Drug plans well worth the costs (Letter to the Editor)

We are writing in response to the article “Managing drug costs: What Atlantic employers got right” (Canadian HR Reporter, Oct. 25, 2004), written by Jacqueline Taggart.

As Ms. Taggart points out, private drug plan costs have been rising. However, we would suggest that perhaps the more important question to ask is, “Are employers getting good health-care value for their money?”

It is unfortunate that the article did not balance the discussion of drug costs with reference to the many benefits that innovative pharmaceuticals provide to both employees and employers. Thanks to pharmaceutical inventions hospitalization rates have decreased, the lengths of stay in hospitals have shortened, some types of surgeries have been all but eliminated, death rates for many diseases have dropped significantly and now there are options for diseases that were once untreatable.

All of this means people are suffering less, living longer and living with better health. For employers, this translates into a healthier, more productive workforce with less absenteeism and lower short- and long-term disability costs.

Ms. Taggart commends the Atlantic provinces and plan sponsors for implementing managed plans and for introducing cost-sharing and higher co-insurance rates. There is some compelling evidence that demonstrates such cost shifting to employees will have some serious negative impacts on both patient treatment and the company’s bottom line.

In a study published in the New England Journal of Medicine, by Huskamp et al, it was shown that moving from a one-tier to a three-tier formulary and increasing employee co-payments led to a higher rate of discontinuation in all three classes of drugs examined, two of which were used to treat chronic illnesses and reduce future morbidity and mortality. In a separate study published by Goldman et al in the Journal of the American Medical Association, the effects of doubling co-payments on drug use were examined and it was shown that this cost-shifting resulted in reductions in use in eight therapeutic classes, several of which are used to treat chronic illnesses and prevent future negative outcomes. The authors conclude that significant increases in co-payments raise concerns about the adverse health consequences that may result.

Recognizing that higher co-payments and higher co-insurance leads to poor compliance to medication, one large U.S. employer recently took the dramatic step of eliminating its three-tier pricing structure for drugs used to treat asthma, diabetes and hypertension and reducing employees’ out-of-pocket expenses by nearly 50 per cent (CIO Magazine, July 1, 2004). Although Pitney Bowes would be paying a much higher portion of employees’ drug costs, they hoped that more faithful medication usage would justify the expense. The results of this initiative were very impressive. Pharmacy costs did not rise and in fact, prescription costs were actually down 10 per cent after 18 months for asthma and diabetes drugs because patients needed fewer additional medications to treat emergencies or side effects. As an added bonus, the overall cost of health care for asthma and diabetes patients fell by 15 per cent and 12 per cent respectively. These data suggest that improving, not restricting, access to pharmaceuticals through employee drug benefit plans may help address rising drug and health-care costs.

The benefits that employers gain by investing in their drug plans go beyond keeping their workforce healthy. The 2004 Aventis Healthcare Survey found an important link between employee satisfaction with their health benefit plans and overall job satisfaction. Among plan members who say they are satisfied in their job, 59 per cent say their health plan meets their needs. Of those who are unsatisfied in their job, only 34 per cent say their plan meets their needs. It is highly probable that greater job satisfaction would lead to higher productivity and improved employee retention, outcomes that would be highly desirable for any employer.

While it would seem that some Atlantic employers have reduced their short-term costs, we would encourage caution regarding the health and financial bottom-line impact of shifting costs to employees. Investments by plan sponsors in the health of their employees through access to medicines and other means will ultimately lead to a more healthy and productive workforce.

Monty Keast
Merck Frosst Canada Ltd.
J. Grant Gunn
Bayer Inc.
On behalf of the Rx&D Ontario Private Drug Plan Sub-Committee

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