Retiree Prescription Benefit Plans Boosted by Lowered Pharmacy Costs
December 18, 2013 – In a report released earlier this year by ExpressScripts, projected costs for 8 of the 10 most popular therapy classes will see the cost of the prescription drugs used to treat them decline. This is welcome news for companies that support retiree prescription benefit plans.
Lower overall prescription costs over the next several years are forecast by several sources including the CMS, Segal Consulting and ExpressScripts. For employers who provide retiree prescription benefit plans this is extremely good news. Why? Well, the Coverage Cap Discount, which mandates that pharmaceutical companies reduce the cost of popular brand name prescription drugs by 50% will be even more valuable with lower overall prescription drug costs.
Compare RDS and EGWP for Retiree Prescription Benefit Plans
Companies that choose to use an EGWP +wrap plan can realize even greater savings over the RDS plans they may have been using in the past. With RDS you have lost many advantages that the plan had in the past. Most notably, RDS payments are no longer tax deductible. But with EGWP +wrap you have a higher savings rate on actual drug purchases, which according to the forecasts are falling in all but two of the most popular therapy categories.
The two therapy classes that are not falling are diabetes and attention disorders. The forecast expects these to rise on a 3 year compounded rate of 25% to 25% (for years 2013 to 2015). The ExpressScripts report attributes the rise to a higher prevalence of both of these diseases being diagnosed and a robust pipeline of new therapies.
Plan sponsors who employ an EGWP +wrap strategy can realize greater savings by the trend of lowered prices on brand name prescriptions. In addition, companies that employ an 800 series EGWP, in which a Third Party Administrator directly contracts with the CMS on behalf of the plan sponsor, have the added savings that all program administration is handled by the TPA. This further lowers the cost and liability of the program and transfers risk to the TPA.
Free Retiree Prescription Benefit Plans Consultation
For more information on how to reduce retiree prescription benefit plan costs, please contact one of our Benefit Specialists by clicking here, or use the form below. A Benefit Specialist can help you determine the best options for your retiree pharmacy benefits plan. The consultation is free and carries no obligation.