University drug plan limits cost increases, offers new programs


Prescription drug spending is an important driver of health care costs nationwide, but the University of Michigan drug plan has contained costs better than many employers.

The university spent $117 million on prescription drug benefits for faculty, staff, retirees and their families in 2016, according to the drug plan’s latest annual report. Drug spending made up one-fifth of the total health benefits expense of more than $500 million.

The self-managed plan beat national trends reported by Express Scripts for both specialty drug cost and total spending in 2016.

New programs for drug plan members

The Benefits Office relies on the expertise of clinical faculty in the College of Pharmacy and the Michigan Medicine Department of Pharmacy to make plan decisions that balance safety, cost and effectiveness. As a result of these partnerships, the drug plan recently expanded two successful pilot programs to all eligible U-M faculty, staff and retirees.

The aim of one program is to reduce the member’s total spending on medications. Under this program, members will be contacted by MedImpact or their Michigan Medicine clinic pharmacist to discuss options to reduce their out-of-pocket costs, where opportunities exist.

Another program targets medication effectiveness, and focuses on members who take five or more medications and are Michigan Medicine patients.

They will also have the opportunity to work with a pharmacist to review all their drugs together, considering drug interaction, medication effectiveness and opportunities to consolidate medications. In a pilot version, this comprehensive medication review program improved effectiveness, safety and cost for participants.

Rising cost of drugs

After double-digit cost increases in 2014 and 2015, the drug plan team renegotiated contracts for better rates last year. Along with programs to manage utilization, contracting is a key part of a comprehensive approach to limit the impact of rising drug costs on faculty, staff and retirees.

Drug spending has been in the national spotlight in recent years due to significant price inflation and breakthrough specialty drugs. These products treat serious conditions such as diabetes, asthma, cancer, rheumatoid arthritis and multiple sclerosis.

Out of almost one million prescriptions filled by U-M drug plan members in 2016, specialty drugs made up less than 2 percent. Their share of the total cost? Almost 37 percent.

Dawn Parsons, pharmacy services manager in the Benefits Office, expects half of all spending could be on specialty drugs by 2020. Last year, 26 of the 36 new products added to the list of covered medications were specialty drugs.

“This is great news from a treatment perspective,” says Parsons. “But it changes the cost equation, particularly when new generics aren’t coming to market at the same rate they did in the past.”

Overall, U-M plan members paid less out of pocket for prescription drugs in 2016 than in 2015. Copays and other out-of-pocket spending made up less than 10 percent of the total drug cost. This member share is about half the national average, according to the Pharmacy Benefit Management Institute. It has been shrinking for several years due to lower-than-average copays and high generic utilization. 



  1. Jennifer Sporer
    on May 31, 2017 at 9:03 am

    I wish administration would leave the medication management to health care providers of the patient’s own choosing instead of questioning people just because they have more than 5 meds. My main experiences with MedImpact have been when they were denying me or my family care or treatment.

    • Dawn Parsons
      on June 1, 2017 at 10:55 am

      Thanks for your feedback. Both new programs that we’re offering are completely optional and voluntary. The comprehensive medication review program offers interested members an additional level of support from a Michigan Medicine clinical pharmacist to help optimize their medication regimen.

  2. Billie Rohl
    on May 31, 2017 at 6:14 pm

    This article says the University drug plan limits cost increases. Apparently for some people it does. But I pay as much for Vitamin supplements for osteopenia, OTC generic Prilosec that is less expensive but does not work as well for me as the real thing (I did a blind test to be sure!), and OTC acetaminophen as a therapeutic base for my RA, and a low-dose aspirin each day, also on my doctor’s orders, as I do for monthly co-pays on my meds that *are* covered. I’m looking at retirement in 5 years or less and between that and the political manhandling of Medicaid and Social Security, I am *very* concerned about expenses once I retire.

    • Julie B
      on June 5, 2017 at 5:29 pm

      I’m with you! I’m fuming that the “savings” come at the cost of refusal to cover medications my doctor has deemed that I need. These savings don’t always save. I no longer take the decongestant version of my allergy medications, they’re too expensive over the counter! It’s counter-intuitive. I now use a generic otc nasal spray that’s far less effective than what I used to use. My allergies trigger migraines, requiring the use of more (expensive) migraine treatment–ugh!

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