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Preferred Drug List offers quality at competitive prices
The following article is the fifth in a series submitted by the Benefits Office on the University’s new prescription drug plan, which begins Jan. 1. Previous articles have announced the University’s decision to consolidate pharmacy purchasing under a single Pharmacy Benefit Manager (PBM)—AdvancePCS—and to carve out the prescription drug benefit from medical plans. This article looks at how the University works with the PBM to derive the Preferred Drug List and describes the plan’s new mail-order program.

The Preferred Drug List (PDL) and mail order service are key features of the University’s new prescription drug plan. The PDL, a guide for physicians who prescribe for employees enrolled in three-tier co-pay plans, includes various classes of prescription drugs that deliver value at competitive prices. Mail order service, expanded and available to all employees beginning in 2003, offers the convenience of secure home delivery and cost savings for individual prescription drug plan participants.

The PDL includes various classes of quality prescription drugs that deliver value at competitive prices. Mail service offers the convenience of secure home delivery and cost savings for individual members.

The newly available U-M/AdvancePCS Web site and the Benefits Office Web site include the PDL and mail service information, plus nearly everything members need to know about the new pharmacy benefit plan. All members are encouraged to visit, or

Preferred Drug List

AdvancePCS, the University’s Pharmacy Benefit Manager (PBM), has worked with the University to develop the PDL, a subset of the plan’s formulary. The formulary is an extensive list of drugs designed to serve the needs of patients requiring drug therapy in an outpatient setting. It is open to all drugs approved by the U.S. Food and Drug Administration (FDA) with the exception of standard exclusions such as cosmetic, over-the-counter and weight-reduction drugs.

The PDL includes about 150 select brand-name and generic drugs that are options for physician prescribing. These drugs, selected for therapeutic effectiveness and cost benefits, account for the majority of all drug costs. The University will make available copies of the PDL before Jan. 1 to University health plans so they can distribute the PDL to network physicians.

In addition to the PDL, the “commonly prescribed medications” list can be found on the prescription drug Web sites. Members will receive this master list of second-tier and generic drugs in their December Welcome Kit, and they are encouraged to take a copy to their physicians.

The PDL does not apply to union groups with two-tier co-payments or members with 20 percent co-insurance.

“When we promote these medications to physicians, our recommendation is based on the best medical evidence and cost value,” says Keith Bruhnsen, assistant director and pharmacy manager of the Benefits Office. “Although physicians’ compliance is voluntary, most pay attention to the PDL because they know a body of their peers selected these drugs on the basis of best outcomes and value.”

When filling prescriptions, AdvancePCS pharmacists are alerted online about opportunities to substitute PDL drugs for the original prescribed. With the patient’s permission, the pharmacist can contact the physician to receive approval for a therapeutic interchange. The physician or patient can veto a PDL substitution.

The formulary and PDL are products of collaboration between the University’s Pharmacy Benefit Advisory Committee (PBAC) and AdvancePCS. The PBM’s Pharmacy and Therapeutics (P&T) Committee reviews new drugs that come to market and provides recommendations to the University for formulary status and co-payment tier placement, says Joe Vogel, director of clinical management for AdvancePCS. These decisions are reviewed by the University PBAC for consistency with University practice and placement on the three-tier co-payment plan and then forwarded to the University Pharmacy Benefit Oversight Committee for final determination.

AdvancePCS encouraged the University to focus on the 20 to 25 drug classes that make up the bulk of utilization and spending, Vogel says. If two or three drugs in a high volume class, such as ACE Inhibitors for high blood pressure, offer all the therapeutic benefits of similar drugs but at more competitive prices, those few would be selected for the PDL.

More than 800 brand-name drugs comprise the second co-pay tier. The third tier includes those defined as non-preferred drugs, about 100–150 that offer no clinical advantages and at a higher cost than preferred drugs. Only about 12 percent of all prescription claims fall into this group. “Non-preferred drugs are not placed on the third tier to penalize people, but because these drugs have lower-priced brand or generic alternatives,” Bruhnsen says. “The purpose of the third tier is to make the widest possible range of drugs available to members.”

AdvancePCS Member Services can answer specific questions about drugcoverage and identify specific co-payments for members. The toll free number is (866) 485-0268.

Generic Drug Incentive

The new pharmacy benefit offers a Generic Drug Incentive to encourage plan members to take advantage of these safe alternatives to higher cost drugs. At a cost of $7, generic drugs comprise the first co-pay tier. Pharmacists dispense generic drugs, when available and legally permitted, unless the physician has written “dispense as written” on the prescription. In that case, the brand-name drug is given and the member pays the applicable brand drug co-payment.

But members who choose a brand-name drug when a generic is available and acceptable to the physician pay more than a standard co-payment for that choice. They must pay the cost difference between the brand-name and generic medication, in addition to the generic co-payment.

An average 30-day supply of a popular brand-name antidepressant currentlycosts $95, retail. If members reject the option to substitute its generic equivalent, whose retail price is $10, they would pay $92—the cost difference ($85) plus the generic co-pay ($7). If they go with the generic, the member’s pharmacy bill is only $7.

“There is a common misconception that generic drugs are inferior, even though they have proven as effective as their brand-name equivalents,” says Jeoffrey Stross, professor of internal medicine and chair of the PBAC. “Manufacturersmust jump through the same hoops to receive FDA approval for generics as they do for brand-name drugs.”

Mail Order Service

AdvancePCS offers mail service for up to 90-day supplies of prescription drugs. Prescriptions are delivered to members’ homes or, if requested, to another U.S. address within 10 to 14 days of order placement. Mail order saves on trips to the pharmacy and is the only means of obtaining 90-day supplies of medications. Retail pharmacies may only dispense 34-day supplies of a medication at a time.

The mail service is cost effective for members and the University, which receives deeper discounts on mail-order drugs. Mail order co-pays for most members are twice the normal co-pay amount per 90-day prescription with up to four refills per year. For example, a generic drug ordered by mail would cost $14 for a 90-day supply.

Members of BCBSM/United of Omaha pay 20 percent of the cost for a 90-day supply after the annual deductible has been met and receive lower overall cost due to deeper discounts. Members of that plan can determine their mail order co-pay amount by calling AdvancePCS Member Services.

For mail-order prescriptions to be filled on or after Jan. 1, members should ask their physicians to write two prescriptions: one for a 30-day supply, which is filled at the local pharmacy, and one for up to a 90-day supply for mail-order service. They should send the 90-day prescription to AdvancePCS, along with an order form and co-payment. Preaddressed envelopes and order forms will be included in all members’ Welcome Packets.

Up to four refills per year can be ordered online at, by mail or by calling AdvancePCS Member Services. Mail-order drugs originate from the PBM’s mail-order pharmacy in Wilkes-Barre, Pa. AdvancePCS safeguards the security of members’ medication and personal information. Prescription orders are shipped in plain, tamper-evident packaging via Federal Express, UPS or first-class U.S. Mail according to the best method for the particular medication. Members do not pay for mail-order shipping costs. Prescription drugs cannot be mailed outside the United States.

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