15 for non-preferred drugs.
  
  Some plans are adopting “greater-of” co-pay structures in which covered individuals and families pay a percentage of the cost of a drug or a set dollar amount, whichever is greater. Others have raised co-pays.
  
  The Auto Workers new pact with Daimler-Chrysler and Ford doubles co-pays to $10, while a recent contract between the Steelworkers and the Goodyear Tire Co. hikes co-pays forbrand-name drugs from $4 to as much as $80.
  
  
• Mandatory mail programs: Some city unions require members and retirees to obtain their maintenance drugs through a mail program.
  
  DC 37 provides a financial incentive for members and retirees to use a mail-order program. Members save 33 percent by ordering a 90-day supply of medication by mail.
  
  In October, National Prescription Administrators, a division of Express Scripts Inc. that handles the DC 37 drug benefit, will send a letter to members and retirees to publicize the mail-order service.

— GNH