Long-term savings Featured

7:00pm EDT November 24, 2006

Businesses have been dealing with the burden of rising health care premiums for many years. However, the good news is that in the past couple of years, health benefit premiums are no longer seeing the double-digit increases of the past decade, and have slowed to a more manageable single-digit increase, says Shawn F. Barger, Pharm.D., director of clinical pharmacy management at AvMed Health Plans in Gainsville, Fla. Part of the reason that health benefits costs have slowed, interestingly enough, is because of the advances in the pharmaceutical industry.

“Yes, prescription drug costs have skyrocketed, but that is because there are more advanced therapies that did not exist 10 years ago,” he says. “But the benefit of these drugs is that they manage to rein in even more expensive hospitalizations and physician treatments.”

Smart Business spoke with Barger about these new trends in health care that may spell relief for companies that have been burdened with high health care premiums.

What are some of these drugs and why are they so expensive?

There are now specialty injectable or infusion products for diseases that are increasing quality of life; rheumatoid arthritis, cancer, asthma, hereditary diseases and diabetes. It is important to note that prior to these treatments coming out, many people — particularly those with rheumatoid arthritis — had a horrible quality of life. These new treatments can stop the progression of a disease and prevent the person from having to go on disability. So, while the treatments are very expensive to produce, they are having a huge impact on quality of life and the ability for a person to continue working.

How much do prescriptions drugs account for in an employer’s health care expenditures?

Roughly 15 percent. While it is not the majority of total costs, this percentage is increasing every year. The goal, of course, is that the more expensive drug therapies will decrease expenses of hospitalizations and emergency room visits. More companies — both businesses and pharmaceutical companies — are looking at what’s called ‘pharma-economics,’ in which the cost of higher drug therapies are offset by decreased visits to the ER and hospitals.

Is the increased availability of generic drugs helping to keep costs down?

Yes. The three categories of drugs that have been in the top five for drug spending have been statins (for high cholesterol such as Zocor and Pravachol), selective serotonin reuptake inhibitors or SSRIs (anti-depressants such as Prozac and Zoloft), and proton pump inhibitors (such as Prilosec for gastroesophageal reflux disease/GERD).

The good news is that these drugs, which have been brand-only in the past, now have generics as alternatives to the brand, which has been a huge help in keeping costs down.

What are some ways that companies can work to rein in the costs of health benefits?

It is important for employers to remember, given what we just discussed, that managing prescription costs doesn’t always mean lowering costs. If employees are taking their prescriptions the way they should, the use of prescription medication will go up. But what might costs be if the employee did not take the medication? Would the employee take more time off because he or she is sick more often? Would he or she go on disability? Would visits to the ER increase? The employer needs to look at the big picture.

The way many companies are dealing with the rise in pharmacy costs is to raise the co-pays to offset the increase in prescription drug spending. But you can only do that to a certain point until it becomes a barrier to buying the medication and employees opt not to buy it — which can have many negative consequences. Co-pays should not be a barrier to getting needed medication.

What are some available cost-controlling tools that won’t jeopardize employee health?

Four major initiatives allow greater access to medications, which will show savings in hospitalizations over the long term.

  • 90-day supply of medication at retail pharmacies instead of just mail-order

  • Co-pay holidays if members switch to generics

  • Development of medication adherence programs

  • Removing prior authorizations and quality limits on certain medications

SHAWN F. BARGER, Pharm.D. is the director of clinical pharmacy management at AvMed Health Plans (www.AvMed.org) based in Gainesville. Reach Barger at (352) 337-8517 or Shawn.barger@avmed.org.