Employer Profile: Drug Plan Stability

by | Dec 15, 2020 | Business Owners, Employee Benefits, Take 5 Articles

Double-digit rate increases for the drug plan are a distant memory for Jeff Porter, president and CEO of Turner & Porter, a funeral home business in Toronto, Ontario. Ten years ago, the company introduced virtual pharmacy services to its plan members (about 80 employees and their dependents). Over time, the annual rate increase for the drug plan stabilized to a manageable 4% on average, and employees came to appreciate the convenience.

“Especially now with COVID-19, employees are thrilled to have their medications delivered rather than have to go to a pharmacy,” says Porter.

While it took time to reach the current level of success, Porter says there was never any strong pushback from employees. Uptake was more a matter of constant reminders and transparent communications, which includes being honest about the need for savings in order to maintain a strong drug benefit plan (for members who use the virtual pharmacy, coverage remains at 100%).

The steady rise of e-commerce also likely helped promote acceptance. Porter notes that among existing employees, younger employees were quicker to adopt the offering, and new hires, of all ages, tend to accept it without question. “I think generally speaking people are more educated and accountable about health benefits, and as a result more appreciative.”

Porter originally heard about Alliance Pharmacy, the virtual pharmacy provider (also referred to as a central dispensing pharmacy), through his long-time benefits advisor, Bill Zolisat Penmore Financial Group. It was 2009 and drug plan costs were not only climbing at a concerning rate, but the company had also experienced its first claim for a specialty drug. Alliance Pharmacy would deliver savings on the prices of traditional drugs and dispensing fees, and at a preferred rate through its partnership with the BENEFITS ALLIANCE GROUP, a coalition of advisor firms to which Penmore belongs.

Turner & Porter initially used routine internal communications as well as onsite group meetings conducted by Zolis to promote Alliance Pharmacy. Drug coverage remained at 100% whether members used the virtual pharmacy or a traditional community pharmacy. After one year, uptake was almost zero.

Zolis and Porter then changed the plan design so that members who continued to use traditional community pharmacies paid 20% of the cost of the prescription. Coverage for the dispensing fee was capped at $4. “After that we saw big usage. Members paid attention when they realized that money would be coming out of their own pocket,” says Zolis.

Another round of group sessions as well as one-on-one conversations were critical for buy-in. Zolis again led the meetings. “Management can talk all the time about the value of something, but when Bill and his team come in we get a different response. Understanding improves when the message is delivered by a third party,” says Porter.

That message spoke not only of the savings to both employer and employee, but also the services. “People can still talk to a pharmacist and get great service. This was not just about lower prices,” stresses Zolis. He adds that Alliance Pharmacy’s unique packaging system for multiple medications and its refill reminder service were selling points for plan members.

As for the one-on-one conversations, Turner & Porter’s benefits administrator would constantly remind employees about Alliance Pharmacy when responding to queries about benefits, and eventually shared her own positive experiences. “She became a champion because she loves it herself,” says Zolis. “And the constant reminders work, otherwise people naturally go back to what they’re used to.”

Today the majority of drug claims go through Alliance Pharmacy. The cost savings are enough to provide rate stability as well as make headroom for high-cost specialty drug claims. And while no one knows what the future may hold, Turner & Porter is in a better position to weather possible storms. “We want the plan to always be there to benefit employees and Turner & Porter as best it can. Alliance Pharmacy helps us do that more efficiently,” notes Porter.

He has one final piece of advice for other plan sponsors: “It is very important that you are able to put your faith in your advisor to add value to your employee benefits plan. We certainly respect our relationship with Bill and his team and would like it to continue,” says Porter.