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In this issue: • Benefit Design News • Government News • Arxcel News Arxcel, Inc. 4390 Quinby Dr. Suite D Hamburg, NY 14075 (716) 646-9292 (716) 646-6985 Fax www.arxcel.com info@arxcel.com ARXCEL can help with: Plan Design Proposals Clinical Analysis Product Line Development Sales Formularies Aidits |
| Spring 2001 |
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NEWSLETTER TO PROFILE CURRENT ISSUES
Arxcel, Inc. is pleased to announce our new Pharmaceutical Newsletter - Arxcel News Brief. The newsletter will be published quarterly for our clientele. We will provide information on plan design, along with other Government, Industry and Corporate News.
We look forward to providing you with information that will benefit you in your decision-making, along with pertinent corporate news to make our service to you better.
If there is a particular area of interest you would like addressed, or you have a question regarding a current issue, please contact Bridget Conti at (716) 646-9292.
BENEFIT DESIGN - 3-TIER COPAYS, RIGHT CHOICE?
Over the past year there has been a trend to increase member cost-sharing in prescription drug benefit programs. Many managed care organizations and employers have been switching from one or two-tier drug copays to three-tier copays.
A shifting of the copay sharing is shown in the chart below - the level of three tier copay programs is over 30% in an HMO setting.
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This copay structure has been brought about by the need to share and reduce costs while maintaining patient choices. This is an important factor as drug costs continue to rise.
The rising costs of drugs are affected by: An aging population; Many drugs in clinical trials; Shortened FDA approval process; Direct-to-consumer advertising; and Expanded manufacturer sales forces.
A cost shift of this significance must be analyzed by a Plan or Employer to determine if the cost savings can outweigh any member dissatisfaction. The savings realized by a 3-tier benefit comes from shifting the members to more cost effective drugs that have therapeutic equivalence. It is important not to sacrifice the quality of care in the copay structuring process.
There are two different 3-tier structures: A Formulary Based Model and A Substitute Based Model.
| Formulary Based | Substitution Based | |
| Tier 1 | Generics | Generics |
| Tier 2 | Formulary Brand Drugs | Brands with no Generic Substitute |
| Tier 3 | Non-formulary Brand Drugs | Brands with Generic Substitutes |
In general, the greater the dollar differences between the tiers, the higher the likelihood of shifting. A difference of between $5-$9 is considered a minimum incentive to change behavior. Differences of $10-$14 create more incentive, while $15 or greater results in maximum change.
One design consideration for a tiered program involves maximizing compliance of different drug classes such as NSAIDS, proton pump inhibitors and antibiotics. In classes such as these, some Plans move the more expensive therapeutic equivalent drugs to the higher tier. This shift must be weighted against the Plan's financial incentive that might be attached to the use of the more expensive equivalent.
Predicting the savings associated with a 3-tier program is difficult, but it can be modeled. Generally, the higher the average cost difference, the greater the savings.
Arxcel can provide you with cost projections associated with plan design changes. The key to implementing a change such as a 3-tier copay benefit is communication to members, physicians and pharmacists. At a minimum, the change should be described, the list of drugs provided, along with a description of how the list was developed. Further communication can detail the change to the impacted member, specifically outlining how they will be affected and give alternatives if available.
contact us at 716-646-9292 or info@arxcel.com.
GOVERNMENT NEWS
FDA Approves Nexium, anti-ulcer drug
The FDA approved Nexium® (Esomeprazole) [AstraZeneca] for use as a treatment for gastroesophageal reflux disease, healing of erosive esophagitis, maintenance healing of erosive esophagitis, and H. pylori eradication to reduce the risk of duodenal ulcer recurrence.
It is similar to Prilosec®, [AstraZeneca] except the active ingredient is considered more specific to the action required for treatment and it has potential for less side effects.
FDA Approves 2 Glaucoma Drugs
The FDA announced the approval of Lumigan® (bimatoprost ophthalmic solution) [Allergan, Inc.] 0.03% and Travatan® (travoprost ophthalmic solution) [Alcon Universal, Ltd.] 0.004%.
They provide alternatives for the reduction of intraocular pressure in patients who are intolerant of other intraocular lowering drugs. Many of these patients might otherwise need surgery.
ARXCEL NEWS
Arxcel has moved it's offices and launched a website. Please make sure you have our current information:
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(716) 646-6985 FAX www.arxcel.com info@arxcel.com |
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