Purpose and Target Audiences

The Employers Guide to Pharmaceutical Benefits is intended as an educational tool for human resources and benefits staff and directors, business coalitions, Employer Benefit Consultants and Pharmaceutical Benefit Management firms. It will be structured such that employers of all sizes will be able to find information of value, from those who are looking to gain a basic understanding of the issues at play and the options available, to those more familiar with the environment who are seeking innovative ways to manage their pharmaceutical costs.

Objectives of the "Guide"

  • To help employers put Rx benefits and costs into context and consider a definition of value with regards to their drug benefits that includes direct cost offsets, productivity, etc.;
  • To help employers ask better questions and insist on better answers from consultants, vendors, and health plans regarding total costs, Rx benefit design and benefit management techniques;
  • To help employers to be better able to make decisions about Rx benefit design and management that are within their budget constraints, consistent with their values and circumstances, and that suit their workforce.
  • To help employers become more aware of available resources and tools; and
  • To help employers understand what to communicate to their workforce about their decisions.


The guide will be compiled with relevant worksheets and decision tools included. The narrative text will be highlighted with thought-provoking questions employers should be asking as they design their Rx benefit packages, best-case examples, references to additional resources, examples of emerging concepts or applications, eye-catching graphics, and “tips” to remember in order to tailor the concepts to an employer’s situation. In order to facilitate broad use, the Guide will be structured with clearly defined break points and brief section summaries so that users with different needs and levels of understanding can easily determine the sections of greatest relevance to them. It is meant as a practical guide for decision-makers short on time.

Development Process

To ensure that the final product is reflective of a broad knowledge base, an advisory committee is guiding the work, comprised of Wye River Group on Healthcare participants and supporters from various healthcare stakeholder groups. This diverse approach will ensure consideration of different perspectives and help to generate a base of educated allies to champion the concepts articulated in the document.


  1. Introduction: General context; marketplace drivers; evolving roles of stakeholders.
  2. Purpose: How the Guide is intended to help employers get the most return on their investment in drug benefits by making “best fit” decisions about Rx benefit design and management.
    • Am I making the right healthcare investments, including Rx care, for my workforce?
  3. Putting Rx spending into context
    • What proportion of my health insurance premium increase is due to drug spending?
    • What factors are driving drug spending? (the relative impact of price inflation, shifts to newer more expensive drugs, and more patients taking more types of drugs more often for chronic ills.)
  4. Determining the theoretical value of drug spending
    • What can be gained by providing a drug benefit?
      1. Employee satisfaction and retention. (Harris survey of employees views of Rx benefits, design, management.)
      2. Proper use of Rx may offset other healthcare costs (e.g., asthma and diabetes.)
      3. Impact of certain diseases and Rx on productivity, absenteeism and short-term disability (pain, depression.)
      4. Practice according to care guidelines for serious chronic disease (preventing heart attacks and stroke.)
  5. Determining the potential value of Rx for my workforce
    • What diseases are key to MY drug costs, to other direct health care costs and to indirect costs?
      1. The demographic make-up of a workforce influences disease burden and the healthcare dollars needed.
      2. The most workplace relevant diseases vary between industries, among job types and by firm.
      3. Volume increases are being driven by demographics, new treatments/ diagnostics/ guidelines, disease management and consumerism -- and all of these drivers are likely to continue.
      4. Retiree health benefits pose special challenges for Rx design and management.
  6. Actualizing the benefits of your Rx benefit
    • What information do I need from my health plan, PBM and other vendors?
      1. Claims experience to determine the actual disease prevalence and related total in/direct costs (MEDSTAT)
      2. Integration of data on indirect costs with direct costs to select best disease targets (FedEx, Pitney Bowes)
  7. Choosing and Using the Right Tools
    • Can I make smarter decisions about my drug benefit to better control my costs?
    • How can I maximize my return for my healthcare dollars?
      1. Some costs are inevitable, but some costs can be controlled without sacrificing quality.
      2. Matching the right cost management tool to your workforce and available resources.
      3. Clinical techniques
        • Disease management / Case management
        • Predictive modeling
        • Step therapy
        • Utilization review
      4. Design incentives
        • Increased use of generic drugs, whenever appropriate
        • Mail order
        • Cost sharing
      5. Techniques that balance cost-effectiveness with clinical adequacy
        • Formularies
        • Therapeutic substitution
        • Prior authorization
        • Tiered copays
        • Coinsurance (tiered coinsurance)
        • Tiered cost sharing based on clinical value
  8. Cultivating Effective Vendor Relationships
    • What performance and evaluation criteria should I use for contracting? (Evidence of their experience in managing total costs as well as drug spending)
    • Which interventions can be effective implemented for MY firm? Contract out or in-house?
      1. DM vendors
      2. Worksite programs
      3. Compliance programs (e.g., via phone call centers or pharmacy/PBMs?)
  9. Communicating with Employees
    • Do my employees need more information to help them manage their health and seek correct care?
      1. Employees want more information about what’s on the formulary when making decisions.
      2. Employees often don’t understand what is and isn’t covered and how to appeal treatment decisions.
      3. Employers need to provide culturally sensitive benefit information at the right reading level, etc. to help employees to be effective healthcare consumers. d. Consider the use of report cards, etc, if available in your locale and provider choice is possible.
  10. Evaluating Outcomes
    • In what ways can / should I measure the costs and value of my health benefit design?
    • Do my employees have access to care that is appropriate for their needs?
      1. Overall healthcare expenditures can be evaluated for cost offsets.
      2. Growth in drug spending for specific diseases (eg, those with DTCA) can be evaluated for appropriateness
      3. Productivity, absenteeism, and short-term disability can be used to measure indirect cost savings.
      4. Quality of care ratings and employee satisfaction can serve as measures of a plan’s effectiveness.
  11. Conclusions
  12. Bibliography
  13. Worksheets
    • Access
    • Prior authorization
    • Cost sharing
    • Pharmacy request for information
    • Drug utilization review checklist
    • Disease management checklist
  14. Tools
  15. Disease Management Resources
  16. Glossary of Terms
    • Formulary
      1. Open / voluntary formulary
      2. Closed / mandatory formulary
      3. Selective / restrictive formulary
      4. Step care provision
      5. Financial incentive formulary
    • Cost sharing
      1. Flat dollar co-payments
      2. Two-tier co-pays
      3. Three-tier co-pays
      4. Coinsurance
    • Utilization Management
      1. Drug utilization review (DUR)
      2. Concurrent review
      3. Generic substitution
      4. Prior authorization
      5. Case management
    • Compliance programs
  17. About Wye River Group on Healthcare

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