Rx for employers: the Detroit Regional Chamber is fighting for lower health-care costs.

Many employers are desperately trying to maintain health-care coverage for their employees and families amid a deepening crisis, which will likely mean another 15- to 22-percent increase in health insurance premiums. Unfortunately this trend is expected to continue into the foreseeable future as a number of public-policy issues are ultimately addressed in Washington and Lansing.

The Detroit Regional Chamber, through its Health Care Stakeholders Initiative, is actively advocating on several key issues of importance to employers, including healthcare financing, the health-care workforce, information technology, quality and incentives. The issue of prescription drugs, in particular, is receiving considerable attention.

To address this issue, the Chamber is teaming with Michigan for Affordable Pharmaceuticals (MAP), a voluntary organization comprised of employers, unions, healthcare providers and health-care plans supporting specific reform initiatives designed to contain pharmaceutical costs while ensuring access and quality.

MAP reports that outpatient retail prescription drug expenditures in 2001 were up 17.1 percent to $154.5 billion and mail order prescription drug expenditures were up 27 percent to $20.7 billion when compared with the prior year. This marks the fourth consecutive year that spending on outpatient prescription drugs topped 17 percent. In Michigan, retail prescription drug expenditures rose 12 percent or $541 million from 1999 to 2000.

"While the increase in Michigan was less than the national average, residents are critically affected because, compared to the rest of the country, we use more prescriptions per resident and spend more than twice as much on prescription drugs," MAP notes

The Chamber and MAP are targeting two critical components of this issue--generic drugs and direct-to-consumer advertising guidelines.

Generic drugs--The Chamber partnered with Blue Cross Blue Shield of Michigan in a campaign to promote the use of generic equivalents when possible. The initial campaign resulted in a slight increase in the use of generic drugs among Chamber-member firms from the fourth quarter of 2000 to the fourth quarter 2001. The estimated savings totaled $45,000. While this may seem insignificant, it does demonstrate the savings potential. The Chamber will continue to promote the use of generic drugs whenever possible.

Advertising guidelines--As the volume of direct-to-consumer advertising continues to increase at unprecedented rates, MAP believes such promotions raise consumer safety issues, including inappropriate demand for, and use of, advertised drugs.

A report issued by the National Institute for Health Care Management Research and Education Foundation found that sales of the 50 drugs most heavily advertised to consumers in 2000 increased an aggregate 32 percent from 1999 to 2000, compared to 13.6 percent for all other prescription drugs.

The Chamber believes a balanced approach is needed to ensure that consumers have the information needed to make informed choices about advertised drugs. Therefore, as ads for prescription drugs continue to saturate the airwaves, MAP asserts that new guidance for pharmaceutical manufacturers on such advertising is needed. Additional guidelines should include criteria to ensure that such advertising clearly communicates to consumers the benefits and risks related to the advertised drug as well as notification that a generic equivalent may be available.

By increasing consumer awareness of the availability of generic drugs and stipulating that direct-to-consumer advertising contains appropriate information, all Michigan payers--public and private--will be able to better afford prescription medications.

Chamber health-care survey
As part of its campaign to reduce health-care costs
for employers, the Detroit Regional Chamber surveyed
its members earlier this year to determine how spiraling
costs are affecting their business and their employees.
Here are some of the findings:

What actions have you taken to compensate for rising
costs?

Changed plans                                39.9%
Reduced benefits                             32.8%
Increased co-pay                             32.0%
Changed carriers                             18.8%
Canceled other benefits                      10.3%
Dropped coverage                              3.8%
Other                                         3.5%

How has the rise in health-care costs affected your
business?

Paid lower wages or limited wage increases   45.2%
Provided fewer benefits                      36.4%
Hired fewer full-time employees              33.4%
Less competitive because of cost             29.3%
Increased price of goods or services sold    24.6%
Borrowed more because of reduced cash flow   14.4%
Other                                        13.2%

How have rising health-care costs affected your
employees?

Lower morale/satisfaction                    35.2%
Reduced coverage for family and dependents   32.0%
Increased financial hardship                 32.0%
Decreased productivity                        5.9%
Other                                        19.6%

Source: Detroit Regional Chamber. Survey was
conducted March 7, 2002, with 347 respondents.

For more information on the Chamber's health-care initiatives, contact Sebastian Wade, director of public policy, at [phone] or e-mail: [e-mail].