Prescription Copayments To Increase July 1

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

Alternative Proposals Defeated

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

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

Generics Often Used

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.