Rising Prescription Drug Costs Lift Price of Employee Benefits, Hartford Courant Reports

"Soaring" prescription drug costs will likely soon lead to "large increases" in workers' health insurance premiums and to "changes or cutbacks" in prescription drug benefits, the Hartford Courant reports. The rising drug costs are also making employer-funded retiree health benefits "rarer" than they have been and are raising spending on care for the uninsured. Prescription drug costs are projected to increase by 20% this year after increases of 18% in 2000 and 17% in 1999, and employers are "at the end of their line," Blaine Bos, a principal at William Mercer, said. The Courant reports that nearly one-quarter of large employers are "have carved out" prescription drug benefits from primary care, allowing them to "set separate coverage and payment conditions for drug benefits." They are also encouraging the use of generic drugs, mail order pharmacies and tiered prescription drug copayment plans. Ron Fontanetta, a principal at Towers Perrin, said that almost all the employers that his company surveyed "have either adopted or are considering changes to their prescription drug programs to limit the impact of increasing costs." The Courant reports that several trends have contributed to the rising drug costs, including an "explosion" in television drug advertising and "costly" pharmaceutical research and development (MacDonald, Hartford Courant, 4/24).