October 6, 2003

Drug plan redesigned for 2004

By Wynell Lauver

Rising prescription drug costs pose a major challenge for employers nationwide; here at Emory, 2003 expenditures on employee prescription drug costs already have exceeded 2002’s figure of more than $14 million.

In an effort to manage these escalating costs, the University will introduce a redesigned, four-tier drug plan for 2004. Caremark, one of the largest and most well-respected prescription drug plan administrators, will manage Emory’s plan, which covers more than 15,000 employees and their dependents.

“In redesigning the pharmacy program, we established a pharmacy committee comprised of medical and pharmaceutical experts who provided oversight to the plan,” said Alice Miller, vice president of Human Resources. “We know the redesigned four-tier structure may create change for people, but we hope our employees will realize it is being done for the broader good.

“Without effective cost management, today’s skyrocketing prescription drug costs will quickly erode our ability to afford comprehensive health care benefits,” Miller continued. “The more we can keep our drug and health care costs down, the more we can pass the savings on to our employees. We want Emory employees to learn more about making the right choices to stay healthy, to find less expensive but equally effective remedies, and to get more involved in taking better care of themselves.”

Following is an overview of the new four-tier structure:

Tier 1
Generally includes generic drugs (drugs that can be manufactured and distributed after the original manufacturer’s exclusive rights have expired) and has the lowest co-pay. Generic drugs have the same active ingredients and quality standards as brand-name drugs and are approved by the U. S. Food and Drug Administration, but cost much less.

Tier 2
Generally includes many brand-name drugs on the Caremark “preferred drug list” or formulary. The formulary drugs have been included because of their clinical effectiveness, safety and cost.

Tier 3

Generally includes brand name drugs not included on the Caremark formulary and some aggressively advertised drugs for which there are lower-tier alternatives.

Tier 4

Primarily “personal choice drugs,” which include brand-n ame drugs such as Levitra and Retin-A, and drugs that have lower cost or over-the-counter alternatives.

In order to manage prescription drug costs, employees need to stay informed and discuss cost-saving alternatives with their doctors. For example, someone who takes Nexium (“the purple pill”) for heartburn/acid reflux pays a $62 co-pay for a 30-day supply or $124 for a 90-day mail-order supply—because Nexium is a “Tier 4” drug and there are less expensive alternatives available.

But omeprazole, the generic equivalent of prescription Prilosec, costs only $12 for a 30-day supply or $24 for a 90-day mail-order supply.

By choosing generic and using Caremark’s mail-order service, the consumer saves $100 on a 90-day supply. (Keep in mind that a prescription must be written for 90 days and not for 30 days with two refills.)

Another example is Prozac, a brand-name drug. Prozac has an FDA-approved generic equivalent, fluoxetine, which costs a $12 co-pay for a 30-day supply at retail. However, consumers who still choose the Prozac brand name would pay the generic co-pay plus the dollar difference between the cost of the generic and the brand name drug. If the generic’s actual cost to the plan is $38 for a 30-day supply and Prozac’s actual cost to the plan is $97 for a 30-day supply, the consumer’s cost for Prozac would be $71: the $12 (generic co-pay) plus the $59 difference between the cost of the brand-name and generic. (Please note that the drug prices are current at the time of printing, but the actual costs may vary over time.)

“The redesigned pharmacy plan is structured to provide employees with a financial incentive to select drugs in the lowest tier possible,” said Mary Smith, director of benefits. “We encourage our employees to talk with their doctors and pharmacists to see if there are less costly alternatives available.

“In addition, be wary of drug manufacturers’ advertising campaigns,” Smith continued. “Just because it sounds impressive doesn’t mean it’s the best choice. And remember that mail order offers a 90-day supply for a 60-day co-pay for maintenance prescriptions.”

Finally, flexible spending accounts offer a great way to save on out-of-pocket health care expenses. Employees can reduce their taxes by setting aside money on a before-tax basis for medical, dental, prescription and vision expenses not covered by insurance. And in 2004, FSAs can be used to pay for over-the-counter medicines such as pain relievers, antihistamines, contact lens solutions and cold remedies.

Open enrollment packets, which detail cost and eligibility information, will be mailed out in mid-October. Employees can check their current benefits selections by visiting http://leo.cc.emory.edu and using their Emory network ID and password. For questions about open enrollment, contact a benefits specialist at 404-727-7613.