Generic drugs may be an employer's first line of defense in reducing prescription drug costs, according to experts at the Benefits Management Forum & Expo.

In 2006, Virginia-based Landmark Communications reduced its copayments for generic drugs from $10 to $5 for retail purchases and from $25 to $10 for mail-order purchases. In addition, the company increased coinsurance from 20% to 25% for preferred-brand drugs and from 40% to 50% for non-preferred brand drugs.

The company wanted to implement a new pharmacy benefit without disrupting employees and negatively influencing company culture, Kathleen Thomas, director of benefits at Landmark, told attendees. "We knew we had to use several different avenues to communicate changes to our employees during the transition. Naturally, we promoted the more positive aspect of the change," she said.

In 2004, the media outfit had a 12% drug cost increase, and a year later that figure jumped to 14%. Its generic utilization rate was 48% of prescriptions in 2004 and 51% in 2005. Under the new design in 2006, its generic utilization rate was 57%, and that number is estimated to research 63% by the end of 2007.

The company saved $500,000 and reduced double-digit pharmacy cost trends to 3.7%. Part of the savings included $15,000 from an early-refill management program and $18,000 from the generic conversion program. Plan design changes also included clinical management programs and Web-based drug comparing and pricing tools.

"We knew that every member was not going to choose a generic drug, so we included brand-name drugs where the patents were about to expire," said Erik Fiedler, vice president of account management at Cigna Pharmacy Management, which helped Landmark design its new plan. "It's a great success story of reducing prescription drug costs without putting on tight management controls on the members. It was achieved simply by plan design and communication."

Likewise, in 2003, Dollar General had a 26% drug cost increase. Between 2004 and 2005, the company introduced deductibles for brand-name pharmaceuticals, adopted a mandatory generic program and replaced copayments with coinsurance.

Chandra Matthews, director of benefits at Dollar General, said "We wanted people to really think about their pharmacy decisions as being separate from their medical decisions." Dollar General carved out its prescription drug benefit and hired a pharmacy benefit manager, EHS/PharmaCare.

In 2004, Dollar General had a generic utilization rate of 52.1%, but that number is projected to reach 66.6% by the end of 2007.

When designing a pharmacy plan, keep in mind that "the prescription drug aspect does not behave like other health care services," advised Kristy Arcizewski director of health and welfare at Buck Consultants, which helped Dollar General revise its drug plan.