You know the expression “Strike while the iron is hot”? For plan sponsors that have contemplated imposing limits on prescription drug coverage but have worried about upsetting plan participants, the timing just may be right.

Participants almost couldn’t miss recent news of soaring drug prices (think EpiPens® and specialty drugs for hepatitis C and other conditions). They can see the connection between drug prices and health care costs—and that it’s in their own best interest to help to control costs.

So plan sponsors that want to impose some reasonable prescription drug coverage limits might be surprised how little pushback they’d get.

Seven Tips for Adding Prescription Drug Coverage Limits
Linda Cahn, an attorney who specializes in pharmacy benefits manager (PBM) contracting and RFPs and heads a prescription coverage coalition, thinks plan participants are “natural allies” with their plans in trying to keep a lid on drug costs.

[Related: Overview of Prescription Drugs e-learning course]

In the January issue of Benefits Magazine, Cahn writes that many plan sponsors already are aware of some of the cost-control strategies she describes in “Prescription Coverage Savings: Easy to Find if You Just Look for Them.” But too often, plan sponsors fear a backlash from employees and fail to take advantage of the strategies. “Such a concern is understandable but probably unnecessary and unwise,” according to Cahn.

Plan sponsors can ask participants to pay attention to drug prices and to ask their doctors to prescribe lower cost generics or over-the-counter drugs when possible. Participants can be asked to fill prescriptions at lower cost pharmacies or specific pharmacies.

[Related: Understanding Specialty Drug Pricing | Benefit Bits Video]

Sponsors may need to explain why they’re excluding certain high-cost drugs from coverage or making them more expensive when a less-expensive alternative is available. Participants likely will understand,  Cahn thinks.

She suggests that plan sponsors implement these operations.

  1. Stop covering high-cost drugs that have lower cost equivalents.
  2. Make sure their PBM is invoicing the plan with the PBM’s actual reimbursement to the pharmacy—in other words, is using pass-through pricing.
  3. Pin down the definitions for brand drugs and generic drugs in the PBM contract.
  4. Make sure specialty drug pricing is competitive and guaranteed.
  5. Refuse to play what Cahn calls PBM rebate games.
  6. Create a limited or preferred retail pharmacy network.
  7. Address drug manufacturers’ ploy of using coupons to end-run a plan’s copay structure.

Most participants may see that they, as well the plan, stand to benefit from doing whatever they can to control drug costs. As is the case with all benefit plan changes, good communication is key.

Chris Vogel, CEBS
Senior Editor—Publications at the International Foundation




Chris Vogel, CEBS

Senior Editor—Publications at the International Foundation Favorite Foundation service/product: Benefits Magazine, of course—especially “What’s Working” articles

Benefits related topics she loves to cover: Behavioral science behind steering employees to best retirement and health care options; innovative health care and wellness plan designs Favorite Foundation conference/event moment: Every minute of the Employee Benefits Symposium Personal Insight: “Leisure time” for Chris is far from inactive. You might find her gardening, cooking up a storm of healthy foods, traveling to historic places, biking with her husband, reading 24/7 or knitting sweaters for her grandson. Whatever activity, she’ll be doing it with an inspiring enthusiasm.


Recommended Posts

Legal & Legislative Reporter: Medical Provider May Not Bring Claim on Behalf of Participants and Beneficiaries

Guest Contributor

Every month, the International Foundation releases the Legal and Legislative Reporter, a compilation of new employee benefits–related case summaries. Below is a summary we thought you’d be interested in. Content provided by Morgan, Lewis & Bockius LLP. The U.S. District Court for the […]

Five Steps to Nurture Belonging in the Workplace

Guest Contributor

Benefits Magazine Extras articles provide you with bonus content on a mix of benefits topics as well as deep dives and analyses on the latest benefit trends and compliance issues. Visit to see the latest Benefits Magazine Extras as well as the bimonthly print […]

Navigating Uncertainty

Christine Vazquez, CEBS

In today’s business environment, change is constant. Earning a Certified Employee Benefit Specialist® (CEBS®) designation can help benefits professionals improve their ability to manage organizational change. The self-study CEBS courses provide critical knowledge and skills to scan the environment and strategically tailor benefit […]

DOL Guidance on Mental Health Parity: Proposed Rules for NQTL Comparative Analyses

Jenny Gartman, CEBS

Many health plan sponsors continue to struggle to comply with the Mental Health Parity and Addiction Equity Act (MHPAEA), particularly the requirement to conduct a comparative analysis of nonquantitative treatment limitations (NQTLs) that has been effective under the 2021 Consolidated Appropriations Act […]