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Press Release

AmeriHealth Benefits Customers with Sweeping Changes to Prescription Drug Program

Local health insurer announces FutureScriptsTM, also gives members a break on generic drugs with first-ever three-month "No Pay Copay" waiver

Mt. Laurel, NJ - October 11, 2006 - AmeriHealth today announced sweeping changes to its approach to managing prescription drug benefits that are expected to provide approximately $9 million in savings to AmeriHealth's group customers in New Jersey, Pennsylvania, and Delaware over the next five years. Paramount among these changes is a partnership with FutureScriptsTM, a new pharmacy benefits management company, that will help employers manage rising prescription drug costs without sacrificing quality coverage.

The changes include a three-month program that makes generic drugs available for no copayment; quicker access to new FDA-approved drugs, including less costly generic drugs; and superior reporting on pharmacy and medical benefit usage to help group customers better manage these expenses. In addition, AmeriHealth members whose employers are based in Pennsylvania and Delaware can now access self-injectable drugs through their local pharmacies.

"We listened to our customers' concerns about increasing pharmacy costs and responded by dramatically changing our prescription drug program to hold down expenses and still provide quality care and comprehensive prescription coverage," said Judith L. Roman, President and CEO of AmeriHealth Insurance Company of New Jersey. "We understand the importance of making good coverage affordable to help employers and members save on health care expenses, and help our members to get the drugs they need to prevent and treat illnesses and avoid more costly medical problems."

AmeriHealth's significantly enhanced approach to managing pharmacy benefits is one of a host of customer-focused, cost saving initiatives that will be rolled out following a recent in-depth study by AmeriHealth of its business and markets.

AmeriHealth is working with the new pharmacy benefits management company, FutureScripts, to provide more cost effective, quality drug benefits for its employer group customers and members. FutureScripts will negotiate drug pricing and develop rates for generics directly with its comprehensive network of more than 56,000 retail pharmacies nationwide, including all major chains. FutureScripts will also negotiate directly with pharmaceutical manufacturers for discounts on brand drugs. Finally, to help effectively manage the cost of pharmacy coverage, FutureScripts will encourage the appropriate use of lower cost generics and cost effective brand name drugs.

For all members who have prescription drug benefits with AmeriHealth, other than those enrolled in Medicare Part D, the transition to FutureScripts occurred October 1, 2006. The transition for Medicare Part D members will occur on January 1, 2007. AmeriHealth is sending members who have AmeriHealth pharmacy benefits new ID cards this month.

The switch to FutureScripts will not change members' current benefit coverage provided under existing contracts.

Other benefits of the significant changes AmeriHealth is making to its approach to managing prescription drug benefits include:

  • Faster access to new, less costly generics and brand name drugs recently approved by the U.S. Food and Drug Administration (FDA). AmeriHealth will update its list of approved drugs every quarter.
  • Enhanced reporting tools for employers to explain what's driving their pharmacy expenses and how to provide quality coverage while containing costs.

In addition, AmeriHealth members whose employers are based in Pennsylvania and Delaware have more access to lower cost self-injectable medications through pharmacy benefits. While most often used in the last decade to treat cancer or rare inherited diseases, injectable drugs are now used to treat more common conditions, such as migraines, psoriasis and arthritis. Traditionally, these medications were available only through medical benefits.

To help introduce these sweeping changes, AmeriHealth will offer members genuine savings on out-of-pocket prescription drug costs by waiving copayments/coinsurance for new prescriptions or refills for covered generics during the first quarter of 2007. AmeriHealth's "No Pay Copay" promotion will facilitate the long-term increased use of generics, which will favorably impact future premiums for customers.

AmeriHealth expects to save group customers roughly $9 million over the next five years as FutureScripts and the other elements of the pharmacy initiative lower pharmacy drug costs for customers, thus reducing premium increases.

Facts About Drug Cost Trends

AmeriHealth is enhancing its drug program to help customers better manage prescription drug cost trends that have been fueling premium increases. According to the Henry J. Kaiser Family Foundation's June 2006 report on prescription drug trends in the United States:

  • Prescription drug purchases increased 71 percent, compared to a population growth of 9 percent, during the period from 1994 to 2005.
  • Retail prescription prices increased an average of 8.3 percent a year, more than triple the annual inflation rate of 2.5 percent, between 1994 and 2005.
  • Drug spending increased by an average of 10 percent every year in the last five years.

Nationwide, prescription drug costs accounted for 16 cents of the premium dollar in 2005, according to the PricewaterhouseCoopers 2006 report, The Factors Fueling Rising Health Care Costs.

"Given the rising cost and use of drugs, managing prescription drug benefits effectively is one of the most important services a health insurer can provide its customers," said Dick Tewksbury, client leader of Trion, one of the nation's largest benefits consulting firms. "If a health insurer does it right, the consumer saves money and has ready access to new and less expensive generic drugs — which leads to better health."

