Seven Tips for Adding Prescription Drug Coverage Limits

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