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Home » Clarion » 2016 » February 2016 » Understanding your prescription drug benefit

Understanding your prescription drug benefit


Anyone who follows the news is aware of Martin Shkreli, the arrogant punk who recently bought a pharmaceutical firm with exclusive rights to a life-saving drug, then increased the price by thousands of dollars. (He has since been arrested on other, unrelated charges.)


Not too long ago, several major pharmaceutical firms rolled out game-changing treatment for Hepatitis C. The price tag in the United States for a 12-week course of treatment started at $84,000, and soon could be twice that. The identical medication is available in Pakistan for $15. No arrests are pending.

This is the culture of profiteering that dominates the prescription drug business. Overall, the costs of prescription drugs have nearly doubled since the last negotiated increase to PSC Welfare Fund (WF) contributions. If the Fund continues to strive for best practices at the lowest costs, we will find a way to continue our prescription benefit package. But this is no easy task.

Prior Authorization Explained

One way we maintain our benefits at an affordable cost is through the practice of prior authorization by the prescription benefit manager (PBM). CVS/caremark, the Welfare Fund’s new PBM, is more diligently applying our longstanding prior authorization rules than did Express Scripts, so those covered through the WF may be subject to new approval requests from CVS/caremark for certain medications if a lower-priced equivalent is available.

The philosophy behind a prior authorization requirement is that the drug prescribed by a doctor may have a less expensive and therapeutically-equivalent counterpart. The Fund cannot pay for the more expensive version unless there is evidence that less expensive treatment was tried and found unacceptable due to intolerance or simple ineffectiveness. Some members may take umbrage that their doctors’ orders are not followed to the letter, but the prescribers aren’t invested in the survival and continuance of a viable drug benefit.

The Problem

In the United States, the unbridled greed of drug companies is summed up in a statement published in January by pharmaceutical industry publication Fierce Pharma that cited an analyst who told the Wall Street Journal that “…the fact that prices continue to go up despite a public outcry — not to mention political pushback, in the form of congressional hearings and price-control proposals — shows just how resilient the US market can be.” He added, “Unlike [in] other countries, there’s no mechanism whereby regulatory authorities can control price.”

Typically, benefit providers such as welfare funds share drug costs with the insured through deductibles and co-insurance, but these are rendered useless by coupons issued by manufacturers and “patient assistance” schemes that benefit some patients while shifting the resulting higher drug costs onto the to the insurance company (or your Welfare Fund), all for a public relations boost to the drug companies. Efforts expended by manufacturers don’t include cost reductions, only an expansion of the field of users — and reluctant payers.

The response

The most common employer or insurer practice addressing increased costs has been to reduce or eliminate coverage, or to ramp up “cost-sharing” (in the form of higher co-pays or deductibles). Approaches used by others have virtually eliminated retiree coverage — at best, helping with Medicare Part D premiums.

The PSC-CUNY Welfare Fund takes a different approach, choosing a course of action that minimizes financial and therapeutic impact, and tries to encourage smarter use of available drugs. The WF has negotiated partnerships with Medicare that has allowed our over-65 retirees to maintain a high level of benefit with modest cost-sharing that is comparable to the commercial plan that covers active (still-working) participants. But even this arrangement has seen steep increases in gross charges and a lessening of Medicare offsets.

As reported in the December 2015 issue of Clarion, the Welfare Fund Board of Trustees decided to change the fund’s pharmacy benefit manager in order to assure that the benefit design allows the continuation of valuable services for all. Our experience with our previous PBM, Express Scripts, showed that it did not adequately capture Medicare subsidies. And there were persistent, ongoing problems with its mail-order service.

The new vendor

On January 1, the Welfare Fund’s new pharmacy benefit manager — CVS/caremark for active employees (and under-65 retirees) and Silver Scripts for Medicare retirees — replaced Express Scripts. We’ve invested great effort in notifying participants of the change and of the details of the new plan and we’ve been hard at work transferring utilization data and preparing to administer and adjudicate new claims. Nonetheless there have been difficulties along the way of the sort that might be expected with any such big change: wrong addresses or surprise encountered by a participant who missed opening the notification mailed to his or her home.

The service was intended to remain unchanged with the transition, but as anything that impacts 40,000 lives and 350,000 prescriptions per year, there are bound to be some differences. One difference we expect participants to regard as an improvement is that, in addition to being able to stick with one’s regular pharmacy — be it a small business or an outlet in a national chain — the new program also makes it easier to fill prescriptions in nearly any locality via the vast network of CVS stores throughout the country. The new program also offers the ability to use a CVS store as if it were mail-order to fill a 90-day maintenance supply, and offers in-store discount cards.

For the past four years, every PBM juggled its formulary (list of covered drugs) in an effort to keep costs in check and maintain a scheme affordable to those covered. CVS/caremark is no exception to this practice; just as Express Scripts did, CVS/caremark notified Welfare Fund participants of any changes to its list of approved drugs and suggested alternatives to participants who were taking medications that are not on the list.

Addressing concerns

However, we are just learning that some Medicare members may not have been adequately notified and the matter is being addressed with CVS/caremark. The intricate pricing formulation, Medicare D, plus the Welfare Fund wraparound, further complicate matters.

Members who have questions about authorizations or any other aspect of their drug benefit are encouraged to contact customer care service at either CVS/caremark or Silver Scripts. The Welfare Fund website (, provides links to the websites of CVS/caremark and Silver Scripts. And, as always, personal attention is also available through the Welfare Fund. We appreciate the patience of our members as we make this transition.


Larry Morgan is executive director of the PSC-CUNY Welfare Fund.

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