2018 Employer Health Benefits Survey
Section 9: Prescription Drug Benefits
Almost all covered workers have coverage for prescription drugs. Over the years we have conducted the survey, coverage for prescriptions has become more complex as employers and insurers expanded the use of formularies with multiple cost-sharing tiers as well as other management approaches. Collecting information about these practices is challenging and was burdensome to respondents with multiple plan types. Beginning in 2016, we revised the survey to ask respondents about the attributes of prescription drug coverage only in their largest health plan; previously, we asked about prescription coverage in their largest plan for each of the plan types that they offered.
In addition, because of the significant policy interest in access to and the cost of specialty drugs, in 2016 we also began asking employers to report separately about the cost sharing for tiers that cover only specialty drugs. In cases in which a tier covers only specialty drugs, we report its attributes under the specialty banner, rather than as one of the standard tiers. This entails revising the way we group formulary tiers: for example, a three-tier formulary where the third tier covers exclusively specialty drugs is now considered a two-tier plan with an additional tier. This approach allows us to report on the cost sharing for specialty drugs regardless of the number of tiers in the formulary. For this reason, we are not presenting statistical comparisons of estimates relying on tiers to prior years.29 This change is also discussed more fully in the survey design and methods section.
- Nearly all (more than 99%) covered workers work at a firm that provides prescription drug coverage in its largest health plan.
DISTRIBUTION OF COST SHARING
- The majority of covered workers (92%) are in a plan with tiered cost sharing for prescription drugs [Figure 9.1]. Cost-sharing tiers generally refer to a health plan placing a drug on a formulary or preferred drug list that classifies drugs into categories that are subject to different cost sharing or management. It is common for there to be different tiers for generic, preferred and non-preferred drugs. In recent years, plans have created additional tiers that may, for example, be used for specialty drugs or expensive biologics. Some plans may have multiple tiers for different categories; for example, a plan may have preferred and non-preferred specialty tiers. The survey obtains information about the cost-sharing structure for up to five tiers.
- Eighty-eight percent of covered workers are in a plan with three, four, or more tiers of cost sharing for prescription drugs [Figure 9.1]. These totals include tiers that cover only specialty drugs, even though the cost-sharing information for those tiers is reported separately.
- HDHP/SOs have a different cost-sharing pattern for prescription drugs than other plan types. Compared to covered workers in other plan types, those in HDHP/SOs are more likely to be in a plan with the same cost sharing regardless of drug type (10% vs. 2%) or in a plan that has no cost sharing for prescriptions once the plan deductible is met (8% vs. 1%) [Figure 9.2].
TIERS NOT EXCLUSIVELY FOR SPECIALTY DRUGS
- Even when formulary tiers covering only specialty drugs are not counted, a large share (82%) of covered workers are in a plan with three or more tiers of cost sharing for prescription drugs. The cost-sharing statistics presented in this section do not include information about tiers that cover only specialty drugs. In cases in which a plan covers specialty drugs on a tier with other drugs, they will still be included in these averages. Cost-sharing statistics for tiers covering only specialty drugs are presented in the next section.
- For covered workers in a plan with three or more tiers of cost sharing for prescription drugs, copayments are the most common form of cost sharing in the first four tiers and coinsurance is the next most common [Figure 9.3].
- Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average copayments are $11 for first-tier drugs, $33 second-tier drugs, $59 for third-tier drugs, and $105 for fourth-tier drugs [Figures 9.6 and 9.7].
- Among covered workers in plans with three or more tiers of cost sharing for prescription drugs, the average coinsurance rates are 19% for first-tier drugs, 26% second-tier drugs, 36% third-tier drugs, and 31% for fourth-tier drugs [Figures 9.6 and 9.7].
- Eight percent of covered workers are in a plan with two tiers for prescription drug cost sharing (excluding tiers covering only specialty drugs).
- Five percent of covered workers are in a plan with the same cost sharing for prescriptions regardless of the type of drug (excluding tiers covering only specialty drugs).
- Coinsurance rates for prescription drugs often include maximum and/or minimum dollar amounts. Depending on the plan design, coinsurance maximums may significantly limit the amount an enrollee must spend out-of-pocket for higher-cost drugs.
- These coinsurance minimum and maximum amounts vary across the tiers.
- For example, among covered workers in a plan with coinsurance for the first cost-sharing tier, 20% have only a maximum dollar amount attached to the coinsurance rate, 6% have only a minimum dollar amount, 20% have both a minimum and maximum dollar amount, and 54% have neither. For those in a plan with coinsurance for the fourth cost-sharing tier, 42% have only a maximum dollar amount attached to the coinsurance rate, <1% have only a minimum dollar amount, 10% have both a minimum and maximum dollar amount, and 48% have neither [Figure 9.8].
SEPARATE TIERS FOR SPECIALTY DRUGS
- Specialty drugs, such as biologics that may be used to treat chronic conditions, or some cancer drugs, can be quite expensive and often require special handling and administration. We revised our questions beginning with the 2016 survey to obtain more information about formulary tiers that are exclusively for specialty drugs. We are reporting results only among large firms because a relatively large share of small firms were unsure whether their largest plan covered these drugs.
- Ninety-eight percent of covered workers at large firms have coverage for specialty drugs [Figure 9.10]. Among these workers, 52% are in a plan with at least one cost-sharing tier just for specialty drugs [Figure 9.11].
- Among covered workers in a plan with a separate tier for specialty drugs, 34% have a copayment for specialty drugs and 59% have coinsurance [Figure 9.12]. The average copayment is $99 and the average coinsurance rate is 26% [Figure 9.13]. Eighty-one percent of those with coinsurance have a maximum dollar limit on the amount of coinsurance they must pay.
- HSA-qualified plans generally are not permitted to cover services, other than for preventive care, until the plan deductible is met. In this context, many HSA-qualified plans have identified a list of prescription medications that may be considered preventive so that they can be covered prior to the deductible being met. An example are statins, which treat high cholesterol, and are considered to be preventing the complications that can result if high cholesterol levels are not treated.
- Sixty-eight percent of workers covered by an HSA-qualified plan have coverage for preventive medications before the deductible is met [Figure 9.14]. Among covered workers in HSA-qualified plans, those in firms with 5,000 or more workers are more likely than covered workers in firms of other sizes to have coverage for preventive medications before the deductible is met [Figure 9.14].
- Generic drugs
- Drugs that are 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.
- Non-preferred drugs
- Drugs not included on a formulary or preferred drug list; for example, a brand-name drug with a generic substitute.
- Fourth-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.
- Specialty drugs
- Specialty drugs such as biological drugs are high cost drugs that may be used to treat chronic conditions such as blood disorder, arthritis or cancer. Often times they require special handling and may be administered through injection or infusion.
- In cases in which a firm indicated that one of their tiers was exclusively for specialty drugs, we reported the cost-sharing structure and any copayment or coinsurance information under the specialty drug banner. Therefore, a firm that has three tiers of cost sharing may only have plan attributes for the generic and preferred tiers.↩