Exhibit 4.10: Distribution of Covered Workers Facing Different Cost-Sharing Formulas for Prescription Drug Benefits, 2000-2005

Trends and Indicators in the Changing Health Care Marketplace

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The use of three-tier cost-sharing arrangements for prescription drug coverage, where a worker faces one copayment for generic drugs, a higher copayment for preferred drugs (such as brand name drugs with no generic substitutes), and an even higher copayment (or sometimes coinsurance) for nonpreferred drugs (such as brand name drugs with generic substitutes), has become the most prevalent prescription drug cost-sharing formula in the recent years, rising from 27% of covered workers in 2000 to 70% in 2005. Two-tier arrangements and payment regardless of drug type both declined from 2004 to 2005 (the former from 20% to 15%, the latter from 10% to 8%). Four percent of firms reported using a four-tier arrangement in 2005, a new type of cost-sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle drugs or biologics.

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*Distribution is statistically different from the previous year shown at p<.05. No statistical tests were conducted between 2003 and 2004 due to the addition of a new category, four-tier.

Note: Four-tier drug copay information was not obtained prior to 2004.

Generic drugs: A drug product that is no longer covered by patent protection and thus may be produced and/or distributed by multiple drug companies.

Preferred drugs: Drugs included on a formulary or preferred drug list; for example, a brand name drug without a generic substitute.

Nonpreferred drugs: Drugs not included on a formulary or preferred drug list; for example, a brand name drug with a generic substitute. Nonpreferred drugs: Generally, a drug product that is covered by a patent and is thus manufactured and sold exclusively by one firm. Cross-licensing occasionally occurs, allowing an additional firm to market the drug. After the patent expires, multiple firms can produce the drug product, but the brand name or trademark remains with the original manufacturer’s product.

Four-tier drugs: New types of cost sharing arrangements that typically build additional layers of higher copayments or coinsurance for specifically identified types of drugs, such as lifestyle drugs or biologics.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2005. From Exhibit 9.1, at http://www.kff.org/insurance/7315/sections/ehbs05-9-1.cfm.

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Trends and Indicators in the Changing Health Care Marketplace
Information provided by the Health Care Marketplace Project.
Publication Number: 7031
Information Updated: 04/26/06