PHARMACY COSTS: Increased Faster Than Medical Costs Last Year
Pharmacy benefit cost increases outstripped medical plan inflation at many companies in 1997, according to a new survey released by William W. Mercer, Inc. The survey, which interviewed more than 200 employers, found that 54% said pharmacy benefit costs increased more than overall medical costs in 1997. Thirty percent said both pharmacy and medical benefit costs rose at the same rate, while 16% of the employers said their pharmacy costs rose less than medical plan costs. Larger employers (10,000 or more employees) reported 62% higher pharmacy cost increases compared with 51% for mid-sized companies (fewer than 10,000 employees). The survey notes that larger employers are more likely than mid-sized employers to cover retirees (81% versus 54%, respectively). The survey also found that 56% of employees at larger companies are covered through a pharmacy benefit manager, compared with 25% of employees at mid-sized employers. However, employees of mid-sized companies are more likely than those of large companies to receive pharmacy benefits through PPO or POS plans.
What The Future Holds
The survey predicts that more employers will step up their efforts to better manage these costs. More than half of those surveyed (54%) said they plan to introduce or expand managed drug programs or disease management programs (51%). Forty-two percent of large employers said they are likely to expand these programs, compared with 10% of mid-sized companies. Fifty-seven percent said they are likely to integrate data across drug and medical plans while 30% plan to implement a single managed drug plan for all participants in all plan types. Nick Vasilopoulos, the head of Mercer's national pharmacy management specialty practice said, "Employers are asking about the appropriateness of drug cost increases and are considering stronger management of what is a rapidly increasing benefit cost" (release, 2/16).