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Employers Favor Tiers Over Forced Generics

Cheryl A. Thompson

Despite rising health care costs, employers have not increased their reliance on generic drug products to control pharmaceutical expenses, according to a survey released today.

Nineteen percent of the workers covered by employer-sponsored health plans must have their prescriptions filled with generic products if available—essentially the same percentage as in 2000.

Whereas 24–37 percent of workers in employer-sponsored managed care plans in 1998 had to receive the available generic product in order to receive a discount on the prescription, the level dropped by 2000 to 15–24 percent. During this time, 14–16 percent of workers covered by employer-sponsored conventional insurance had to receive the available generic product.

The telephone survey, conducted earlier this year by the Kaiser Family Foundation and a nonprofit research organization affiliated with the American Hospital Association, involved nearly 2,000 public and private employers that offer medical coverage.

Two-, three-, or four-tier cost-sharing formulas for prescription drugs apply to 89 percent of workers. Since 2000, gradually more employer-sponsored plans have opted to increase the number of tiers in their prescription drug benefit. The average copayment or coinsurance rate for each tier has also gradually increased.

Increasing the amount to be paid by workers for prescription drugs in 2005 was the specific change mentioned most often, 18 percent of the time, as a "very likely" move by firms with 200 or more employees—a sentiment shared by 5 percent of the smaller firms.