Spending on prescription drugs by employers continues to rise sharply. At the same time, employer plans are requiring greater cost-sharing on the part of employees, thus reducing the impact on employers to a degree.

A wide-ranging study by Buck Consultants reviewed an array of drug-related insurance issues. When the focus turned to costs and cost control, the trend was clear: Employers are shelling out more for prescription drugs, but they're requiring plan participants to pay more upfront in premium contributions and more downstream in higher co-pays.

For instance, respondents were given the option to select from various ranges of participation contribution and cost-sharing. The largest segment — 29 percent — said their participants contributed 21 percent to 25 percent in 2014. Last year, the largest segment identified the range as 16 percent to 20 percent.

The same was true of cost-sharing, where 74 percent said cost-sharing targets were either in the 16 percent to 20 percent range or above. The percent of those who chose a range below 15 percent fell from 29 percent last year to 26 percent this time around.

Cost escalation’s quantitative impact could be seen most clearly in the small segment of employers who reported their drug costs had reached or exceeded 30 percent of total plan payouts. The number doubled from last year, from 2.3 percent to nearly 5 percent this year. The percentage reporting spending at least 16 percent of plan dollars on drugs rose from 71 percent to 77 percent.

Buck reported that fixed dollar copays continue to be popular and that employers are attempting to deal with the escalating cost of specialty drugs by creating new plan tiers. However, Buck said an alarming number of respondents didn't closely track their specialty drug costs.

“With specialty drug costs showing no signs of decreasing, we could easily see the average percentage of total health care spend employers are paying for pharmacy increase from 15 to 20 percent,” said Paul Burns, principal, Buck Consultants at Xerox. “Considering the importance of managing specialty drug therapies now and in the future, the percentage of employers not knowing their costs is too high.”

Instant Insights /

Employers struggling to contain escalating drug costs

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