Costs of pharmacy benefits are increasing more rapidly than costs for medical benefits, according to a survey by New York-based consulting firm William M. Mercer.
The increase may be due to new and improved drugs and better patient compliance, said Nick Vasilopoulos, a principal of Mercer and head of its national managed pharmacy practice. Those factors also may have slowed the increase in medical costs by making people healthier.
In the Mercer survey, distributed to more than 200 employers nationwide, 54% of respondents said costs for pharmacy benefits increased more than costs for medical benefits in 1997. Respondents reported an average increase of 11% in pharmacy benefit costs over the last plan year. Even though the survey did not ask employers to specify their medical benefit costs, Vasilopoulos estimated an average increase of 7% to 8%.
Pharmacy costs increased more for large employers -- those with more than 10,000 employees -- than mid-sized employers.
"Larger employers may have been the first to implement managed pharmacy and compliance measures," Vasilopoulos said. "Larger companies also tend to have a greater number of retirees."
According to the survey, 15% of active employees receive pharmacy benefits through indemnity or major medical plans, 27% through PPO or point-of-service plans, 25% through HMOs and 33% through a carve-out pharmacy benefit manager.
Among major medical plans, employees are more likely to incur a coinsurance rather than a copayment cost. All other plans are more likely to have a copayment structure. In particular, 97% of employees enrolled in HMOs have copayment plans.
To manage increasing pharmacy benefit costs, 54% of the survey respondents said they likely will introduce or expand managed drug programs, and 51% will introduce or expand disease management programs.