Cheryl Larson on Implications of Benefit Design Approaches for Employers

Employers can encounter complications with benefit design approaches when it comes to those patients for whom traditional, less-expensive drugs are ineffective, or for those who prefer to have the drugs administered differently, explained Cheryl Larson, BA, vice president of the Midwest Business Group on Health.

Transcript (modified)

From the employer perspective, what are the economic and ethical complications with benefit design approaches?

One of the design approaches is part of the MPCH initiative, and we looked at 4 case studies.

One was specific to cystic fibrosis, and there’s a specific genetic mutation for a very small percent of people with cystic fibrosis—I think it’s about 4% to 5%. And these people cannot take some of the traditional drugs, they can only take the most expensive drug on the market which is around $350,000 per year; it’s this drug that allows these people to stay alive. For those with the genetic mutation, this is the only drug available to them. So ethically, fairly, and legally, as an employer community, we feel that we should cover that. It’s a smaller number to the grand total of people.

The second scenario looked at step therapy where we might have said, “If you followed the rules of step therapy...”—and the example in this case was rheumatoid arthritis—“and you have the burden of being unable to handle the side effects of the previous or the traditional drugs, you are now at the highest tier.” But should you be penalized for that? And again, I think general employers would state that, no, we would try to make every effort to cover that.

The other 2 scenarios were based on type of administration of drug, so it really is preference. This person doesn’t want to take the drug this way, they want to take it that way, but if they take it that way, it’s going to be much more expensive. That would not be a scenario that employers would integrate into their benefit plan design. The next scenario was based on osteoporosis and the mode of administration of the drug, and unfortunately employers are not going to be able to waive, or to be able to take on that additional burden of cost if there are other traditional, less expensive ways to administer that drug. The last option was fibromyalgia and the side effects related to some drugs, but because it is not a serious or a life-threatening illness they felt that there should be precautions taken, that the patient should be monitored but that traditional drugs versus higher-cost drugs would be a better option.

So the challenge for employer is plan design: you’ve got all of these very high-cost drugs and you’ve got to decide which ones you’re going to remove the cost barriers for the consumer, but ensure that the employer can afford them as part of their benefit plan offerings.