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PBMI Research Shows More Employers Using Multi-Tier Plan Designs To Control Drug Costs

Posted on: Wednesday, 15 October 2008, 12:00 CDT

More employers are using three- and four-tier drug benefit designs to encourage plan member use of low cost prescription medications, according to research findings from the Pharmacy Benefit Management Institute's (PBMI) Prescription Drug Benefit Cost and Plan Design Report 2008-09 Edition. The research also shows that the average member cost share for generics, preferred brand and nonpreferred brand-name drugs has increased.

"Employers are effectively using multiple tools to keep their rate of drug cost increases to an average of 4.86%, the lowest rate since PBMI began conducting this survey in 1995," said Dana H. Felthouse, MBA, PBMI president. "This is a decline of 2% from last year's survey. In addition to multi-tiered formularies, employers are using generic dispensing incentives, negotiated pharmacy reimbursement, and a broad range of utilization management approaches to control costs."

PBMI's Prescription Drug Benefit Cost and Plan Design Report provides trending information on plan design and utilization. It also includes employer responses to questions about:

-- Copayments, coinsurance and out-of-pocket maximums;

-- Specific drug inclusions, exclusions and benefit limits;

-- Coordination with Medicare Part D for retiree coverage;

-- Specialty pharmacy cost sharing and dispensing;

-- Per member per month utilization metrics; and

-- Utilization management tools.

The survey was completed by 223 employers representing more than 15.1 million members.

PBMI gratefully acknowledges the support of Takeda Pharmaceuticals North America (TPNA), Inc. for the provision of a grant to cover costs incurred in the production of this report. TPNA has no access to the individual responses or raw data gathered, nor do any other third parties. This protects the confidentiality of the survey respondents and ensures the independence and objectivity of this report.

Takeda has sponsored publication of the Prescription Drug Benefit Cost and Plan Design Report since 2001. Because the data set is so expansive, Takeda also has underwritten the development of supplemental resources at www.pbmi.com to make research findings easy to access and use in benefit planning. Copies of the new report also are available at www.pbmi.com.

The Pharmacy Benefit Management Institute provides research, continuing education, and educational tools to help health care benefit executives work effectively with pharmacy benefit managers to improve the design and management of drug benefit programs. Learn more at www.pbmi.com.

Table: Summary of Cost Sharing for Common Drug Benefit Plan Configurations

Percentage of Employers Using Plan Cost Sharing Structure Configuration ------------------------------------------------ --------------------- 2008 2007 ------------------------------------------------ --------------------- Two-tier Plan Design with Dollar Copayments 14.8% 16.8% ------------------------------------------------ --------------------- Two-tier Plan Design with Coinsurance 4.5% 7.9% ------------------------------------------------ --------------------- Three-tier Plan Design with Dollar Copayments 60.5% 45.3% ------------------------------------------------ --------------------- Three-tier Plan Design with Coinsurance 17.9% 14.4% ------------------------------------------------ --------------------- Four-tier Plan Design with Dollar Copayments 20.2% 11.5% ------------------------------------------------ --------------------- Four-tier Plan Design with Coinsurance 9.4% 4.1% ------------------------------------------------ ---------------------

Source: Pharmacy Benefit Management Institute, Prescription Drug Benefit Cost and Plan Design Report 2008-09 Edition

Caption: PBMI research shows an increase in the percentage of employers using three- and four-tier drug benefit designs to drive utilization to the lowest net cost drug. The most commonly used plan configuration is a three-tier design with dollar copayments.

Source: Business Wire

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