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IRS adjusts rules on health insurance debit cards

December 27, 2010 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Accounting Today, a SourceMedia publication – 12.27.2010

The Internal Revenue Service issued new guidance allowing the continued use of flexible spending arrangement and health reimbursement arrangement debit cards for the purchase of prescribed over-the-counter medicines and drugs.

The new guidance modifies previous guidance to permit taxpayers to continue using FSA and HRA debit cards to purchase over-the-counter medications for which the taxpayer has a prescription.

Effective after Jan. 15, 2011, in accordance with the new guidance, this use of debit cards must comply with procedures reflecting those that pharmacies currently follow when selling prescribed medicines or drugs.

The procedures include requirements that a prescription for the medication be presented to the pharmacy or the mail-order or web-based vendor that dispenses the medication and that proper records be retained.

In accordance with the Affordable Care Act, the cost of over-the-counter medicines or drugs can be reimbursed from a health FSA or HRA if a prescription has been obtained. The requirement to obtain a prescription does not apply to insulin.

The prescription requirement applies to purchases made on or after Jan. 1, 2011, and not to purchases made in 2010 even if reimbursed after Dec. 31, 2010. Because the requirement applies only to over-the-counter medications, it does not apply to other health care expenses such as medical devices, eye glasses or contact lenses.

The new guidance, IRS Notice 2011-5, as well as answers to frequently asked questions on IRS.gov, also contain further details on health FSA and HRA debit card purchases, including purchases from health care providers other than pharmacies and mail order and web-based vendors.

For guidance on health FSA and HRA debit card purchases at “90 percent pharmacies,” see IRS Notice 2010-59. More information on health care reform provisions can be found on the Affordable Care Act page on IRS.gov.

Medtipster Sees Growth In Generic Drug Switches With Co-pay Waivers

December 14, 2010 By: Nadia Category: Free Prescriptions, HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: Medtipster Client Data: August 1, 2009 – November 30, 2010

Medtipster.com, working with it’s employer sponsored benefit plan members, found that offering a waiver of generic drug co-payments led to more switches to generics from their brand equivalents and that plan members were more likely to remain on their generic drugs after the switch was made.

The waiver program resulted in savings of about $500,000. to the sponsor and about $750,000. to the plan members during the observation period.

To improve generic dispensing rates, Medtipster offered plan members using brand medications in 40 therapeutic classes up to two co-pay waivers if they switched to a preferred generic drug. Information about the waiver was mailed to plan members, alerting them that all they needed to do was switch within six months of receiving the communication.

Members who took advantage of the waivers early in the six-month period were able to use it twice, while members who acted later in the window were only able to use the waiver once.

The recently enacted health care reform law has a provision in it that will allow Medicare Part D plan sponsors, beginning with the 2011 plan year, to reduce or waive the first co-pay for a generic drug when a plan member switches from its corresponding brand product.

Medtipster examined how many of the plan members remained on the generic drug after receiving one or two co-pay waivers. Findings among the top four therapeutic classes (HMG CoA reductase inhibitors, antihypertensive combinations, proton pump inhibitors and beta blockers cardio-selective) showed that plan members who took advantage of two co-pay waivers had higher generic dispensing rates in the fill immediately after the waivers and had higher sustained GDRs during the months after the generic dispensing conversion program began compared to those only using one waiver.

For example, 94.9 percent of members using beta blockers filled the next prescription with a generic following the use of two waivers, compared to 59.5 percent who used only one waiver. Members who used two waivers had a sustained generic dispensation rate of 89.5 percent, compared to 58.5 percent who only used one waiver.

The drug that showed the highest difference in sustained GDR between the use of two waivers and one waiver was AstraZeneca’s high blood pressure medication Toprol XL (metaprolol succinate), which had sustained GDR of 91.5 percent for members using two waivers, compared to 62.5 percent for members who used only one waiver.

Of the top 10, the drug that had the lowest difference was AstraZeneca’s cholesterol lowering drug Crestor (rosuvastatin), which had a sustained GDR of 82.7 percent for members using two waivers versus 78.1 percent for members who used one waiver.

Most large employers changing health benefit for 2011

August 23, 2010 By: Nadia Category: HealthCare, Medtipster, Prescription News

www.Medtipster.com Source: Employee Benefit News – By Kathleen Koster – 8.18.2010

According to a new survey by National Business Group on Health, more than half (53%) of large U.S. employers plan to revise their 2011 health care benefit programs in the wake of health care reform legislation and anticipated large benefit cost increases next year.

Also considering the provisions of the Patient Protection and Affordable Care Act, 19% of respondents are scaling back changes they planned to make while an equal number are making no changes.

The remaining respondents were still undecided pending further review of the final regulations.

Among employers who will be making specific changes to their health benefit plans to comply with the new law, 70% said they will remove lifetime dollar limits on overall benefits while 37% said they will make changes to annual or lifetime limits on specific benefits.

Approximately one-fourth will remove annual dollar limits on overall benefits while 13% reported they will remove pre-existing condition exclusions for children.

The survey, based on responses from 72 of the nation’s largest corporations representing more than 3.7 million employees, was conducted in May and June 2010.

“While the health reform law has forced employers to evaluate their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, they haven’t lost sight of the fact that controlling rising costs remains one of, if not, their highest priority. They have to foot the bill, not the government,” says Helen Darling, president of the National Business Group on Health. 

“In fact, with cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do every year,” she adds.

Employers estimate their health care benefit costs will jump to an average of 8.9% next year, compared with an average increase of 7% this year. To help curb those increases employers plan to use a wider variety of cost-sharing strategies.

