High prices chew into DC 37 plan

Prescription drugs continue to eat up a growing proportion of the resources of the DC 37 Health and Security Plan.

“The rising cost of the prescription benefit is leaving less for the other benefits we provide,” said Rosaria R. Esperon, administrator of the DC 37 Health and Security Plan.

Besides drugs, the plan offers an array of benefits, including dental care, eye exams and glasses, hearing tests, podiatry and legal services.

In 1998, prescription drugs accounted for 59 percent of spending, compared with 41 percent for the other benefits. In 2003, drugs will consume an estimated 69 percent, leaving 31 percent for other benefits.

All told, in fiscal year 2003, the plan projects prescription drug spending at $143 million, compared with $90.7 million four years ago.

Containing costs: How you can help Members and retirees who use regularly prescribed drugs can save time and money by getting their medication through the union’s mail-order service. “With our mail-order program, you pay substantially less for a longer supply of prescription drugs than if you buy them at your neighborhood pharmacy,” said Rosaria R. Esperon, administrator of the DC 37 Health and Security Plan. “It offers a convenient way of getting your prescriptions filled while also helping the plan control costs.” The program covers “maintenance” medications. These are drugs approved by the Federal Drug Administration for treatment of chronic illnesses, such as heart disease, hypertension, high cholesterol and arthritis. Filling prescriptions through the mail-order program lets you save one-third of what you would pay at a neighborhood pharmacy. All you do is mail your doctor’s prescription with a form and a check or money order in a postage-free envelope. The drugs are delivered to your home, and the prescription plan covers shipping and handling fees. Mail-order purchase of a 90-day supply of medication costs $6 for generic drugs, $16 for medications on the plan’s preferred list and $30 for brand-name drugs that are not on the list. By contrast, a 30-day supply at a pharmacy costs $3 for generics, $8 for drugs on the preferred list and $15 for non-preferred drugs. National Prescription Administrators, which handles the DC 37 drug benefit, provides the mail-service through Central Fill Inc., which is situated in Harrisburg, Pa. CFI pharmacists are available to help you with questions about medications. If you’re interested in the mail-order service, call the DC 37 Health and Security Plan’s Inquiry Unit at 212-815-1531. The unit will provide you with envelopes to order your medication. To obtain refills, call CFI at 1-800-233-7139 or visit its Web site at www.cfipharmacy.com.

In the late 1990s, the plan suffered from a similar hemorrhaging because of skyrocketing prescription drug costs. The plan managed to control costs somewhat by implementing a three-tier, managed-care generic drug program, putting the drug benefit up for bids and streamlining management. The City Comptroller recently audited 109 municipal union funds and found that DC 37 had cut its administrative expenses from 8.22 percent of total revenues in 2000 to 5.10 percent in 2001 — the best improvement among the large municipal unions.

The plan also cut costs by working with other unions to get the city to establish the PICA program. Under PICA, psychotropic, injectable, chemotherapy and asthma drugs are paid for through the Stabilization Fund, a reserve for the city’s health-care program. Money for welfare benefits, including drugs, comes from a separate funding stream and results from contracts between municipal unions and the city. Currently, the city provides DC 37 with $1,475 for each eligible member and retiree.

But while cost-saving steps reduced spending by more than $2 million in 2002, the continuing escalation of drug prices at well over 10 percent a year has forced the plan to dip into its reserve.

“As we negotiate a new contract, a priority will be to obtain sufficient funding to protect our drug benefit,” said DC 37 Executive Director Lillian Roberts. Meanwhile, the plan’s trustees are taking a close look at the funding challenges.

Nationwide, as employers and unions confront the inexorable rise in the cost of prescription drugs, many have adopted cost-saving changes. These include upfront annual deductibles; higher co-pays; mandatory preferred medication lists; lower annual caps on coverage; “greater of” coverage, in which individuals pay either a dollar amount or a percentage of the cost of medication, whichever is greater; and step therapy, in which patients are required to use “tried-and-true” medicines, including over-the-counter drugs, before taking new and more expensive prescriptions.