Specialty drugs drive up U-M prescription drug plan costs

May 14, 2015  //  FOUND IN: Updates & Resources

Source: U-M Benefits Office

The university’s prescription drug plan for faculty, staff and retirees continued to outperform cost benchmarks in 2014, but rising specialty drug costs present challenges for the future.

The plan cost increased from $85.3 million in 2013 to $94.3 million in 2014, an increase of 10.6%, according to the 2014 Prescription Drug Plan Annual Report published by the U-M Benefits Office. The national trend for 2014 reported by Express Scripts was 13.1%. 

The university’s self-funded plan has outperformed national averages for more than a decade through a tightly managed plan design and collaboration with expert faculty, who consult with the Benefits Office on drug and plan decisions. 

As a result, U-M plan members paid about 11% of total drug plan costs through copays and other out-of-pocket expenses in 2014, compared to the national average of 24% reported by the Pharmacy Benefit Manager Institute.    

Despite U-M’s successful track record, prescription drug plans nationwide are experiencing significant cost increases driven by growth in specialty drug costs and utilization. 

Recent pharmaceutical advances provide promising new treatment options for people living with conditions such as hepatitis C, multiple sclerosis and cancer. Many such “specialty drugs” have entered the market at very high price points. For example, new hepatitis C medications offer 90% cure rates at
$80,000-$90,000 per course of treatment. 

Specialty drugs represented 1.3% of U-M prescription drug plan claims in 2014, but accounted for 31.9% of the total plan cost. By 2018, specialty drugs are expected to account for 40-50% of the total plan cost, according to Keith Bruhnsen, prescription drug plan manager and assistant director in the Benefits Office.    

The university is exploring ways to maintain a high-value prescription drug benefit for members going forward while balancing cost-effectiveness, clinical appropriateness and safety considerations.

Members can offset some of the impact of rising drug costs by filling prescriptions for regularly taken maintenance medications through NoviXus Pharmacy Services, the university’s mail order pharmacy administrator. The average household saves $280 per year by switching eligible prescriptions to mail order. It takes about five minutes to sign up online at umich.novixus.com or by calling 877-269-1160. 

Mail order offers the lowest copay for a 90-day supply of maintenance medications, such as daily medications for cholesterol or high blood pressure. The average prescription is filled and shipped at no cost to the member from NoviXus’s location in Novi, MI in less than one day.      

NoviXus receives high marks for customer satisfaction with a dedicated customer service line for U-M members.  “Since I started using them last year, they have been terrific,” said John Kotre, professor emeritus of psychology, U-M Dearborn.  “The prices, the web site, the ease of refilling, the free and prompt shipping, and last of all the customer reps on the phone . . . I couldn’t ask for more.”

More information about the mail order pharmacy and the 2014 Prescription Drug Plan Annual Report is available from the Benefits Office website.

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