PRESCRIPTIONS Have a drug benefit? Co-payments are going up

Insurers and employers want employees to pay more.
BALTIMORE SUN
If you have a prescription drug benefit, prepare for sticker shock.
Pharmacy co-payments that had hovered for years at $5 or $10 a script are soaring now to $50 or more for brand-name medications as insurers and employers shift more of the growing cost of health care to consumers who had grown accustomed to believing that only uninsured seniors worried about paying for drugs.
"People are confused," said Pat Burke, who owns pharmacies in Hamden, Reisterstown and Parkville, Md. "Most of the time, it's the pharmacist who has to break the news that the medication they used to get for $8 is now $12 or $40 -- or that the insurer won't cover it at all."
Expanding spending
Spending on prescription drugs -- the fastest growing component of the United States' medical tab -- has been expanding at roughly twice the inflation rate in the past decade. Now, employers and insurers are rethinking the generous drug benefits that have helped fuel that galloping growth.
"The number of prescriptions has just blown through the roof," said Donald Knapp, dean of the University of Maryland School of Pharmacy. "And the availability of insurance is a factor. Ten years ago, 35 percent of working adults had a drug insurance benefit. Now, 85 to 90 percent have it."
Built on a 1980s model pioneered by health maintenance organizations, drug benefits allowed employees to plunk down a low co-payment for any prescription. The benefit worked for all, because drug therapies helped keep people healthier and thus kept down hospitalization costs.
New, expensive medicine
But "a tremendous onslaught of new, very expensive medications" came on the market in the 1990s and physicians began writing scripts liberally, said Stanley Wallack, director of Brandeis University's Schneider Institute for Health Policy.
Almost overnight, the benefit became a sweetheart deal for employees who could pay $5 for a $150 bottle of pills and leave insurers and employers to pay the rest.
Americans spent $184 billion on prescription drugs last year, an increase of 13.4 percent over the year before, the federal government reported earlier this month. They filled 3.1 billion prescriptions in 2002, 1 billion more than in 1992.
"Now, the insurers are pushing back," Wallack said.
CareFirst BlueCross BlueShield, for example, introduced plans this year that allow employers to offer three "tiers" of co-payment options for their employees.
The lowest possible co-payment option under those plans is $5 for generic medications in the first tier, $20 for "preferred" brand name drugs in the second and $30 to more than $50 for the most expensive medicines.
"We want people to understand: Drugs cost a lot," said Amy Doherty, CareFirst's product manager. "That's hard to do if they pay a flat $5 or $10 or $15 every time."
What will happen
So a CareFirst beneficiary will pay $40 or $50 for a month's supply of the "nonpreferred" cholesterol-lowering drug, Zocor, whose actual retail cost is about $3.15 a day, and $5 or $10 for the same amount of the generic Lovastatin, which costs less than $1 a day. The plan also enlists physicians by requiring them to call the insurer's drug benefit manager for permission to write prescriptions for nonpreferred drugs.
CareFirst is riding an industrywide wave. Sixty-three percent of workers with employer-sponsored drug benefits will have "tiered" co-payment plans this year, up from 27 percent in 2000, with an average co-payment of $29 for the most expensive drugs, according to Kaiser Family Foundation, which monitors health care trends.
Other restrictions
Some plans are going beyond the tiers to restrict coverage to generics or requiring beneficiaries to pay percentages of the total cost of drugs.
"The transfer of liability of drug costs [to beneficiaries] that began around 2000 is just rocketing," said Bruce Stuart, the director of UM's Peter Lamy Center on Drug Therapy and Aging.
Tracking the effect of a tiered benefit on hypertension prescriptions, UM researchers Sachin Kamal-Bahl and Becky Briesacher found that insurers and employers reduced their spending 52 percent as patients switched to generics or simply stopped filling all their prescriptions.