Despite decreases in generic prescription costs by large retailers, formulary and non-formulary co-pays continue to increase. The Benefits USA 2007/2008 survey of more than 5,400 benefit plans found formulary and non-formulary co-pays have increased by at least 20 percent on all plan types over the last five years.

Formulary drugs are those included on a pre-approved list, which are offered at a negotiated discount rate. The Benefits USA 2007/2008 results found formulary co-pays were more than $24.00 on all plan types with PPO plans having the highest co-pay, $25.31. Since 2003, formulary co-pays on all plan types have increased by at least 24 percent. Indemnity plans had the largest increase, 30.4 percent and were followed by HMO at 27.5 percent. PPO plans had the smallest increase, 24.6 percent.

Non-formulary drugs are those without a negotiated discount rate. The Benefits USA 2007/2008 results found prices on non-formulary co-pays were above $39.00 for all plan types, and the average co-pay on PPO plans was $42.31. Although non-formulary drugs on HMO plans had a 20.1 percent increase over the last five years, other plan types had increases above 27 percent. Indemnity plans had the highest increase at 36 percent. PPO and POS plans had similar increases in co-pay costs at 27.6 and 27.7 percent respectively.

Currently, generic prescription co-pay costs range between $10.56 and $11.25. According to the 2007/2008 results, generic co-pays on PPO plans are $10.99. When comparing the generic price to the non-formulary price on PPO plans, there is a difference of $31.32. For prescriptions used monthly, that difference can equate to $375.84 for just one prescription over the course of a year.

"Employers should be proactive in educating employees regarding prescription costs," said Amy Kaminski, manager of marketing programs for Compdata Surveys, the nation’s leading compensation and benefits survey data provider. "Offering a formulary list to your employees allows them to see how drugs are classified, so they can make informed choices when working with their physician."

About the Survey
Benefits USA 2007/2008 analyzes national and regional data on benefits eligibility and administration policies with detailed information on benefit plans, premiums and provisions. Information was collected from more than 5,400 benefit plans covering almost 6 million employees across the country.

Compdata Surveys is the nation’s leading compensation and benefits survey data provider. Data is collected annually from thousands of organizations across the country. Compdata Surveys has been providing accurate, reliable data at affordable prices to organizations since 1988. For further information about the compensation and benefits surveys, contact Lane Odle at (800) 300-9570 or lodle@compdatasurveys.com.