If you have a prescription drug benefit, prepare for sticker shock.
Pharmacy co-payments that had hovered for years at $5 or $10 a script are soaring now to $50 or more for brand-name medications, as insurers and employers shift more of the growing cost of health care to consumers who had grown accustomed to believing that only uninsured seniors worried about paying for drugs.
"People are confused," said Pat Burke, who owns pharmacies in Hampden, Reisterstown and Parkville. "Most of the time, it's the pharmacist who has to break the news that the medication they used to get for $8 is now $12 or $40 -- or that the insurer won't cover it at all."
Spending on prescription drugs -- the fastest-growing component of the nation's medical tab -- has been expanding at about twice the inflation rate in the past decade. Now, employers and insurers are rethinking the generous drug benefits that have helped fuel that growth.
"The number of prescriptions has just blown through the roof," said Donald Knapp, dean of the University of Maryland School of Pharmacy. "And the availability of insurance is a factor. Ten years ago, 35 percent of working adults had a drug insurance benefit. Now, 85 to 90 percent have it."
Built on a 1980s model pioneered by health maintenance organizations, drug benefits allowed employees to plunk down a low co-payment for any prescription. It worked for all because drug therapies helped keep people healthier and thus kept down hospitalization costs.
But "a tremendous onslaught of new, very expensive medications" came on the market in the 1990s, and physicians began writing scripts liberally, said Stanley Wallack, director of Brandeis University's Schneider Institute for Health Policy.
Almost overnight, the benefit became a sweetheart deal for employees who could pay $5 for a $150 bottle of pills and leave insurers and employers to pay the rest.
Americans spent $184 billion on prescription drugs last year, an increase of 13.4 percent over the year before, the federal government reported this month. They filled 3.1 billion prescriptions in 2002, a billion more than in 1992.
"Now, the insurers are pushing back," Wallack said.
CareFirst BlueCross BlueShield, for example, introduced plans this year that allow employers to offer three "tiers" of co-payment options for their employees.
The lowest possible co-payment option under those plans is $5 for generic medications in the first tier, $20 for "preferred" brand-name drugs in the second and $30 to more than $50 for the most expensive medicines.
"We want people to understand: Drugs cost a lot," said Amy Doherty, CareFirst's product manager. "That's hard to do if they pay a flat $5 or $10 or $15 every time."
So a CareFirst member pays $40 or $50 for a month's supply of the "nonpreferred" cholesterol-lowering drug Zocor, whose retail cost is about $3.15 a day, and $5 or $10 for that amount of the generic lovastatin, which costs less than $1 a day.
The plan also enlists physicians by requiring them to call the insurer's drug benefit manager for permission to write prescriptions for nonpreferred drugs.
CareFirst is riding an industrywide wave: 63 percent of workers with employer-sponsored drug benefits will have "tiered" co-payment plans this year, up from 27 percent in 2000, with an average co-payment of $29 for the most expensive drugs, according to Kaiser Family Foundation, which monitors health care trends.
Some plans are going beyond the tiers to limit coverage to generics or requiring beneficiaries to pay percentages of the total cost of drugs.
"The transfer of liability of drug costs [to beneficiaries] that began around 2000 is just rocketing," said Bruce Stuart, the director of UM's Peter Lamy Center on Drug Therapy and Aging.
Tracking the impact of a tiered benefit on hypertension prescriptions, UM researchers Sachin Kamal-Bahl and Becky Briesacher found that insurers and employers reduced their spending 52 percent as patients switched to generics or simply stopped filling all their prescriptions.
Meanwhile, patients' out-of-pocket spending for hypertension medicine increased 600 percent, according to the national study of 1999 health insurance databases from 45 large employers and public organizations published this month by the journal Health Affairs.
That cost-shifting is just starting to be noticed by drug customers.
"My co-payments have almost doubled," said Kate Cameron, a mother of a 2-year-old. The Glyndon resident pays $14 for her prenatal vitamins and another $14 for vitamin supplements for her daughter. "It's a large increase, but it's not enough that we have to worry."
Faith Wade, office manager for a small Baltimore construction company, has a front-row seat on the struggle to contain drug costs. Employees on her company's plan face $30 co-pay charges for top-tier drugs.
"Co-pays are being raised to help lower the cost of health insurance premiums," she said. "But even so, those premiums have just about priced us out of business."
The drug co-payment that Carroll County corrections officer Tom Bryant pays doubled to about $200 a year for his allergy medications. "That's a lot, but it's not much compared to what other people are facing," he said.
His father and grandmother, he said, pay about $1,000 a year for their medications.
"Our drug costs are going out of control," said Jim Huber, the union representative at the International Steel Group Inc. plant in Sparrows Point, where employees' drug co-pays range from $10 to $30. "Americans are paying the highest prices in the world for prescription drugs."
Growing numbers of the nation's most price-sensitive drug shoppers -- uninsured seniors -- have been crossing the border to get a better deal on prices. Defying federal prohibitions on importing prescription drugs, American seniors spent almost $1 billion buying drugs from Canadian mail-order pharmacies last year. Canada's prices are lower because its government controls prices of prescription medications.
While shifting benefit schemes and rising co-payments might hardly be noticed by healthier, well-paid workers, there is evidence that such changes might do more than discourage patients from filling prescriptions for so-called "lifestyle drugs" such as medicines that combat toenail fungus or hair loss.
The UM study suggests that cost-shifting might harm people with chronic diseases and could lead to higher overall health care costs, as patients who skip medications are forced into the hospital.
Patients with high blood pressure whose employers installed a tiered drug benefit with sharply higher co-payments did buy more generic drugs, but they also filled almost half as many prescriptions for anti-hypertension medication as they had before, the UM study found.
A separate study published in the New England Journal of Medicine in December by the nation's largest pharmacy benefits manager, Medco Health Solutions, and Harvard Medical School reached a similar conclusion.
The findings should be warnings to federal officials planning how to administer a new Medicare drug benefit to seniors and to state officials trying to limit expenses on Medicaid programs for the poor, experts said.
UM researchers Kamal-Bahl and Briesacher write: "Policymakers must bear in mind that if the cost burden on patients results in decreased use of and adherence to lifesaving therapies, then the drug benefit will fail to serve its main purpose: providing affordable access to necessary drugs."
In turn, consumer advocates say efforts by insurers and employers to shift costs to patients should focus the nation's attention on what they see as the root of the crisis: the unwillingness of Congress and the White House to force drug companies to lower prices.
"We missed a golden opportunity to deal meaningfully with skyrocketing prices when the Medicare legislation was signed into law," said Ron Pollack, director of the advocacy group Families USA.
Pollack said Congress could have lowered drug prices for all by allowing the federal government to negotiate with the pharmaceutical industry for lower drug prices for seniors who would be eligible for the Medicare drug benefit that takes effect in 2006. Instead, lawmakers prohibited negotiations.
"For every dollar spent on drugs in the United States, 43 cents is spent on seniors," Pollack said. "If you moderate prices for seniors, you moderate drug prices for everyone. But under the Medicare legislation, prices will continue to skyrocket."
The projected cost of the benefit has ballooned by a third in less than a month. Passed by Congress as a $400 billion benefit, the new entitlement is expected to cost $530 billion over a decade, the administration revealed last month.