Why some employers choose to pay for Rx

As the economy slowly recovers, employers are taking some innovative steps toward controlling health care costs. One strategy generating attention and adoption in several companies is waiving prescription drug co-pays.

That’s right – at a time when most companies are looking for ways to SAVE MORE on health plans – some are choosing to PAY MORE of their employees’ prescription drug costs. That’s because they believe this up-front investment will provide a healthy return over time for both employees and their business.

Take the example of GlaxoSmithKline. In 2006, the company tried an experiment to better control the cost of medical care for employees managing diabetes. To incentivize some of those employees to engage in active diabetes management programs with local pharmacists, GSK waived the regular deductibles the employees paid for their diabetes medications, and also reduced deductibles and co-pays on lab tests.

Glaxo told The Wall Street Journal the program produced good clinical results for those who participated and it also yielded an average savings of more than $5,800 per participant.

The success of this strategy for GSK and other companies is prompting benefits managers across the country to encourage company leaders to think about spending a little more now to save more later. Some are starting small: eliminating co-pays for generic drugs only, for which employees typically pay between $7 to $15 out-of-pocket.

Other companies, such as Marriot International, Mowhawk Carpet Corporation and Proctor and Gamble are targeting chronic conditions, like GSK did.

Some organizations view this approach similarly to how they view an investment in wellness programs. If prescription drug treatments can prevent costly treatment down the road, it not only saves both the company and employee money, but it also preempts lost productivity from unscheduled absences.

So how many employers are dipping their toe in the pay-for-prescriptions water? The National Business Coalition on Health in Washington says some companies are thinking about it very seriously – they just want to see more data on the cost savings.

Another question to ask is if employers make the medications less expensive, will employees actually take their pills as directed? To help ensure they do, such programs often include a targeted and consistent employee communication campaign to reinforce the importance of using prescription drugs as directed to enhance long-term disease management and health.

Companies shouldn’t assume, though, that this is the right approach for them. Instead, think of the approach as one of many to consider in an overall health improvement and cost reduction strategy. Start by completing a thorough analysis of prescription drug use on your health plan to see if that data suggests using medication will improve health outcomes.

If you find reason to believe it will, then it may be worth investigating further.

Controlling health care costs will require many innovative solutions.

Michelle Hicks is a communications consultant with Buck Consultants. Contact her at michelle.hicks@buckconsultants.com.

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