Department of Labor Logo United States Department of Labor
Dot gov

The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Cost-saving incentives in prescription-drug coverage

September 21, 2004

Although prescription-drug coverage remains an integral part of employee health care plans, employers have implemented a variety of methods to stem the rising costs of providing such coverage.

Percentage of workers with prescription-drug benefits by type of coverage, all private workers, 2002–03
[Chart data—TXT]

A few plans offer prescription-drug cards, which require a monthly fee and allow the card holder discounts on prescription drugs. Prescription cards were offered to 9 percent of employees with prescription drug coverage.

Somewhat more common are plans employing a cost structure known as a "tiered system." Such a system features a formulary, which is a list of drugs that are covered at the highest level; medications not on the formulary usually require a higher copayment by the enrollee. Such a feature was offered to 27 percent of employees with prescription drug coverage.

Many plans cover mail-order drugs more generously than those purchased in a local pharmacy. The plan provider contracts with a pharmacy to purchase large quantities of commonly prescribed drugs at discount prices. In turn, patients are given the incentive of higher coverage for purchasing through their mail-order service. In 2003, mail-order drugs were offered to 70 percent of employees with prescription-drug coverage.

Generic drugs tend to be priced lower than their brand-name counterparts. When enrollees choose a generic over a brand-name drug to fill a prescription, the plan sponsor accrues substantial savings; therefore, many plans offer more generous coverage for generic substitutes. The percentage of employees in plans that offer this type of cost saving incentive has increased markedly over the past decade, to 83 percent in 2003.

These data on prescription drugs benefits are from the BLS National Compensation Survey - Benefits program. To learn more about prescription-drug and employee health care plans, see "Trends in employer-provided prescription-drug coverage," by Elizabeth Dietz in the Monthly Labor Review, August 2004.

SUGGESTED CITATION

Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Cost-saving incentives in prescription-drug coverage at https://www.bls.gov/opub/ted/2004/sept/wk3/art02.htm (visited March 28, 2024).

OF INTEREST
spotlight
Recent editions of Spotlight on Statistics


triangle