Insurers Looking to Increase Consumer Cost-Sharing by Adding Tiers to Prescription Drug Coverage

Attempting to pass more costs on to consumers, health plans are increasingly using multi-tiered systems of prescription drug coverage that go beyond the once-standard categorizations of drugs as either brand-name or generic, the Washington Post reports. Nearly 50% of companies that offer pharmacy benefits to employees have added or are in the process of adding a "third or higher tier," with the top tiers "generally includ[ing] brand-name drugs with the highest retail prices," according to a survey by the benefits consulting firm Hewitt Associates. The result, according to Watson Wyatt, another benefits firm, is that drug spending will account for 17% of consumers' health costs next year, up from 11.5% in 1999. New pharmacy plans offered by insurers include the following:

• For some of its Washington-area members, Aetna will raise the co-payment on its third-tier drugs, which are brand-name medications not on the company's formulary, to 50% of a drug's cost.
• Humana is rolling out a four-tiered plan that sets co-pays of $10, $25 and $45 for brand-name drugs that have a "lower-priced alternative," while the co-pay for Tier 4, which covers "expensive, top-of-the line drugs," will be 25% of the retail price.
• Express Scripts, a pharmacy benefits manager, is introducing a five-tier plan, in which employers will "be able to tinker with the exact co-pays and which drugs get included in the tiers." The tiers take "various factors" into account, including the cost and effect of the drug and whether Express Scripts reached a price deal with the drug's maker.
• WellPoint Health Networks next year will introduce a "reference pricing" plan in which consumers, in order to receive coverage for any drug "that is more expensive than its competitors," will have to show proof that the drug is "also more effective."