Co-Pays Chart
Annual out-of-pocket Maximum
Three-tier Benefit
Generic Drug Incentive Program
Pill-Splitting Incentive Program
How to Save Money on Your Prescriptions

The amount that you pay for your prescriptions depends largely upon the drugs you and your doctor choose. Refer to the chart below to find the amount of your retail pharmacy and mail order co-pays or co-insurance payments.

Cost-effective choices allow the University to continue providing the Prescription Drug Plan for employees and retirees at co-pays lower than the national average. By choosing generic drugs and medications on the Preferred Drug List, both you and the University of Michigan save.  

Annual Out-of-Pocket Maximum
An annual out-of-pocket maximum on prescription drug co-pays payments serves as a safety net in case of catastrophic illness. The out-of-pocket maximum is $2,500 per individual up to a maximum $5,000 per family per year. The plan covers the full network cost of all covered prescription drugs beyond that limit within a calendar year. Infertility treatments are not covered after the $5,000 family lifetime maximum has been paid by the plan.

Three-tier Benefit
Medications in a three-tier benefit structure are divided into three groups with three levels of co-pays. First and second tier drugs are listed on the Preferred Drug List (PDL).

Drug plan members with a Tier-Copay have the following options for filling prescriptions at retail pharmacies within the SXC network:

• One-month supply (up to 34 days) for one (1) co-pay at retail
• Two-month supply (35 to 60 days) for two (2) co-pays at retail
• Three-month supply (up to 90 days) for two (2) copays at Walgreen’s Mail Service
• Three-month supply (61 to 90 days) for three (3) co-pays at retail

Generic Drugs/Tier 1
The Generic Drug co-pay level offers an opportunity to take advantage of generic drugs. Generic drugs cost about 50% less on average than comparable brand-name drugs and have different names. Generic drugs are approved by the United States Food and Drug Administration (FDA), contain the same active ingredients and come in the same dosage forms as their brand-name counterparts, and must meet the same safety, production and performance standards. Therefore, the use of generic drugs often offers an effective and safe alternative to help reduce prescription drug cost for both you and the University of Michigan. Approximately 61% of all prescriptions are dispensed as generic drugs.

Generic Drug Incentive Program
Your pharmacist will dispense generic drugs whenever they are available and legally permitted, and you pay the generic co-pay amount unless your physician specifies “dispense as written” (DAW) on your prescription or you request the brand product.

The University of Michigan Pharmacy Benefits Advisory Committee, a group of University physicians and pharmacists, believe strongly in the quality of FDA approved generic medications. Therefore, effective May 1, 2006, if you OR your physician requests the brand-name product when an FDA-approved generic is available, you will be required to pay the cost difference plus the brand-name co-pay.

For example, a prescription for a 30-day supply of Paxil, a non-preferred, Tier 3 drug, costs $100 and your physician has not indicated DAW. Paroxetine, the generic equivalent, costs $50. If you choose Paxil, you will pay $50, which is the difference in cost between the two drugs, plus $24 for your brand-name co-pay, for a total of $74. If you had chosen generic Paroxetine, your co-pay would have been $7, and you would have saved $67.

Use the "What's My Copay" function on the SXC Web site to evaluate your cost comparison of brand and generic co-pays. Log in on the registration area at https://umi.rxportal.sxc.com and then click on What's My Copay. Click on your drug product or search for a drug name to access the drug-pricing feature.

It is always up to you and your physician whether to choose brand-name medications or generics. Members who choose generics incur the lowest costs. For more information about generic drugs, view the FDA Office of Generic Drugs Web site at http://www.fda.gov/cder/ogd/index.htm. For Tier 1 drug co-pay amounts, see the Co-Pays chart.

