By Bill Rusteberg
A 400 employee life group in Texas, like many other employers across the United States, was experiencing high drug costs running into hundreds of thousands of dollars per year primarily due to specialty drugs. This self-funded plan had to do something to stop out of control prescription drug costs.
Industry experts were called in to study the issue and offer advice and guidance. “There is nothing you can do” said one. “Try step therapy” said another. “You can’t do anything, your hands are tied due to ObamaCare” opined another expert, a PBM representative.
RiskManagers.us gave a completely different suggestion. “It’s simple, eliminate specialty drugs from your formulary. There is nothing in the ACA that prevents a plan sponsor from deciding which drugs to cover. PBM’s formularies, for example, are dissimilar. Medicare’s definition of special drugs is any drug that costs more than $600 per month. Simply go through your current formulary and delete any drug that costs, on average, more than $1,200 for a 30 day supply.”( Can A Health Plan Exclude Specialty Drugs?)
“Well, we just don’t know if we can do that, let’s get our ERISA attorney on the phone” said the HR manager. “And, more importantly, how are these poor people on our plan going to get needed specialty drugs if we eliminate them? They will die without them! I just don’t think we should do this!”
“Well, they can enroll on the Obama public exchange and hope they can find coverage there, or they can apply for financial assistance through various drug manufacturers who have been known to provide the drugs for free to those who can’t afford them” said RiskManagers.us.
“Outstanding idea Bill!” said the ERISA attorney and his assistant. “There is nothing to prevent you from doing so, it’s a great idea and something that will have to be considered by many of our clients whose financial backs are against the wall.”
So the decision was made to give employees 90 day notice that effective January 1, 2017 the group’s formulary would be changing. They were advised to compare the new formulary to their prescription needs to determine if their drugs would continue to be covered and if not, seek alternative means to continue to received needed drugs (or, according the the HR Director, face death and distruction).
An email received yesterday from the group’s HR director provides an update:
I wanted to follow up with you all on our big plan change to prescriptions. We had 3 employees with high dollar drugs that were no longer covered as of 1/1/17. The employee on Enbrel (http://www.modernhealthcare.com/article/20160401/NEWS/160409993 ) has no cost now. The employee one Tecfidera (http://www.healthline.com/health-news/ms-why-are-ms-drug-prices-so-high-071913) is also on a free plan through Biogon. I haven’t heard back from the last employee yet for the narcolepsy drug.
It was a long process and not one they could go through before 1/1/17. Most programs, would not approve until the insurance actually stopped paying for the drug. I even wrote letters ahead of time about the insurance change, but we did not hear until January. They also have to reapply each year for the program.
See you guys tomorrow for the quarterly meeting.
This group made a tough decision. It was either do something drastic, or terminate the group medical plan. At the end of the day, all worked out according to plan. The employer can continue to afford to pay for group medical insurance, and plan participants continue to get (free) high dollar drugs.
If more employers followed this example, drug costs would become competitive. Otherwise, drug manufacturers will continue to feed off the deep, unlimited pots-of-gold known as group health plans.
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Editor’s Note: The group will save $244,000 this year on three individuals within the group who are on specialty drugs (now paid by the manufacturer, not the employer).
Write to RiskManager@RiskManager.us:
What happens if the patient goes into the hospital for non-treatment and gets a huge hospital bill as a result? Seems like you defeat the purpose of not paying for the drug let alone the impact medically this has on the groups employees?
I believe that half of the employers out there would disagree with you and the other half would agree. Like any other benefit an employer offers, they offer health insurance to employees not because they want to, but because they must be competitive with other companies to compete for talented employees. If you curtail the benefit as you suggest, especially in the market where I reside, it becomes difficult to recruit new employees and I have had some leave because a benefit is richer elsewhere. There’s no right answer and this seems to have worked for this group, but this would not be good for everyone out there. I am just saying …. .
Bruce D. Roffe, P.D., M.S., H.I.A., President and CEO
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