Workers Paying a Larger Share for Drug Plans

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June 12, 2003Workers Paying a Larger Share for Drug PlansBy MILT FREUDENHEIM

 

 

fter a decade of soaring spending on prescription drugs, employers and health

plans are forcing their workers to pay more for most drugs and refusing payment

entirely for certain medicines that they reject as not essential.

 

The shift comes even as Congress considers a government-subsidized drug benefit

for 40 million people enrolled in Medicare, and at a time when many health plans

have eased restrictions on hospital care and visits to doctors. It represents

significant deterioration in a benefit that has been available to most working

people for years — one that has become ever more valuable as drug prices rose.

 

Companies have been increasing employee co-payments for drugs in their health

plans for several years. But now, some health plans are imposing deductibles of

as much as $150, which employees must pay before their medicines are covered, or

have begun to require them to pay as much as half the retail cost of the drugs.

Still other plans are paying for certain expensive drugs only if a doctor first

tries a less expensive treatment and then petitions the health plan for

approval.

 

Unity Health Plans, a health maintenance organization affiliated with Blue Cross

and Blue Shield of Wisconsin, is limiting access to Zetia, an expensive new

cholesterol-lowering drug jointly developed by Schering-Plough and Merck.

Several older cholesterol medications are available, including lovastatin, a

generic version of Mevacor, and Unity will pay for Zetia only if a doctor

obtains advance approval, insisting that a patient must have it.

 

Many other health plans now require written authorization from a doctor before

they will agree to pay anything for prescription alternatives to the allergy

drug Claritin, which is now available without a prescription. The prescription

drugs include Allegra, Zyrtec and Clarinex.

 

" That was a sea change, " said Kenneth Sperling, a health care expert with Hewitt

Associates, a consulting firm. " Employers are largely saying there is no reason

for us to cover any of them, " or at least not before employees have tried

Claritin and found it ineffective, he said.

 

The insurers' toughened stance is a response to rising costs stoked by the $2.6

billion a year that drug makers are spending on consumer advertising, a

significant part of it to promote medicines that are new, high-cost variations

on older drugs whose patent protection has expired or is close to ending.

 

At Medco Health Solutions, which manages drug plans for 62 million people, the

number of its client companies requiring employees to obtain approval in advance

for some costly drugs rose 70 percent, to 560, last year.

 

The cutbacks in drug benefits are helping to slow the growth in overall spending

on health care, according to some experts, after years of double-digit

increases.

 

At retail and mail-order pharmacies, the rate of increase in the number of

prescriptions slipped to 1.8 percent in the first quarter of this year compared

with 5 percent in the period a year earlier, and will probably be about 3

percent for the full year, according to IMS Health, a health care information

firm.

 

That represented a steep drop from a growth rate of 4.2 percent for all of 2002,

5 percent in 2001 and 2000, and 9 percent in 1999, said Douglas Long, a vice

president of IMS Health.

 

" As out-of-pocket expenses have gotten bigger, consumer behavior has definitely

changed, " Mr. Long said. He added that factors including weak demand for cold

and flu remedies and the switch of some popular drugs to nonprescription status

also contributed to the slower growth in costs.

 

Some companies are requiring increased employee co-payments so that drugs that

used to cost the patients $10 or $15 for a month's supply now cost $40 or $50,

and a growing number of employees are paying part of the cost of a drug rather

than a fixed amount.

 

The most recent changes are not yet reflected in the latest data on consumer

spending. But in the five years ended in 2001, the cost to the average consumer

of prescription drugs and over-the-counter medicine rose nearly 50 percent, to

$449 a year.

 

Elaine and Michael Linn of Folsom, Calif., have been paying half the cost, or

$125 a month, for two asthma drugs, Xopenex and Orapred, for their 10-month-old

son, Toby, Ms. Linn said. Toby has Down syndrome and complications that would

make the use of alternative drugs dangerous. Worried that the insurance offered

by Ms. Linn's employer, a small public relations agency, might become too

expensive, the Linns recently changed her coverage to a health plan offered by

the school district where Mr. Linn teaches sixth grade.

 

But the school's plan does not normally pay for the drugs Toby is taking. " They

said we have to get a prior authorization, " Ms. Linn said. Without it, they will

have to pay the full cost of the drugs, or $3,000 a year.

 

Evergreen Healthcare Management, a West Coast nursing home chain based in

Vancouver, Wash., adopted a new drug plan for its 1,000 employees on April 1.

They now pay $8 for a month's supply of lower-cost generic drugs, $25 for drugs

on the plan's preferred list and 50 percent of the full cost of brand-name drugs

not on the list.

 

Mark Rubenstein, human resources director at Evergreen, said he persuaded his

doctor to switch his own cholesterol treatment from Zocor to Lipitor, a

preferred brand, rather than pay half the $117 monthly cost of Zocor. " The new

plan does encourage employees to assume some responsibility for knowing what

medications they are taking and that they are getting the best bargains for

themselves, " he said.

 

Express Scripts, another big drug plan manager, said nine million members were

required to pay higher amounts last year for drugs that were not on their plans'

preferred list. A total of 27.5 million workers and their dependents are now in

Express Scripts plans with similar requirements, up from 18.5 million in 2001.

 

The changes in company health plans mirror those that have been appearing in

managed care plans covered by Medicare. As the costs there have increased, many

insurers have ended Medicare drug coverage altogether. Secure Horizons, a big

Medicare H.M.O. in California, covers only generic drugs in most of its Medicare

plans.

 

The United Automobile Workers and other unions first obtained company-subsidized

drug coverage for members 35 years ago, when the full cost of a prescription was

often less than $4. Many employers added drug coverage to their health plans in

the early 1990's to induce workers to choose managed care.

 

The volume of prescriptions soared over the years as drug makers spent heavily

on marketing. Those campaigns changed the routine in doctors' offices, said

Edward L. Wristen, president of the First Health Group, a managed care company

that has its own drug-plan management unit. " Patients expected a prescription

when they walk out, " he said. " The doctors satisfied them. "

 

Carolyn Pare, chief executive of the Buyers Health Care Action Group, a

coalition of employers in Minnesota, said, " Employers are feeling frustrated and

used, " adding, " The consumers are completely insulated from the actual costs. "

 

The Federal Employees Health Benefits Program, the nation's largest health plan,

said increased drug costs accounted for almost one-third of its 11.1 percent

rise this year in the cost of premiums.

 

Employers say they hope that more information and higher charges for some drugs

will push workers to choose lower-cost generic versions of widely used drugs, or

over-the-counter remedies in place of prescription medication. " We are trying to

get the consumer back in the game with information about treatment options,

potential side effects, and outcomes and questions they should ask their

doctor, " said Brian Marcotte, vice president for benefits at Honeywell

International.

 

Ann Robinow, president of Patient Choice, a group that negotiates with doctors

and hospitals on behalf of Minnesota employers, argues that private employers

and public purchasers need to reconsider the obligation to cover all new drugs.

 

" Some are performance enhancers, " she said. Yet " some of the new genetically

engineered drugs will help counter potential long-term risks like 20-year-olds

with undiagnosed colon cancer, " Ms. Robinow acknowledged.

 

" Will only wealthy people be able to take these drugs? " she asked.

 

She recalled the battle several years ago when Viagra, the male-potency drug,

first became available and some employers and insurers decided not to cover it

or to limit payments. Some of the coverage issues ahead, Ms. Robinow said, would

make the debate over Viagra " look minor. "

 

Copyright 2003 The New York Times Company

 

 

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