Wall Street Journal Examines Efforts To Curb Health Care Cost Increases Through Use of Generics
The Wall Street Journal on Tuesday examined how employers and health plans are trying to encourage members to use generic medications to help control prescription drug costs. Employer drug costs increased by 83.4% over the past five years, an average of 16.7% annually, according to Mercer Human Resource Consulting. To control these costs, employers are launching "aggressive" efforts aimed at "driving employees to lower-cost medications," the Journal reports. The "most popular" change to prescription drug benefits is "tinkering" with copayments, according to the Journal.
Some health plans divide drugs into two or three tiers according to price -- with less-expensive drugs requiring lower copays -- and some health plans have eliminated copays altogether for generic drugs. In addition, some health plans have begun using coinsurance, in which the patient pays a percentage of the drug cost -- ranging from 10% to 50% -- rather than a flat copay. As with copays, some plans offer lower coinsurance for generics than for brand-name drugs.
According to the Journal, a few employers are "experimenting" with reference pricing, whereby patients pay more if a drug's price exceeds a set reference level for the medication's category. In addition, some health plans require patients to try less-expensive alternatives first or require physicians to obtain prior approval before the health plan will cover brand-name drugs.
Many physicians say that less-expensive alternatives are not always the best medical option and that some patients pay for higher-cost drugs out of pocket because some medications health plans will cover are less effective. Judi Woolger, an internist in Miami, said, "Frequently, there are (less-expensive) alternatives, but we may not consider it the best choice. So we're forced into writing a prescription for second best."
Insurers and employers say they must take steps to address prescription drug costs. Julie Kerling, a spokesperson for Georgia's state employee health insurance plan, said the plan had a projected deficit of $466 million for fiscal year 2006. The plan includes a $10 copay for generics, a $30 copay for less-expensive brand-names and a new $100 copay for the most expensive brand-name drugs (Martinez, Wall Street Journal, 6/28).