By Steve Selinsky, Director of New Business, Health Alliance Plan (HAP)
Prescription drug use is becoming increasingly widespread and costly — and these trends are only expected to continue.
The Kaiser Family Foundation reports that in 2015 the number of drug prescriptions filled at pharmacies across the United States averaged 12.7 per person. And, according to The Centers for Disease Control, nearly 65 percent of the nation’s seniors take three or more medications.
Prescription drugs are also becoming more expensive. Multiple factors, including “pharma flipping” — where companies “buy the rights, hike the price and resell them” — are driving drug prices so high that a single drug can today exceed the average American’s annual income, according to the national political advocacy and trade association America’s Health Insurance Plans (AHIP).
These statistics mean that as an HR professional, you are in a position to help prepare your employees to manage their health care needs, particularly considering the rising cost of prescription drugs for those who rely on them.
At Health Alliance Plan (HAP), we understand that appropriately managing prescription drug costs for improved health and well-being requires a partnership between the HR professional and the employee. HR professionals have an opportunity to educate employees on ways they can manage costs at an individual/family level, and can also work with carriers to proactively identify opportunities to manage this as an organization.
Here are five tips you can share with employees to help them reduce their prescription costs:
- Use a generic drug whenever possible. Not all drugs are available generically, but those that are have the same active ingredients and therapeutic effects as brand-name drugs and can cost significantly less. Recently, many popular, but previously expensive, medications have become available generically.
- Research medication co-pays. Prescription drugs are categorized into tiers that determine the co-pay for which employees will be responsible. These tiers can vary widely, but many plans have the following categories:
○ Tier 1 – Preferred generics (co-pays of $5 or less)
○ Tier 2 – Generics (co-pays of $10 to $15)
○ Tier 3 – Preferred brand drugs
○ Tier 4 – Non-preferred brand drugs
○ Tier 5 – Specialty drugs
Employees should determine where prescriptions fall in their plan’s formulary. This will help them understand their costs and will allow them to ask the right questions. Most insurance companies post their drug formularies on their websites. If employees are uncertain, they can call the insurance carrier directly and ask about the specific co-pays for prescriptions.
- Consider a mail order with a 90-day supply, when available. Using mail orders with a 90-day supply will reduce co-pay or co-insurance in many prescription drug plans. Most plans offer this option at only two or two-and-a-half times the 30-day copay. That’s less expensive than paying for three individual 30-day supplies.
- Talk to health care providers about cost. Employees should consider letting their physician and pharmacist know they prefer lower co-pay drugs and generics when these are available. These professionals will work with employees to find an affordable treatment with a lower-tiered drug.
- Look for patient assistance programs or “Extra Help.” Patient assistance programs provide free or lower-cost medications to people who cannot afford to buy their own. If you know an employee who has limited income and resources, they may qualify. “Extra Help” is the name of the Medicare drug-cost assistance program, and many pharmaceutical companies list patient assistance programs on their websites.
HR professionals can also contribute to prescription cost savings. Consider the following when working with carriers during the plan selection process:
- Be aware of the most utilized drugs in your organization. Ask your current carrier for a list of the most utilized drugs, and use this to closely examine the costs of these medications when shopping around for plans.
- Adhere to a strict formulary. By focusing on a specific list of prescription drugs, organizations can recognize cost savings for employees by identifying for carriers which drugs could potentially be bought in bulk, or otherwise be eligible to receive discounts given the volume. Note that formularies may include brand-name drugs and/or generics.
- Communicate the process of reviewing existing drug coverage. It can be a shock to new employees, or employees receiving health insurance benefits through a new carrier, that their pre-existing prescription drugs may not be covered. Know the review process and whether employees will need to gain pre-approval, go through step therapy (trying the newly prescribed drug first) or another process.
- Know how well the carrier manages the process. Ask questions to understand how carriers manage prescription drugs with the formularies. With larger organizations, those with more than 75 employees, they may choose to go with a specific pharmacy that can adhere best to formulary recommendations. While there are employer groups that elect to do this, most carriers are doing a much better job at managing their pharmacy programs and costs than they did even four or five years ago, and there may be a better option out there.
There’s no time to waste when it comes to consumers making health insurance decisions. As many groups begin their new benefit year on Jan. 1, now is the time for HR professionals to help employees consider the true cost of health care and plan accordingly for physical and financial health.
Steve Selinsky is Director of New Business for Health Alliance Plan, where he is responsible for all group new business sales for HAP.
To learn more about affordable healthcare plans for your small business, visit Health Alliance Plan.
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