Retirement insights from a Colorado PERA perspective

Issues & Perspectives

Multiple Approaches to Keep Prescription Drug Prices Down

retirement

For years, prescription drug prices have been rising at a dangerous rate—dangerous because high prices keep some people from buying or using the medication prescribed to them.

Lack of awareness certainly isn’t an issue. Health care costs are at the top of mind for the American voter and leading businesses.

Despite its prominence in the national discussion, addressing this nebulous issue hasn’t been easy. A single overarching solution remains elusive. Instead, multiple legislative proposals each seek to address specific cost drivers. Meanwhile, health care plans, including PERACare plans, have features that allow participants to keep costs down.

Drug prices continue climbing

GoodRX tracks the prices of hundreds of brand drugs. They report that 601 brand drugs increased in price last year by an average of 5.8 percent. This was nearly three times larger than the overall inflation rate of 1.8 percent.

Kaiser Family Foundation reports that a quarter of those taking prescription drugs say they struggle to afford them, and nearly 30 percent say they didn’t take medications as prescribed in the past year because of cost. According to the research, “this includes about one in five who say they didn’t fill a prescription (19%) or took an over-the counter drug instead (18%), and about one in 10 (12%) who say they cut pills in half or skipped a dose.”

The reasons behind the seemingly endless increases amount to a tangled knot. Experts routinely try to untangle the problem, but it persists.

PERACare: Offering lower-cost options, passing along savings

Using generic drugs helps keep
costs down. Generic drugs are chemically equivalent to their name-brand
counterparts, but they typically cost much less.

The pricing schedule in all PERACare plans is reflective of this. Generic drugs are available at a lower price than name-brand equivalents. Many people already take advantage of the option that costs less, but not everybody. In fact, a significant amount of savings goes unused every year.

If everyone with an Anthem PERACare plan who currently uses one of just three common brand drugs—Synthroid, Lipitor, and Zoloft—started using the generic equivalent, not only would those members save money due to the lower copay, but the plan itself could save about $1 million per year. This, in turn, could reduce the plan’s overall expenses, which can help keep monthly premiums more affordable.

PERACare also helps keep
prices down by passing rebates they receive from drug manufacturers on to
PERACare enrollees in the form of lower monthly premiums. It’s a common
practice for manufacturers of prescription drugs to send rebates to insurers or
plan providers. Because PERACare is not designed to make a profit, rebate
dollars PERA receives are used to lower premiums for everyone.

“PERA is committed to keeping costs down in any way we can, whether that is negotiating for the best possible administrative costs and premiums or auditing carrier performance to assure financial accuracy,” said Jessica Linart PERA’s Director of Insurance. “However, we also encourage retirees to help each other by making smart health care decisions. When retirees use health care that costs less, by using generic medications or visiting their primary care doctor instead of going to the emergency department, that helps keep plan costs down which ultimately helps all enrollees in the PERACare program by helping to keep premiums down.” 

Prescription Drug Legislation
at the Capitol

Health care is taking a prominent role at the capitol this year. Bills that address prescription drugs are summarized below. Although the legislature temporarily adjourned due to concerns surrounding COVID-19, work on these bills may continue when work resumes. (Editor’s note: These summaries are for informational use and do not represent a PERA endorsement for or against the legislation.)

HB 20-1160 – Drug Price Transparency Insurance Premium Reductions

This bill would require health insurers,
prescription drug manufacturers, pharmacy benefit management firms, and
nonprofit organizations to send information about the costs of prescription
drugs to the commissioner of insurance. This includes information on rebates
and certain price increases. The commissioner is required to make the
information available in an annual report. The bill also requires health
insurers to pass rebate savings along to consumers by adjusting premiums based
on rebate amounts.

HB 20-1078 – Pharmacy Benefit Management Firm Claims Payments

This bill would require pharmacy benefit
managers to reimburse pharmacies at the same rates. It would also prohibit pharmacy
benefit managers from retroactively reducing payments on a claim after a sale.

SB 20-107 – Drug Production Costs Transparency Analysis Report

This bill would direct the Colorado Department
of Health Care Policy and Financing (HCPF) to analyze drug production cost for
the highest-cost prescription drugs by volume purchased by a number of state
agencies. HCPF would then request from drug manufacturers a detailed basis of
the costs to the manufacturer, including costs associated with research and
development, clinical trials, and materials. Manufacturers who don’t provide
this information would be subject to a fine. This data would be turned into an
annual report.

SB 20-119 – Expand Canadian Prescription Drug Import Program

This bill would expand a program initiated in
last year’s legislation that seeks federal approval to import prescription
drugs from Canada. This bill would expand the request to include the import of prescription
drugs into the state if certain conditions are met.

Comments

  1. Betty Trammell Spinuzzi says:

    Since my COLA has been limited to 1.5% if any I am asking you to negotiate with the insurance companies to not ever raise their premium costs passed on to me to no more than 1.5%. Who negotiates for me with the insurance companies and what is the chance I could talk to them about this idea?

  2. Jeanne Aiello says:

    I paid much less for my scripts before I went on Medicare in February 2000. I am paying 3x what I paid last year now with Silver Script.
    I order meds for my mother who is with Kaiser Medicare Advantage Plus. This year, we have not paid anything for her scripts.

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