Sunday, December 04, 2022

Survey: Generic Drugs and Multi-Tiers Dominate Employer Sponsored Drug Plans

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United Benefit Advisors

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United Benefit Advisors Releases New Special Report, “Trends in Prescription Drug Benefits”

June 27, 2016--Almost half (48.9 percent) of employer-sponsored prescription drug plans in America utilize three tiers, and 44.1 percent offer four or more, an increase of 34 percent from 2014 to 2015 and a 58 percent increase since 2013, according to the Special Report: Trends in Prescription Drug Benefits, from United Benefit Advisors (UBA), the nation’s leading independent employee benefits advisory organization. The report is based on data from the latest UBA Health Plan Survey of more than 10,000 employer-sponsored health plans.

“The fourth tier (and additional tiers) pays for biotech drugs, which are the most expensive. By segmenting these drugs into another category with significantly higher copays, employers are able to pass along a little more of the cost of these drugs to employees,” says Les McPhearson, CEO of UBA. “This is a rapidly growing strategy to control costs.”

Another significant cost control measure used by a majority (61.8 percent) of employers, UBA finds, is the requirement that employees pay more when they elect brand-name drugs over an available generic, and 37.9 percent of those plans require the added cost even if the physician notes “dispense as written,” according to the report.

“The market will continue to adapt and. in fact, we’re already seeing the advent of six-tier prescription drug plans,” says Scott Deru, President of UBA Partner Firm Fringe Benefit Analysts. “We’re seeing traditional three-tier drug plans (generic, formulary brand and non-formulary brand) with a preferred and non-preferred category in each of the three bands. This allows payers the flexibility to adjust quickly to move drugs to a non-preferred status within a tier, especially as the costs of some drugs, even generics, has increased as much as 1,000 percent over the past year or two.”

UBA’s Special Report: Trends in Prescription Drug Benefits also includes in-depth coverage broken out by industry, region, and employer size in the following categories:

  • Self-Funded vs. Fully Funded Prescription Drug Plans
  • Brand-Name vs. Generic
  • Multi-Tier Plan Design
  • Copay/Coinsurance Models
  • Deductibles
  • Mail-Order Prescription Drug Plans

“The Affordable Care Act will drive changes to plan design. Employers continue to struggle with balancing cost containment and employee retention,” says McPhearson. "The biggest challenges remain for those employers who are losing their grandmothering or grandfathering protection. Those companies should be paying close attention to these trends and how other employers in their market are responding.”

Download a free copy of the UBA Special Report: Trends in Prescription Drug Benefits at or contact a UBA Partner Firm for a customized benchmark survey based on industry, region, and business size.


About United Benefit Advisors
United Benefit Advisors® (UBA) is the nation’s leading independent employee benefits advisory organization with more than 200 offices throughout the United States, Canada and the United Kingdom. UBA empowers more than 2,000 Partners to both maintain their individuality and pool their expertise, insight, and market presence to provide best-in-class services and solutions. Employers, advisors and industry-related organizations interested in obtaining powerful results from the shared wisdom of our Partners should visit

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