Benefits Plans - Prescription Drug Plan: Prescription Drug Plan Newsletter

Page last updated: Thursday, 14-Jun-2012 15:34:40 EDT

Fall 2003


  1. Fall 2003 — Prescription Drug Plan Newsletter
  2. New Drug Releases
  3. Over-the-Counter Medications Approved for FSA Reimbursement
  4. Plan Updates
  5. Web Site Tools — Formulary, Preferred Drug List (PDL) and Pricing
  6. Mail Order Pharmacy
  7. Prior Authorization (PA) and Appeals
  8. How to Lower Your Co-Pays
  9. General Reminders
  10. Customer Satisfaction Survey

Click the link below to download a printable version of the newsletter.

1. Fall 2003 — Prescription Drug Plan Newsletter

This is the second edition of the U-M Prescription Drug Plan Newsletter. This newsletter is being sent to all participants in the University of Michigan prescription drug plan. Members of the University prescription drug plan will also receive an updated 2004 Prescription Drug Plan booklet in December 2003.

In this Fall 2003 issue, we are pleased to provide you with information that includes approval of new drugs to our plan, new over-the-counter (OTC) medications, how to find the co-pay for any drug, and helpful tips for vacation or other travel medication needs. Each section includes a link where you can find additional details and the most current updates for each topic. Please email your comments or questions to


2. New Drug Releases

Since January 1, 2003, U-M has approved over 25 new drugs for the plan. In September 2003, the antidepressant Paxil became available in a generic version with considerable co-pay savings for members, and Prilosec was approved by the FDA for over-the-counter (OTC) purchase. The complete list of new drug releases from January to September, 2003 and their co-pay tier levels is below and can also be found at:


3. Over-the-Counter Medications Approved for FSA Reimbursement

The Treasury Department and the Internal Revenue Service (IRS) recently ruled that certain non-prescription drug expenses may be reimbursed from pre-tax health care dollars contributed by an employee to a Health Care Flexible Spending Account (FSA).

Faculty and staff members currently enrolled in a Health Care FSA may take advantage of the expansion of the eligible expenses immediately. Eligible employees not currently participating should consider this new information when deciding on FSA participation during this year’s Open Enrollment period (October 1 – 24). U-M will change its current FSA eligible expenses list to include over-the-counter (OTC) medications, including sales tax, purchased on or after September 3, 2003. The Benefits Office will communicate further changes or restrictions as they develop.

By using pre-tax dollars in a U-M Health Care Flexible Spending Account, participants can save considerable out-of-pocket cost — up to one-third net savings depending upon their tax bracket. The claim requirement will be a register receipt with date of purchase, product name and price. U-M faculty and staff members can enroll in or renew their FSA enrollment during Open Enrollment (October 1-24).

The new IRS ruling (Rev. Rul. 2003 – 102) allows reimbursement for over-the-counter medications, tax-free (Federal) when the OTC product is used for medical care purposes.

The new ruling addresses the increased number of drugs available on an over-the-counter basis and provides consumers savings on some drugs that were formerly covered under a prescription drug plan. Examples of commonly purchased over-the-counter medications that now qualify include, but are not limited to:

  • Claritin, loratadine, and other allergy medicines/eye drops
  • PrilosecOTC and other OTC heart burn medications (e.g., Zantac, Tagamet, and some antacids)
  • Over-the-counter medications for yeast infections, contraceptive products with a drug ingredient
  • Smoking cessation products, dental treatment (e.g., Orabase B)
  • Pain relievers and sleep aids (e.g., acetaminophen, ibuprofen, diphenhydramine)
  • Cold medicines, cough syrups (e.g., Nyquil, Triaminic, Pedia-Care)
  • Topical antibiotics (e.g., Triple Antibiotic Ointment, Bacitracin)
  • Topical Steroids (e.g., hydrocortisone cream)

Reimbursement is not permitted for OTC products that are not medicines, drugs or merely benefit the general health of an FSA participant. The following are examples of items that are not included:

  • Cosmetic products (e.g., face creams, etc.)
  • Toiletry products (e.g., toothpaste, mouthwash, deodorant, shampoo, etc.)
  • Dietary Supplements (e.g., vitamins, fiber, minerals, and nutritional supplements such as Ensure, Glucerna, Slim Fast, etc.)
  • Herbal supplements

More information on FSAs and reimbursement-eligible expenses can be found on the Benefits Office Web site at:, and from SHPS, the U-M FSA claims processor. Visit the SHPS Web site at, or call SHPS Customer Service toll free at 1-800-678-6684.