When your physician requests a brand name drug be dispensed by writing “dispense as written” (DAW) and when a generic equivalent drug is available, the following is the procedure for consideration of the generic penalty relief. The physician must document that the generic equivalent drug: (A) produces a severe adverse reaction, (b) produces an allergic reaction, or (C) results in therapeutic failure (this will have to be validated by medical testing). The physician contacts SXC, the University of Michigan prescription drug plan administrator, to provide the required documentation by calling 1-866-0715-0874 (option 1). If SXC determines that the documentation meets the criteria for generic penalty relief, SXC will process future claims at tier co-pay without the penalty. See Medical Necessity for Brand Name Drugs with a Generic Availability (PDF) for more information

Preferred Brand Name Drugs/Tier 2
Brand-name drugs are patent-protected and product-trademarked. For each drug class (e.g., cardiovascular, depression), there may be several drugs produced by different manufacturers with different prices that are equal in therapeutic value. Preferred brand drugs are selected based on clinical efficacy and safety as well as best financial value. The second co-pay tier includes the University’s Preferred Drug List (PDL) and a limited number of generic drugs. For Tier 2 drug co-pay amounts, see the Co-Pays chart.

Non-Preferred (Brand Name) Drugs/Tier 3
Drugs on the third co-pay tier are brand-name, FDA-approved drugs that University physicians and pharmacists have not designated as “preferred” and are subject to a higher co-pay and generic incentives. These products often are in drug classes that include several similar alternative brand-name or generic options. Brand name drug products that have FDA approved generic equivalents available will always have a Tier 3 co-pay. Approximately 10 to 15% of all medications are dispensed as non-preferred brand name drugs. For Tier 3 non-preferred, brand-name drug co-pay amounts, see the Co-Pays chart.

Consult with your doctor and pharmacist to determine if there is a medication on the University of Michigan Preferred Drug List (PDL) that is appropriate for your condition. Your doctor may decide that you should stay on your current medication for medical reasons.

The University of Michigan does not restrict your access to approved medications, although there may be higher co-pays for non-preferred drugs. Appeals for lower co-pays are not accepted.

The 2008 Prescription Drug Plan Co-Pays are below.

¹ Catastrophic coverage for prescription drugs goes into effect after the annual out-of-pocket maximum of $2,500 per individual coverage or $5,000 per family per year is met. Catastrophic coverage applies only to covered prescription drugs and does not include infertility medications, generic drug incentive or medical plan expenses such as doctor office visits.

² If the retail price of a covered medication is less than the tier co-pay, you pay only the cost of the medication. If the cost of the covered medication is more than the co-pay, you pay only the co-pay. The member always pays the full cost for prescriptions that are not covered by the plan.

How to Save Money on Your Prescriptions

1. Always show your U-M SXC ID card when you fill a prescription. If you participate in the Medicare Rx assistance low-income Part D plan,always show both cards.
   
   
2. Ask your physician or pharmacist if a generic alternative is available. Using a generic saves you money.
   
   
3. Ask your physician if a “preferred” drug is available.
   
   
4. Order your larger supplies from the Walgreens Mail Service. Participants save a third of their out-of-pocket co-pay cost for a 90-day supply of medication at the mail-order pharmacy. You can receive up to a 90-day, three-month supply for only two (2) times the co-pay. This saves you a third of your co-pays over a one-year period.
   
   
5. If you take a generic statin cholesterol-lowering medication, ask your physician if you can participate in the U-M pill-splitting program.
   
   
6. Check to see if you are eligible to participate in the Specialty Drug Program.
   
   
7. For active faculty and staff members, prescription drugs are among the eligible expenses under a Health Care Flexible Spending Account (FSA). Prescription co-pays and many over-the-counter (OTC) medications are also eligible for reimbursement from a Health Care FSA. You can contribute to a Health Care FSA on a pre-tax basis. The cost-saving FSA plan allows you to annually set aside pre-tax dollars for certain out-of-pocket health care expenses. Contributions are deducted from your paychecks and deposited into your FSA. Since the contribution amount is deducted from your taxable earnings, it lowers your income tax.
   
   Each year, you determine your Health Care FSA contribution by estimating your out-of-pocket health expenses for the upcoming year. As you incur eligible expenses, including prescription drug co-pays, you submit the required documentation to SHPS, the University’s external claims processor. You generally receive reimbursement within two weeks of submitting the claim. Enroll in a Health Care Flexible Spending Account (FSA) during Open Enrollment. For enrollment information, see Flexible Spending Accounts.