With the cost of pharmaceuticals consuming an ever-increasing proportion of health benefit expenditures, many employers are responding by adding pricing tiers to their drug plan designs. The move is being driven partly by the exorbitant cost and increasing utilization of specialty drugs.
A few years ago pharma claims were around 10% of the claim total, and now its closer to 25% for many employers, says Carol Taylor, employee benefit adviser with Roanoke, Va.-based D&S Agency. D&S is a member of the UBA network of benefit firms, which recently published pharma plan data from its latest health plan survey.
Specialty drugs, often administered by injection, cover such serious illnesses as hepatitis, cancer, and multiple sclerosis.
According to the UBA survey, last year about one-third of surveyed employers offered four-tiered drug benefit designs, up from 14% in 2009.
Copays on the rise
Also, drug plan copays have been on the rise. Between 2012 and 2014, median copays for tiers have risen by 25%, to $10, $35, $55, and $100 for each of the four tiers, according to the survey.
The proliferation of specialty drugs costing thousands or tens of thousands of dollars for a monthly dose is spurring plan designs with six or even seven tiers. Under the four-tier model, of course, copays rise as buyers move up the scale from preferred generic to non-preferred generic to preferred brand to non-preferred brand. Some plans add two additional tiers: preferred specialty and non-preferred specialty.
Top 10 Most Prescribed Specialty Drugs
Cost for 30-day supply
1. HARVONI: TAB 90-400MG Hepatitis Agents
2. ENBREL: SRCLK INJ 50MG/ML Soluble Tumor Necrosis Factor Receptor Agents
3. HUMIRA PEN: INJ 40MG/0.8 Anti-TNF-alpha - Monoclonal Antibodies
4. COPAXONE: INJ 40MG/ML Multiple Sclerosis Agents
5. HUMIRA: PEN KIT 40MG/0.8 Anti-TNF-alpha - Monoclonal Antibodies
6. TECFIDERA CAP 240MG Multiple Sclerosis Agents
7. SOVALDI TAB 400MG Hepatitis Agents
8. ENBREL INJ 50MG/ML Soluble Tumor Necrosis Factor Receptor Agents
9. GILENYA CAP 0.5MG Multiple Sclerosis Agents
10. SOLIRIS INJ 10MG/ML Complement Inhibitors
Source: Catamaran Corp., based on 12 million covered lives
Taylor offers the following example of copay pricing for a 30-day supply:
- Copays for preferred generics: $3.
- Moving up the 6-tier scale: $10 for non-preferred generic, $30 for preferred brand, the greater of 20% of the drug price or $50 for non-preferred brand, $100 for preferred specialty and $300 for non-preferred specialty.
If there is only one source for a specialty drug, a typical plan design would categorize it as preferred, Taylor says, since the employee would have no choice in the matter.
The UBA survey found a pattern in which smaller (and thus perhaps more financially constrained) firms were more likely to offer four-tier plan (vs. two- and three-tier plans) than larger employers. For example, 35% of surveyed employers with 50-99 employees are using four-tier designs, versus 20% for employers in the 500-999-employee bracket.
However employers try to steer employees to the most economical drug choices, they are still constrained by the Affordable Care Acts out-of-pocket limits for health benefits. For single plans that limit will rise by 3.8% to $6,850 in 2016, from todays $6,600 limit. That means that there is only so much employers can do to cushion themselves from the high cost and growing prevalence of specialty drugs.
A new specialty drug for people with high cholesterol due to genetic factors will be hitting the market next year, according to Taylor. About 1-2% of the population has that condition, and the drug is estimated to cost $12,000 for a one-month supply, she says.
Richard Stolz is a freelance writer based in Rockville, Maryland.
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