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Prescription Copayments To Increase July 1 PDF Print E-mail
MARCH 1999 - GIC Counters Rising Cost of Drugs - For the first time in nearly eight years, the state’s Group Insurance Commission (GIC) has voted to raise the copayment for both the retail and mail order drug benefits offered through its indemnity plan.
Since 1992, the copayments associated with the retail prescription drug benefit have been locked at $5 for generic and $10 for name brand drugs. Beginning July 1, members enrolled in the GIC Indemnity Plan, OME, or the Plus Plan will still pay a $5 copayment for generic prescriptions, but will pay $15 for name brand prescriptions.

Under the mail order program, members can receive a three month supply of their required prescription at a discounted rate. Under the new rates, the mail order copayment will increase from $6/$12 for generic and namebrand to $6/18 for the three month supply.

Eight of the eleven Commissioners voted in favor of the copayment increase. Union representatives John Walsh (Local 254, S.E.I.U., AFL-CIO), Christine Truax (NAGE), and Mark Mulcahy (Council #93, AFSCME, AFL-CIO) each voted against the proposal.

"While we preferred to have no increase in the copayments, I understand why this was inevitable. Pharmaceutical costs are out of control all over the country and the GIC can only do so much to address the problem from this end," explained Association President Ralph White. "In view of what is happening in the private sector with the HMOs restricting the drug benefit our members are fortunate to have the type of comprehensive coverage that the indemnity plan offers.

"The alternatives to raising the copayments discussed by the Commission over the past few months were far more drastic than what the outcome brought. We heard everything from formularies to $25 copayments discussed."

Alternative Proposals Defeated

During the past several months, the GIC had examined a number of proposals to rein in the rapidly rising cost of prescription benefits. Prescriptions that were once a marginal cost in terms of health care expenditures have risen to account for over 20% of annual insurance costs. The GIC’s near $20 million deficit in FY’98 can be partly attributed to drug costs.

In their attempts to devise a way to stem the rise in costs, the GIC investigated a number of alternatives. One was to institute a formulary, or list of approved drugs that the plan would cover. Typically, using a drug outside of the approved formulary requires the patient to pay high out-of-pocket expenses.

Another alternative discussed was to institute a three tier copayment system of $5/$15/$25. The high $25 copayment would be used in cases of name brand drugs which have a generic equivalent. These types of drugs account for 5% of the prescriptions filled by retirees.

During the discussion process both the GIC staff, as well as the majority of Commissioners felt both the formulary and three-tier system were unnecessary at the present time. In fact several Commissioners expressed concern as to the impact such procedures would have on retirees.

Generics Often Used

Under Massachusetts law, pharmacies must substitute generic drugs for namebrand, unless the doctor orders otherwise. In most cases, generics are identical to their namebrand equivalent. However, there are instances where the namebrand is required due to a drug allergy or other circumstance.

In states where no such law exists, a three tiered copayment system encourages the use of generic equivalents. This helps control the overall cost of the drug benefit. Since generic usage in Massachusetts is already high, the $25 copayment would serve little purpose in modifying behavior. Instead, GIC officials argue, it would penalize older retirees who have no choice but to use the high cost namebrand drugs.

"The GIC Commissioners did the right thing by agreeing with the staff recommendation not to go with a three-tier system or formulary. Neither alternative would have accomplished a thing other than to shift the costs to those retirees who can least afford to pay," commented Association Legislative Liaison Shawn Duhamel. "I hope this sets an example of how the need to control costs must be balanced with what the effect will be on the insured.

 
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