As the dust settles over the Affordable Care Act and employees get used to operating in the post-ACA world, plan sponsors find themselves in somewhat of a holding pattern with regards to their pharmacy benefits. But strategic decisions are still in play about whether or not employers are going to provide traditional benefit plans once the employer mandate goes into effect in 2015 or send workers to public or private exchanges.

“That lack of clarity then creates the scenario where the investment in changing the pharmacy benefit and subjecting employees to a change in benefits, only to end up with a decision to not provide the benefits, seems inefficient and pointless to some,” says Allan Zimmerman, national pharmacy practice director for PricewaterhouseCoopers.

The 2013-2014 Prescription Drug Benefit Cost and Plan Design Report, from the Pharmacy Benefit Management Institute, highlights the gray area inhabited by plan sponsors for now. The annual survey, now in its 13th year, analysed data from 478 U.S. employers, representing 22.5 million lives enrolled in employer-sponsored coverage.

“We saw not a lot of change from the previous year to this current year in terms of benefit design features,” says Kathleen Fairman, vice president of research and education with PBMI. “If you look at the key plan design features and you compare 2012 and 2013 you see a pattern we describe as holding steady.”

Indeed, according to the report, use of prior authorization as a plan design feature remained at 86% in 2013, unchanged from 2012, yet up from 76% in 2011. Plan sponsors also reported a small increase in their use of step therapy. In 2013, 67% of plan sponsors surveyed report using step therapy, up from 65% in 2012 and 56% in 2011.

Nadina Rosier, Towers Watson’s North America health and group benefits practice leader, pharmacy, notes the holding pattern many plan sponsor find themselves in isn’t restricted to just the drug plan — it extends to all health benefits. With the evolution of health care exchanges and near-final guidance around the excise tax, which Rosier says which is not going away any time soon, “employers are trying to determine what their next steps are in terms of the contribution to [all] health benefits moving forward,” she says.

The lack of change in prescription drug plans isn’t necessarily positive or negative, says Michael Jacobs, a director with IMS Health, a technology services company for the health care industry, but merely “a result of the times. It’s not a bad thing. Employers are being faced with decisions that are new. The public and private exchanges have added another discussion point for consultants and brokers to bring up with employers.”

Pharmacy networks

The PBMI report suggests plan sponsors regularly evaluate their pharmacy network contracts “because factors that can be very important to plan sponsors’ costs per claim — such as dispensing fees, ingredient cost discounts — can vary substantially by channel,” says Fairman. “Because those are subject to contractual arrangements, our data suggests it’s important to look at those on a regular basis.”

The majority of employers (96%) offer access to mail-order pharmacies. Among those, 24% have a mandatory mail program, with 20% of them requiring that all maintenance medications be filled through mail. Four percent, meanwhile, require that some maintenance medications be filled through mail. These figures are virtually unchanged from 2012.

“We are seeing a growth of so-called narrow networks — limited networks or mandatory limitations on networks — either offering cost-sharing discounts for certain pharmacies or removing some pharmacies from the network altogether,” says Fairman.

Even the use of narrow networks, however, conforms to the same holding pattern as other drug benefit plan design features examined in the report, with 18% of respondents offering a preferred network in 2013 (down slightly from 19% in 2012) and 11% a limited network in 2013 (unchanged from 2012.)

Pharmacy consultant Dave Borden, CEO, Pharmaceutical Strategies Group, expects to see increased competition among retail pharmacies to attract plan members who might otherwise go to mail-order. “We’re actually seeing mail-order pharmacy volumes flattening out and we’re seeing a lot of the growth in generic dispensing coming from the retail side,” he says.

Lisa Zeitel, senior vice president with Aon Hewitt, concurs. “We are seeing greater interest in retail-90 networks, or a 90-day maintenance drug benefit either at mail or retail,” she says. “They provide a 90-day supply at a retail pharmacy for the same copay or price as mail.”

Step therapy

Prescription drug plans haven’t remained completely stagnant, however. New to this year’s survey was a question about which therapy classes require step therapy. Rheumatoid arthritis and cholesterol-lowering drugs are the ones most likely to require step therapy. Fifty percent of employers overall require step therapy for rheumatoid arthritis drugs, while 49% require step therapy be used for cholesterol-lowering drugs.

The report reveals some statistical differences among large and small employers when it comes to step therapy. Large employers are more likely than small employers to use step therapy programs for cholesterol-lowering drugs (57% vs.

42% for small employers), depression (51% vs. 38% for small employers), sleep disorders (40% vs. 28% for small employers), asthma (40% vs. 24% for small employers), osteoperosis (32% vs. 19% for small employers) and overactive bladder medications (21% vs. 9% for small employers.)

The next frontier

PBMI is releasing its annual specialty drug trend report this month. While data was not yet available, “at this point we’re probably consistent with what people thought last year, which is that specialty drugs are growing very rapidly. There is a pipeline of specialty drugs and as that pipeline continues into the post-market stage, we’re going to see that reflected in cost trends,” says Fairman.

In fact, many believe the cost savings achieved through better plan design and increased use of generic drugs will be muted by rising spend on specialty medications. “Those drugs are trending, in terms of inflation, at double-digit rates and utilization is expected to grow,” says Zeitel. “We’re projecting that by 2020, specialty drugs could account for about 50% of all pharmacy costs.” 

Register or login for access to this item and much more

All Employee Benefit News content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access