Preventive drug list coverage: What HR needs to know to cut costs, improve employee health

The number of employers offering a benefit known as preventive drug list coverage has increased in recent years, showcasing an up-and-coming option that may help reduce healthcare costs while improving patient outcomes, according to a newly published report.

As an employee benefit, this offering provides coverage for medications on preventive drug lists—also known as PDLs—to the insured, often at no cost, to help prevent serious illnesses and complications.

Such coverage is a “particularly promising, broad value-based benefit,” according to a report published last month in the American Journal of Managed Care. That’s because, the report says, it covers drugs that “lower or eliminate out-of-pocket payments for many generic and branded medications that need to be taken regularly to prevent worsening of chronic conditions and diseases.”

According to the report, patients whose employers offered such coverage experienced relative reductions in out-of-pocket payments of 35% to 55% during the study period. These effects were most significant among lower-income patients and those in high-deductible health plans with health savings accounts.

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Preventive drug lists can help drive prices down

Covering out-of-pocket costs of prescription drugs needed to treat chronic illnesses is especially important for individuals with chronic conditions, such as diabetes, or those who face high medication costs, according to the report. That includes individuals in HDHPs and HSAs who pay full medication costs until annual deductibles are met.

In 2019, the Internal Revenue Service expanded the list of care classified as preventive in HDHP-HSAs to include prescription drugs for certain chronic conditions. This move means members can receive the preventive care drugs at discounted prices before they meet annual deductibles.

The increase in the number of employers offering PDL coverage during the study period of 2005 to 2017 was most significant among larger companies:

• In 2017, almost 43% of employers with 5,000 or more insured workers offered PDLs. This was four times more than employers with 50 to 199 workers.
• Among employers with at least 85% of their insured workforce in high-deductible plans with HSAs, 32% offered PDL coverage in the previous benefit year, compared with 13% of other employers.
• In adjusted analyses, HDHP-HSA employers with older workforces and those with more chronically ill employees were more likely to offer PDL coverage than employers with workforces living in poorer neighborhoods.

Coverage also can boost patient adherence to treatment

Coverage of “PDLs should benefit mostly those who are vulnerable to high out-of-pocket costs for chronic disease medications,” the report said. “Members in HDHP-HSAs must pay payer-determined prices for drugs out of pocket until they meet their annual deductible amounts. By adding a PDL benefit for members in an HDHP-HSA, employers can substantially reduce or eliminate patient cost-sharing for PDL medications that treat cardiovascular diseases, diabetes, asthma and other chronic conditions, facilitating adherence to treatment.”

Offering coverage of these drugs could be an effective strategy for larger employers, especially those with a high number of chronically ill workers, according to the report.

“Combined with recent evidence of employer interest in increasing pre-deductible coverage for additional health care services, these findings suggest an encouraging trend toward improved healthcare access among commercially insured adults,” the report concluded.

This article was originally published on BenefitsPRO, a sister site of HR Executive. For more content like this delivered to your inbox, sign up for BenefitsPRO newsletters here.