Prescription drug costs are going to rise no matter what the election results and it is doubtful that any mandated price control measure will change that. The reasons for the rise in drug costs are neither a mystery nor the result of some sinister plot. They are the result of successful research, government policy and business marketing, and include the following factors.

 

Cost Management
Cost trends need to be carefully watched. Prescription drug benefit costs for large employers are expected to increase 22.5 percent next year (2) and there is no end in sight. Increased co-payments may reduce absolute costs initially but will not per se stem future cost inflation. A cost management strategy that takes into account future possible increases and does not rely heavily on any one cost containment instrument appears the best way to address prescription drug expenses. Such a strategy has education and gradual cost shifting as the primary ingredients.

 

Education means informing both employee and physician that there are inexpensive alternatives to the marketed prescriptions that are just as effective. Physicians in particular require information about generic substitutes. They should also be involved in determining which drugs ought to be covered by an insurance plan and those that needn't be. Cost shifting requires the employee to assume increasingly more of the cost of expensive prescriptions. Co-payments need not be across the board, and can be used to change an employee's preferences. For example, the co-payment for a brand name drug can be dramatically increased while its generic counterpart has a minimal co-payment. Employers can establish a list of preferred drug list of those medications for which a benefit will be paid, and refuse payment of any benefit for over-the-counter medications. Automatic coverage is ordinarily given to those prescription drugs that are FDA-approved. Recognizing that there are a large number of drugs obtaining approval, plan administrators can eliminate this automatic coverage and instead have an annual review in which it is determined whether or not any newly approved drug is covered. A sizable benefit of this annual review approach is that it would offer the time needed for a generic alternative to be approved, thus allowing for more cost-effective decisions.

 

The future cost trends may ultimately result in some form of catastrophic drug coverage (3), and employers ought to begin developing some elementary forms of catastrophic coverage. An example would be a lifetime dollar maximum payment for a brand name drug, or a cost-sharing ratio for certain maintenance and preventive drugs. If either seems a little drastic, consider the following: Donepezil, used to offset the symptoms of Alzheimer's disease, can cost as much as $141 for a 31-day supply of 5 mg tablets. If a person takes more than one such medication at a time, the monthly expenses can be substantial.

 

Care should be taken lest the inability to pay for a prescription results in health problems that generate greater health costs, and that is a major reason why physicians should be involved in deciding what drugs are covered by the prescription drug benefit. A careful plan of cost management -- one that includes education and cost containment measures to anticipate and not merely react to future cost increases -- offers the plan a chance to economize without placing the health of its members in jeopardy.