According to the survey, 63% of employers plan to increase the percentage employees contribute to the premium, up from 57% who did so this year, while 46% plan to raise out-of-pocket maximums next year compared with 36% this year.

In order to further mitigate costs, employers are shifting to consumer-directed health plans. In fact, 61% of plan sponsors will offer a CDHP in 2011.

While the most common type of plan employers will offer is a high-deductible plan combined with a health savings account (64%), the survey found a large spike in employers moving to a full replacement plan.

Among employers offering a CDHP, the number moving to a full replacement plan doubled from 10% this year to 20% in 2011.

“Consumer directed health plans are living up to their expectations as a way to help save employers money and put employees in greater control of their health care.  In fact, offering these plans was the most often-cited tactic by employers to control costs.  We fully expect that employer interest in CDHPs, and especially full-replacement plans, will continue to increase in the future,” says Darling.

As the health reform law makes Medicare Part D benefits richer as the “doughnut hole” closes between now and 2020, 5% of employers plan to drop retiree health coverage in 2011 while 60% are considering doing so in the future.

In attempt to cut costs with wellness initiatives, 41% of employers offered premium discounts for completing health assessments while 22% offered premium discounts for participating in tobacco cessation programs.

In addition, one in four (25%) of plan sponsors plan to raise the co-pay or co-insurance for retail pharmacy prescription drug benefits while 21% plan to do the same for mail-order pharmacy benefits.

Copies of the survey report can be found at www.businessgrouphealth.org.

Drug Makers Raised Prices Sharply in ’09

April 20, 2010 By: Nadia Category: Medtipster, Prescription News

www.Medtipster.com Source: Wall Street Journal, April 20, 2010

Drug companies sharply raised prices last year, ahead of increased rebates they must pay to Medicaid and other expenses tied to the federal health overhaul passed last month.

Prices for brand-name pharmaceuticals rose 9.1% last year, the biggest increase in at least a decade, according to pharmacy-benefit manager Express Scripts Inc., which included the recent number in its annual drug-trend report. The boost for specialty drugs, a category that is largely biotech products, was even sharper: 11.5%. In 2008, the price rise had been 7.4% for traditional pharmaceuticals, and 9.4% for specialty drugs.

Some individual drugs saw double-digit increases in the first quarter compared with a year earlier, including 12.1% on Zetia, a cholesterol drug from Merck & Co., and 13.6% for Cymbalta, an antidepressant from Eli Lilly & Co., according to data from Credit Suisse. The firm, which tracks the pricing of brand-name drugs made by the biggest U.S. manufacturers, found wholesale prices went up 7.8% in the first quarter, compared with a year earlier.

The increases were “exacerbated by the health-care reform debate,” said Steve Miller, senior vice president and chief medical officer of Express Scripts, although drug makers disputed that notion.

An Eli Lilly spokesman said its pricing policies last year weren’t affected by the health bill, and such decisions take into account benefits for patients as well as “marketplace conditions and recovery of our R&D costs.”

But Lilly did caution shareholders Monday that rebates to Medicaid, as well as other provisions in the law, would lower its 2010 revenue by $350 million to $400 million, and 2011 revenue by $600 million to $700 million.

A Merck spokesman said its “price adjustments are independent of health-care reform,” and are instead driven by an approach that aims to “ensure patient access and enable Merck to invest in research and development.”

Zetia’s pricing for most of last year was controlled by an independent joint venture involving Merck and Schering-Plough Corp., which are now merged, the company added. Both Merck and Lilly said the pricing numbers didn’t reflect the effects of rebates and discounts granted to many health-care payers.

The health law will also require the drug industry to knock off half the price paid by Medicare beneficiaries in their “doughnut hole” coverage gap starting in 2011, among other expenses, though the pharmaceutical companies will also benefit from an influx of newly insured consumers that will kick in later.

The effects of the price increases on overall drug spending are being tempered by the availability and aggressive promotion of cheaper generic alternatives, among other factors.

In its report, which reflects the drug benefits it administers for corporate clients, Express Scripts also said drug spending went up only 6.4% in 2009, slightly more than last year but lower than five years earlier.

Indeed, a report this month from IMS Health said that the number of prescriptions dispensed for generic drugs rose 5.9% last year, but those for branded drugs fell 7.6%.

Overall spending on prescription drugs rose just 5.1% according to IMS, which looks at different data than Express Scripts.

Another reason for price increases is probably that insurers, employers and pharmacy-benefit managers have become “much more difficult gatekeepers,” said Credit Suisse analyst Catherine Arnold. Discounts and rebates used to promote branded drugs precipitate price increases to offset those marketing costs.

Also, as drugs go generic, companies mark up the prices of the brand-name versions, assuming that patients who stick with those “are the people for whom price doesn’t matter,” said Mark McClellan, who formerly oversaw the Medicare and Medicaid programs for the Bush administration and is now at the Brookings Institution.

Express Scripts, which is based in St. Louis and has 36 million people in its commercial client group, said the actual drug-spending increase — as opposed to the price markup — was 4.8% for traditional pharmaceuticals, to $800.23 per member per year, and 19.5% in specialty drugs, to $111.10 per member per year.

Big increases in spending occurred in several areas, including diabetes, driven by the growing number of people diagnosed with the disease, and antiviral drugs, due to flu concerns.

The pharmacy-benefit manager said its clients were able to help keep the increase in check through use of generics and other moves. But it argued that, across the entire U.S. market, there could be significantly greater health-care savings tied to how drugs are taken.

The company estimated the savings at $163 billion a year, which could be achieved with greater use of generics and better adherence by patients prescribed drugs, both tactics that Express Scripts pitches to clients as among services it can provide.

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