INTRODUCING "NO PAY COPAY"

To help introduce the sweeping changes to its approach to managing prescription drug benefits, AmeriHealth will waive copays for members for generics for three months. This first-ever promotion, called "No Pay Copay," will waive copayments/coinsurance for new prescriptions or refills for covered generics during the first quarter of 2007. The goal is to increase the appropriate long-term use of generics, which will favorably influence future premiums for customers.

"We want our members to understand that, where appropriate, generics are a safe, effective, less expensive alternative to brand name drugs," said Roman. "Not only will customers be able to reduce their immediate out-of-pocket expenses by using generic drugs, but they may be able to help bring down their long-term costs as well. Encouraging customers to use generics through our 'No Pay Copay' promotion will bring down prescription drug costs — costs that feed rising medical costs which drive premium increases."

Dr. Allan B. Goldstein, AmeriHealth Insurance Company of New Jersey's vice president and regional medical director said, "This 'No Pay Copay' waiver is an opportunity for our members to talk to their physicians and pharmacists about whether switching to a generic drug might be an appropriate option for them. Generic drugs can provide the same therapeutic benefits as their brand-name counterparts, but at far less cost. And generics meet the same rigorous health and safety standards set by the FDA as brand name drugs."

Indistinguishable in composition and quality to their brand name counterparts, generic drugs may be used interchangeably with brand name drugs to treat the identical health conditions. Generics, however, have significantly lower development and marketing costs than brand name drugs and, as a result, will often cost a fraction of their brand name equivalents. According to the Congressional Budget Office, generic drugs save consumers an estimated $8 to $10 billion a year at retail pharmacies with no sacrifice in quality.

AmeriHealth's "No Pay Copay" waiver is effective January 1, 2007 through March 31, 2007 for new prescriptions or refills at a participating pharmacy or through mail order. Most members with AmeriHealth pharmacy benefits are eligible for the waiver. Not eligible are members with Medicare Part D drug plans or integrated prescription drug coverage such as Major Medical, Comprehensive Major Medical (CMM) and AmeriHealth PPO HSA-Qualified.

MORE ABOUT THE AMERIHEALTH PHARMACY INITIATIVE

In addition to promoting generics using the "No Pay Copay" promotion, AmeriHealth will also enhance its pharmacy benefits in these ways:

Continuous Updating Of Approved Drugs

By updating its list of approved drugs, or formulary, every quarter versus semi-annually, AmeriHealth will provide customers with more rapid access to new, less costly generics and to brand drugs newly approved by the FDA. When a new generic drug appears on the market, AmeriHealth will add it to the formulary as quickly as possible and cover it at the lowest copay. Likewise, the brand equivalent will be removed from the formulary and will be covered at the highest copay. After a review by a committee of primarily independent physicians and pharmacists, new brand drugs approved by the FDA in categories covered by AmeriHealth drug plans will be added quarterly and covered at higher copays — either as a preferred drug covered at a mid-level copay or as a non-preferred drug covered at the highest copay. Some drugs may require prior authorization by a physician.

Superior Reporting on Pharmacy/Medical Benefit Usage

AmeriHealth will provide group customers with detailed reporting about the usage of both medical and pharmacy benefits, which will allow employers to analyze and better manage these expenses. This is an important service because the cost of employee health benefits constitute on average almost 25 percent of employee benefits, according to the U.S. Bureau of Labor Statistics.

Injectable Drug Strategy

Since October 1, 2006, AmeriHealth members enrolled in a Select Drug Benefit program and whose employers are based in Pennsylvania and Delaware, now have the convenience of being able to get many self-injectable medications at their local pharmacies, while employer groups benefit from the discounts that FutureScripts has negotiated. Previously, many self-injectable drugs were covered only under medical benefits.

Injectable medications, which are increasing in number, popularity and cost, are frequently coming into the market. These medications are often very costly per dose. Even for injectables with a lower cost per injection, a course of injectable drug treatment may cost thousands of dollars. Until recently, medical professionals in hospitals or physician offices administered most injectable drugs. Now, patients may administer some injectable medications, known as self-injectables, at home with careful monitoring by a doctor.

About AmeriHealth
AmeriHealth, Inc., a growing group of health care plans with its base in the states of New Jersey, Pennsylvania, and Delaware has grown to more than 265,000 members since its inception in 1995.

AmeriHealth companies have been recognized for their commitment to providing high quality products. AmeriHealth HMO of New Jersey and Delaware's AmeriHealth HMO have received the highest possible accreditation by the national leader in HMO quality evaluation. The National Committee for Quality Assurance (NCQA) has awarded both HMOs "Excellent" status for meeting its rigorous evaluation standards.