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The cost to employers of providing prescription drug benefits is soaring, a new study says.

According to statistics gathered by The Segal Co., a New York-based benefit consulting firm, the average annual per-employee cost of drug claims in 1997 will be $430, a 17.5% increase over 1996 costs.

In addition, Segal is predicting an increase of about 16.3% in employers' prescription drug claims costs next year, with an average cost of $500 per employee.

"I thought the PBMs (prescription benefit management firms) could get these trend rates down and keep them down," said Edward Kaplan, Segal vp and consultant in New York.

Instead, the tendency of drug prices to remain high has remained surprisingly strong, he said. Last year, employers experienced a 13% rise in prescription claims costs, the 1996 Segal survey found.

Various factors are keeping drug prices high, Mr. Kaplan said: price inflation; the number of prescriptions being written for more expensive drugs; an aging population using more drugs; doctors writing more prescriptions generally; and drug companies advertising to consumers.

Of the 22 employers with prescription drug plans that Segal studied, prescription benefit costs for all 22 increased this year, Mr. Kaplan said.

A national retail chain with 20,000 employees that Segal surveyed reported $1.65 million in drug costs between September 1996 and August 1997, up 43.5% from the year-earlier period.

Faced with the failure of PBMs to dramatically lower costs, some employers are instituting higher copayments for non-generic drugs, mandatory generic substitutions or mandatory discount mail-order drug delivery.

Another study on pharmacy costs found an average increase of 11% over the last plan year.

The study, by New York-based consultant William M. Mercer Inc., found 54% of companies responding said their prescription drug costs were increasing faster than their overall medical costs; only 16% said medical costs were increasing faster.

Mercer discovered, though, that despite rising costs plan sponsors are satisfied with the job PBMs are doing. Ninety-three percent reported being very satisfied with pharmacy access, 62% were very satisfied with mail-order services, and 58% were very satisfied with claims processing.

Mercer found that while 96% of active workers are covered by a drug program, only 58% of survey respondents offer pharmacy benefits to all retirees.

For a single free copy of the Segal report, "Update on Escalating Costs of Prescription Drug Plans," contact Vp Mary Feldman, 212-251-5029. A single free copy of the Mercer study, "Fast Fax Survey on Pharmacy Benefits," may be obtained by contacting Sarah Markfield, 212-345-7584.

Care gatekeeping

The gatekeeper system is alive and well in health care and generally satisfies cost-conscious patients, a new report says.

The Washington-based Center for Studying Health System Change found that 91% of 9,264 physicians surveyed reported doing at least some gatekeeping for patients. This included most solo and two-physician practices, group practices and staff-model HMO doctors.

Gatekeeping was classified by the researchers as such whenever the doctor's prior approval was required for a specialist to be consulted.

In a study of 12 U.S. metropolitan areas, the center found an average of 40% of respondents' patients were part of gatekeeping arrangements. Results by geographic area ranged from a low of 31% in Greenville, S.C., to a high of 62% in Boston.

The high level of gatekeeping surprised researchers, said Dr. Robert St. Peter, a pediatrician and senior medical researcher at the center.

On average, pediatricians most frequently act as gatekeepers, doing so for 52% of their patients. Forty percent of general internists act as gatekeepers.

Gatekeeping is not a bad trend so long as patients are comfortable with the arrangement.

"There are a lot of people willing to limit their choice of physicians if it means saving money," he said.

But, according to the center, 16% of patients worry that they will not be referred to the right specialists should they need them. Those patients willing to pay a premium for the right to leave the gatekeeper structure and get direct access to specialists can be expected to do so in the future, he said.

Some states are considering legislation that would allow patients to bypass gatekeepers to see some specialists, and Florida and Georgia have passed laws requiring that patients have direct access to dermatologists, according to the center.

A majority of primary care physicians -- 82% -- told the center that they are always able or almost always able to obtain referrals for their patients to high-quality specialists. Still, about one-fifth of doctors report having trouble getting access to specialists, even when medically necessary.

The report, in Data Bulletin No. 7, can be obtained free by calling 202-554-7549, or can be accessed on the World Wide Web at

Medication reminder

DALLAS -- A little nagging can be good for the soul -- and the body.

That's what the Southern Baptist Convention decided a year ago when it turned to ValueRx, its prescription benefit management firm, to use its "medication adherence" program to coax members into taking their medication.

The Baptists' annuity board, which administers health benefits and retirement plans for about 20,000 pastors and staff, realized its prescription drug costs were high and wanted to increase medication usage where appropriate to head off unneeded hospitalizations and surgeries, said Donna Van Hooser, insurance operation department head.

"They feel so good they don't think they need it," she said of people who stop taking their medication.

The Baptists agreed to join Plymouth, Minn.-based ValueRx's program, which is free of charge and designed to reduce drug non-compliance through gentle reminders via telephone. According to the PBM, U.S. companies lose more than $100 billion a year because of drug non-compliance, and people stopping prescribed medication use are responsible for 10% of hospital admissions.

After about a year, ValueRx showed the Southern Baptist Convention data indicating that for those workers or retirees reached by telephone, 78% resumed using their medications.

Andrea Barry, manager of employee benefits at Elmhurst, Ill.-based Keebler Co., also began the compliance reminder program in July for about 1,200 of Keebler's workers who have chronic medical conditions. "Sometimes people do forget to do things on a regular basis," she said.

Among all of its participating clients, ValueRx reports a 74% success rate for putting people back on their medications.

The compliance program has put out 48,000 calls since it began in November 1996, said Kyle Vance-Bryan, director of pharmacotherapy assessment and disease management at ValueRx.

The program works with ValueRx's mail-order drug service by automatically detecting when a patient has failed to refill a prescription, Mr. Vance-Bryan said. The company is able to reach 80% by telephone, and of those reached, 75% are mailed new drug shipments, he said.

The program concentrates on chronic diseases, such as diabetes, depression, heart disease, allergies and asthma, among other ailments.