While the population of the United States grew just 9 percent in the decade from 1999 to 2009, the number of prescriptions written increased 39 percent. During roughly the same period, the cost of prescription drugs grew 3.6 percent a year, and while these cost increases represent a considerable slackening from the double digit increases of the 1990s, pharmaceutical manufacturing continues to be one of the top three most profitable industries in the country.

Fortunately for consumers, the cost of prescription drugs still accounts for only 10 percent of healthcare spending nationwide. This is only good news because increases in the cost of hospital care and physician services have grown even faster, exceeding 5 percent annually.

Generic Counterparts

Nevertheless, several important factors have helped keep prescription costs in check. First and foremost, has been the introduction of generic alternatives when brand-name pharmaceuticals lose patent protection.

A report by the Kaiser Family Foundation points out that, “almost 80 percent of FDA-approved drugs have generic counterparts,” and explains that when there are two generic alternatives on the market, the generic price is usually about half the original price of the brand name drug. Moreover, when several competing generics are available, prices often plummet to 20 percent or less of the original brand cost.

The Value of a Formulary

In conjunction with cost-sharing techniques such as deductibles, copayments and co-insurance, another tool used by health insurers to keep prescription expenses down is the use of a formulary. Comprising a list of approved prescription drugs, formularies encourage the use of generics and lower-priced alternatives among their subscribers by creating a differentiated copayment schedule. Under such an arrangement, if you elect a brand-name drug when a generic equivalent is available, you will be responsible for a greater share of the cost.

Formulary lists are typically assembled by teams of doctors and pharmacists who evaluate drugs on the basis of safety and effectiveness in the treatment of diseases. Lists are updated regularly and will usually contain both brand name and generic drugs. When a generic is available for a brand-name product, the brand-name product is generally considered non-formulary. Typically only the generic equivalent will be on the formulary list, a practice endorsed by the FDA. In this way a formulary decreases the total prescription costs for a medical plan by steering subscribers to lower cost alternatives that fully meet their needs.

Other “utilization management strategies,” as they are known in the healthcare industry, include the requirement for prior authorization in the case of certain drugs and/or greater patient cost-sharing for new, bio-tech, and specialty pharmaceuticals. Such measures aid in controlling the cost of premiums for all plan participants.

ProtectPlus Formulary

Beginning January 1, 2011, ProtectPlus adopted use of the same formulary utilized by the Anthem Blue Cross HMO plans. The formulary is updated quarterly and can be found online at the ProtectPlus website under “Anthem Blue Cross Formulary List.”

 The copayment structure for ProtectPlus copay plans and Anthem Blue Cross HMO plans is the same for a 30-day supply bought through an in-network retail pharmacy and a 60-day supply when ordered through Anthem’s Express Scripts mail order pharmacy.

• generics = $10 copayment              

• brand-name = $150 annual deductible per member

• brand-name/formulary = $25 copayment

• brand-name/non-formulary = $45 copayment

• self-injectables (excluding insulin) = 30 percent of prescription drug maximum amount

One way to keep your prescription drug costs down is to provide a copy of the Anthem formulary list to your doctor. He or she can then use it to help select the best medication for you while still being mindful of your out-of-pocket costs. Another good strategy is to let your pharmacist know that you prefer to use generics when possible. Many pharmacies will substitute a generic when available unless the prescribing physician specifies a brand-name with the phrase “dispense as written,” but you can’t assume it. Ultimately, what matters is taking the appropriate medication for your condition. However, if an equivalent drug is available that will safely and effectively treat the condition and save you money, where is the downside?