Benefits Plans - Prescription Drug Plan: Costs and Co-Pays

Page last updated: Thursday, 18-Dec-2014 12:11:45 EST

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 serves as a safety net in case of catastrophic illness. 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 product selection penalty, or health plan expenses such as doctor office visits.

Three-tier Benefit

Medications are divided into three tiers with three levels of co-pays. Tier 1 and Tier 2 drugs from the most commonly used categories are listed on the Preferred Drug List (PDL). For a complete list of covered drugs, tiers and coverage limits, refer to the plan Formulary.

Drug plan members have the following options for filling prescriptions at retail pharmacies within the MedImpact pharmacy 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) co-pays at NoviXus 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 84% of all prescriptions are dispensed as generic drugs.

Product Selection Penalty

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 name 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, if you OR your physician requests the brand-name product when an FDA-approved generic is available, you will be required to pay a product selection penalty, which is the cost difference between the generic and brand-name medication plus the brand-name co-pay.

For example, a drug plan member’s physician writes a prescription for a 30-day supply of 30mg capsules of Cymbalta, a non-preferred, Tier 3 drug that costs around $222, and the physician has not indicated DAW.  A 30-day supply of the generic equivalent, 30mg capsules of duloxetine, costs around $160. If the plan member chooses Cymbalta, he will pay $60, which is the cost difference between the two drugs ($220 - $160 = $60), plus$45 for the non-preferred brand-name (Tier 3) co-pay, for a total out-of-pocket cost of $105. However, if he chooses the generic duloxetine, his out-of-pocket cost is only the $10 generic co-pay, for a savings of $95. 

Example
The chart below illustrates the cost savings for choosing a generic equivalent over a non-preferred brand name drug.
Drug Selected

Generic
(Tier 1)

Non-preferred Brand Name
(Tier 3)

Cost of Medication
30-day supply of 30mg tablets

duloxetine  $160

Cymbalta  $220

U-M Drug Plan Co-pay

$10

$45

Product Selection Penalty

Not applicable

Cost Difference 
brand name cost – generic cost:
$220 - $160 = $60


Your total out-of-pocket cost


$10

$45 co-pay + $60 penalty =
$105

The drug pricing in this example is for illustrative purposes only.

Use the "Drug Price Check" function on the MedImpact member website to evaluate your cost comparison of brand and generic co-pays. Log in on the registration area at https://mp.medimpact.com/umh and then click on Drug Price Check. 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, see Understanding Generic Drugs on the U.S. Food and Drug Administration (FDA) website. 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 product selection 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 MedImpact, the University of Michigan prescription drug plan administrator, to provide the required documentation by calling 1-800-681-9578. If MedImpact determines that the documentation meets the criteria for product selection penalty relief, MedImpact will process future claims at tier co-pay without the penalty.

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. Generic drugs and second tier drugs for the most common drug categories are provided on the Preferred Drug List (PDL). 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 if a generic equivalent is available, are subject to a higher co-pay and the product selection penalty. 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.

2015 Prescription Drug Plan Co-Pays

Effective January 1, 2015

Note: Mail order offers the best value for 90-day supplies of maintenance medications. You save a third of your out-of-pocket cost over retail with the added convenience of home delivery.

 

Group

 

Drug Type

Retail Pharmacy Co-pay1,2,3,4

Mail Order Co-pay2,3,4

NoviXus Pharmacy
Services

1- to 34-day supply

35- to 60-day supply

61- to 90-day supply

Up to 90-day supply

(Compare to 61- to 90-day supply at Retail Pharmacy)

Retirees, Active Employees (see below for variance by collective bargaining agreement)

Generic Drugs -
Tier 1

$ 10

$ 20

$ 30

$ 20

Preferred Brand Name Drugs - Tier 2

$ 20

$ 40

$ 60

$ 40

Non-Preferred Brand Name Drugs - Tier 3

$ 45

$ 90

$ 135

$ 90

MNA
Active and LTD members (per contract)

Generic Drugs -
Tier 1

$ 7

$ 14

$ 21

$ 14

Preferred Brand Name Drugs - Tier 2

$ 15

$ 30

$ 45

$ 30

Non-Preferred Brand Name Drugs - Tier 3

$ 30

$ 60

$90

$ 60

TRADES
Active and LTD members (per contract)

Generic Drugs -
Tier 1

$ 5

$ 10

$ 15

$ 10

Preferred Brand Name Drugs - Tier 2

$ 15

$ 30

$ 45

$ 30

Non-Preferred Brand Name Drugs - Tier 3

$ 45

$ 90

$ 135

$ 90

1If 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.
2Catastrophic 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, product selection penalty, or health plan expenses such as doctor office visits.
3Member cost may be higher than the co-pay if a brand-name drug is selected when a generic equivalent is available.
4Co-pays for union members may differ based on their collective bargaining agreement.

How to Save Money on Your Prescriptions

  1. Always show your U-M MedImpact 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 NoviXus 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. Rx: “Take 1/2 pill per day”  — Copay is 1/2 price.
  6. For active faculty and staff members and their eligible dependents, prescription drug co-pays are among the eligible expenses that can be reimbursed under a Health Care Flexible Spending Account (FSA). Many over-the-counter (OTC) medications are also eligible for reimbursement from a Health Care FSA with a written prescription from your healthcare provider. 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 PayFlex, 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.
Limitations
The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.