The US Pharmaceutical Industry Needs to Combat the Perception that it is Employers' Enemy, Incurring Enormous Costs for Little Return

The US Pharmaceutical Industry Needs to Combat the Perception that it is Employers' Enemy, Incurring Enormous Costs for Little Return



Dublin (PRWEB) February 6, 2006



Research and Markets (http://www. researchandmarkets. com/reports/c32101 (http://www. researchandmarkets. com/reports/c32101)) has announced the addition of Employers Role in the U. S. Health Care System: Part 1-The Nonelderly Population to their offering.



U. S. employers have many incentives to ensure that their employees (and their employees' dependents) receive a high standard of health care, but expanding and improving health care provision are expensive. Ever-increasing expenditures present employers with a dilemma: they want to ensure a high standard of health care for their employees but need to control their spending on such benefits. How best, then, for companies to proceed?



In this report, Part 1 of a two-part series on employers' evolving role in the U. S. health care system, Decision Resources examine the level of access to employer-sponsored health insurance in the United States and consider the increasing cost of providing such benefits. The report then focus on prescription drug benefits, analyzing employers' present and future cost-containment strategies and reviewing the role played by pharmacy benefit management companies (PBMs). Decision Resources also discuss the growth of consumerism in the U. S. health care system. The report concludes with an assessment of the outlook and implications for the pharmaceutical industry.



For more information on Part 2, please search the site for "Employers Role in the U. S. Health Care System: Part 2-The Medicare Population"



Business Implications



Employer-sponsored health insurance is by far the most important source of health care coverage in the United States. In 2003, approximately 159 million nonelderly U. S. residents received employer-sponsored health insurance. However, access to such coverage has declined since 2001, while the ranks of the uninsured have grown, reaching 45 million in 2003. Almost all covered workers in employer-sponsored health plans receive prescription drug benefits. Approximately 200 million U. S. residents (68% of the population) have these benefits administered by pharmacy benefit management companies (PBMs). Employers want PBMs to be more transparent about the discounts and rebates they negotiate from pharmaceutical companies and to be more active in promoting the use of generics and other inexpensive medicines. To defend themselves against growing criticism, PBMs may have to distance themselves from the pharmaceutical industry.



Employers are likely to adopt increasingly aggressive pharmaceutical cost-containment strategies. Multitier formularies will become more common and more complex, as more and more employers instruct their health plans and PBMs to add fourth and fifth tiers to their formulary designs. Copayments for branded medicines (especially nonpreferred brands) will continue to increase rapidly, and



Coinsurance for the upper tiers of formularies will become more common. Economies of scale afforded by mail-order pharmacy will prompt a growing number of employers to offer mail-order discounts or even to impose mandatory use of mail-order pharmacy. The expiration of patents on many blockbuster drugs in the next several years will stimulate the generics market. With an expanded arsenal of generic drugs available, it will be easier for employers to justify policies such as mandatory use of generics.



Consumerism—the policy of requiring consumers to assume increased economic responsibility for their health care choices and (potentially) to bear a greater proportion of costs—is expected to expand rapidly in the next several years. Employees will have greater freedom to make choices about their health care but might try to cut their costs to avoid incurring high deductibles. Drug manufacturers should seek ways to interact more directly with employers, especially very large organizations. For example, pharmaceutical companies could play a role in employers' disease management programs. Sponsoring health-related Web sites would be another way to support employers. Above all, the pharmaceutical industry needs to combat the perception that it is employers' enemy, incurring enormous costs for little return. It is critical to demonstrate the value of innovative medicines.



Overview Access to Employer-Sponsored Health Insurance Cost of Employer-Sponsored Health Insurance Prescription Drug Benefits Cost-Containment Measures Pharmacy Benefit Management The Rise of Consumerism Outlook and Implications for the Pharmaceutical Industry



Companies mentioned in this report include:



Medco Health Solutions



For more information visit http://www. researchandmarkets. com/reports/c32101 (http://www. researchandmarkets. com/reports/c32101) Decision Resources



Laura Wood



Senior Manager



Research and Markets



Fax: +353 1 4100 980



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