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Faced with spiraling prescription drug costs in its employee health plan, the state of Montana has devised a new approach that should save $6 million next year and may be a first of its kind nationwide. The new prescription drug coverage, which takes effect Jan. 1 for the 32,000 people covered by the state employee health plan, is designed to push beneficiaries toward choosing the least costly, most effective drug for their medical needs.

If someone wants a more expensive drug that does the same thing as a cheaper alternative, they can choose it but they’ll pay extra. And if they want a drug that is without “significant clinical value,” such as the erectile-dysfunction drug Viagra, they pay the full price. “To our knowledge, we’re the first state plan and the first employer who’s trying to do it, with private-sector pharmacists and physicians,” said Connie Welch, administrator of the state Health Care and Benefits Division.

The University System, whose employee health plan covers 18,000 people, will adopt the drug plan when its next benefit year starts on July 1, 2010. State officials said prescription drug claims for the state plan are projected to hit $32 million this year, a 30 percent increase over last year, surpassing the entire amount of claims paid for physician services. Drug manufacturers have been raising prices and aren’t interested in helping consumers choose less-expensive alternatives.

The state and other large, self-insured employers in the state, such as First Interstate Bank and NorthWestern Energy, formed a committee earlier this year composed of pharmacists, physicians and consumers. The committee evaluated which alternatives within classes of drugs were the best and most cost-efficient options to treat various diseases and conditions. The final result was a grading system for all types of drugs, from classes A to F. Two separate drugs might treat the same disease, but if one is a more expensive brand-name drug with no clinical evidence that it works better, it got a higher “grade” which means if you want to buy it, you pay more.

Drugs under Class A, for example, can be had for no charge, with no deductible. Class B, rated as a “high level” of value, are available for a $15 co-payment for a 30-day supply. Class D, rated as a “lower level of value,” will cost half of the full price. And if you want a Class F drug, deemed to have “the lowest level of value,” you must pay full price for it. Actuaries are estimating that the plan will save the state’s health plan $6.3 million next year, Welsh said – and those savings have already been folded into premiums for 2010.

The state informed employees of the coming change last month. Welsh said her office has received plenty of positive feedback, but that some who are taking class D or F drugs aren’t happy. State officials will do what they can to demonstrate to these employees that the cheaper alternatives are just as effective, she said. The plan also has provisions to grant exceptions, under some circumstances, and to “grandfather” some higher-class drugs, which means if someone is already taking them, they would be able to continue to do so at lower-class prices. While the state and University System are adopting the new cost-saving plan, private employers who took part in the initial study are still looking it over. (Courtesy: Billings Gazette and National Legislative Association on Rx Drug Pricing)

As always, HFA and its policy team are interested in hearing what community members and their families are thinking. We are looking for your thoughts on how this will impact the bleeding disorders community.  Positives or negatives,  question and comments are welcome.

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