The cost of prescription drugs: the challenge of balancing cost and outcomes.

• Author: Perry, Vicki
• Position: ADVICE: HEALTH CARE

THE COST OF HEALTH care continues to rise, and with budget-conscious minds, we continue to look for measures of quality to find the best answers for our employees.

Prescription drugs are a bigger part of today's medical budgets than ever. U.S. expenditures on prescription drugs, hospital care and other health services are expected to double to $4.1 trillion annually over the next decade, up from $2.1 trillion in 2006.

Even in the face of these benefit cost increases, employers continue to cover their workforce. A recent U.S. Chamber of Commerce study of nearly 400 companies demonstrates that employee benefit costs constituted more than 44 percent of payroll expenses in 2005, a 4 percent increase from the previous year. Furthermore, 1 percent of an employer's population can drive nearly one-third of its total health-care costs.

A typical health-benefit design strategy used to respond to these pressures is increasing employees' cost-sharing for their benefits, such as raising copays on prescription drugs. But, as patients face higher out-of-pocket costs, they are less likely to be compliant with the treatment plan prescribed for their condition. Therefore, it is increasingly critical that employers strive for health-plan decisions that strike an appropriate balance between cost and desired health-care outcomes.

Managed-care plans should continuously offer employers new strategies for managing the appropriate use of medical and pharmaceutical expenses in this ever-challenging balancing act between cost and health outcomes. It is critical that employers have access to data that gives a continual assessment of the performance of their benefit design by looking at utilization experience to determine if desired health outcomes are achieved.

One way to measure plan performance is looking at integrated medical and pharmacy data. By using tools that...