By Dave Reid
HR Communications

The University will change the co-pay amounts paid by members of the U-M Prescription Drug Plan next year, the first such adjustment since 2003. The change brings co-pay reductions to those using generic medications, "tier one" drugs in the U-M plan, with a decrease in out-of-pocket expenses from the current $7 co-pay to $5, starting Jan. 1. Those who choose from the two other tiers of brand-name drugs will see co-pays increase to $15 for tier two medications (up from the current $14) and $30 for tier three drugs (up from $24).

"The structure of the plan will be unchanged at three tiers of coverage to continue to support choice, while encouraging the use of generics," says Marty Eichstadt, director of benefits. "Nearly all classes of maintenance medications now include high-quality, FDA-approved generic options."

The University reports more than 67 percent of drugs dispensed under the drug plan are generic medications. Plan Manager Keith Bruhnsen says this rate is greater than average and significantly contributes to overall cost containment as well as reduction of out-of-pocket member expenses.

"The increased use of generic medications and the changes to our co-pay amounts that encourage their use are supported by the U-M Prescription Drug Plan's Pharmacy Advisory Committee and Oversight Committee and the research of the U-M College of Pharmacy," Bruhnsen says.

The U-M Prescription Drug Plan's annual report shows that the increase in generic drug use between 2006 and 2007 alone may have saved more than $2.8 million in additional expense if higher-cost brand-name drugs had otherwise been dispensed. Each 1-percent increase in the U-M rate of generic drug dispensing is reported to bring a savings of nearly $500,000 in reduced medication and co-pay costs.

"It demonstrates the benefit of good health care consumer behavior toward reducing costs," Eichstadt says. "U-M co-pays continue to be lower than peer academic institutions, health systems and the national co-pay averages, so this change maintains our competitive stance and rewards the majority of our plan members who are using generic drugs with a reduction in co-pays."

For more on the U-M Prescription Drug Plan and other benefit programs, go to www.umich.edu/~benefits/.