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Trying to rein in escalating costs in its employee health plan, state government has harnessed the power of prices to nudge beneficiaries toward the least costly drug for their ills. Under a new prescription drug plan, effective Jan. 1 for 32,000 people covered by state health insurance, drugs are “graded” according to their health benefits and cost effectiveness. Patients who choose expensive name-brand drugs that do the same thing as cheaper alternatives must contribute a co-pay. Those who order medications without “significant clinical value,” such as the erectile-dysfunction drug Viagra, pay full price.
Since last year, prescription drug claims to the state’s health plan have increased 30 percent, mostly due to higher drug prices. State health officials hope that the grading system, developed with input from large Montana self-insured employers such as First Interstate Bank and NorthWestern Energy, can reduce those costs. They estimate savings of $6.3 million in 2010, which are already reflected in next year’s premiums.
The state University System, whose health plan covers 18,000 employees, is slated to start the drug program next July. Private employers who helped develop the plan had not yet decided whether to adopt it themselves.