4. Plan Updates

Refill Limits – During the transition period January 1, 2003 to December 31, 2003, the drug plan allows refills when 50% of the medication has been used. Effective January 1, 2004, all retail prescriptions will return to the required 75% used before they can be refilled. For example: 30-day supply = refill on day 23, or 34-day supply = refill on day 26. Mail order prescription refills will require 66% (or 2 months for a 90-day supply) before refills are permitted.

Dose Optimization Program – Several new drugs were added to the Dose Optimization Program as of September 1, 2003. When a medication is on this list, it indicates that the doctor should consider if a patient can be safely switched to one single daily dose instead of multiple daily doses. Dose optimization results in significant cost savings to drug plan participants and to the University by moderating future prescription co-pays and drug plan premiums. The pharmacist is notified about the recommended dose change so he or she can discuss the possibility of a dose change with your physician. More information is available at:

OTC and Other Drug Exclusions – On August 31, 2003 the U-M Pharmacy Benefits Oversight Committee approved the following change to the U-M prescription drug plan exclusion list:

Over-the-counter (OTC) medications and any prescription medication that contains the same active ingredient(s) at the same strength as an existing over-the-counter medication.

PrilosecOTC – One of U-M’s most utilized drug classes will see significant market changes beginning in September 2003. Prilosec has been approved by the FDA for over-the-counter (OTC) use in the 20mg dose. The new product will be marketed as PrilosecOTC. As a result of the change, U-M has revised its Preferred Drug List (PDL) and tier co-pay placement for Proton Pump Inhibitor (PPI) drugs.

  • Prilosec and omeprazole 20mg, as prescriptions, will be excluded from the U-M drug plan, effective 11/1/03. Members should consult with their physicians about changing to PrilosecOTC. The current PrilosecOTC retail price is approximately $17 per one-month supply.
  • Prilosec (10mg and 40mg dose) and Nexium will be moved to the 3rd tier co-pay at $24. Members using Prilosec and Nexium will be notified by mail in October.
  • Aciphex will be moved from the 3rd tier level at a $24 co-pay to the 2-tier level at a $14 co-pay and provide additional cost savings to members.
Facts About Your Prescription Drug Plan
Number of Prescriptions
(1/1/03 to 6/30/03):
415,000, of which approximately 6% are filled through the AdvanceRx prescription drug mail-order pharmacy service.
Average Total Cost: $61.08, with an average member share of
$11.30/Rx, which represents 18.5% of the total cost.
Average Single-Source Brand Drug Cost per Claim: $96.52
Average Multi-Source Brand Drugs Cost per Claim: $42.11
Average Generic Drug Cost per claim: $21.90. Generics represent 45.9% of all prescriptions filled.
Percentage of 3rd Tier Prescriptions ($24 co-pay): 9%
Top 5 Drugs by Volume: Lipitor (cholesterol-lowering)
Prilosec and omeprazole (acid reflux)
Wellbutrin SR and Zoloft (anti-depressants)
Source: AdvancePCS 2003 Clinical Report


5. Web Site Tools — Formulary, Preferred Drug List (PDL), and Pricing

The U-M Formulary and the U-M Preferred Drug List (PDL) were updated on July 1, 2003, and published on the joint U-M/AdvancePCS Web site and the U-M Benefits Office Web site. The U-M formulary is a broad listing of drugs by category, with drugs listed by generic and brand name. It allows you to search and find medications and their respective tier levels. The U-M Preferred Drug List (PDL) is a useful guide of select therapeutic categories that provide the “best value” drugs for members and physicians to choose. Members may access these documents at either: or

AdvancePCS has implemented new features on the AdvancePCS/U-M Web site that allow you to:
1) Search for any drug and find out your specific co-pay or coinsurance amount
2) Refill home delivery prescriptions and check the status of your order
3) View your retail and mail prescription history
4) Identify and take action to achieve potential money-saving opportunities (via generic, preferred drug, and home delivery)
5) Link to information about medication you are taking

The Prescription Manager function helps evaluate your cost at retail or when you use the AdvanceRx mail order pharmacy. You will need to log in at the Web site registration area, go to “Look Up Drug Coverage and Pricing”, and then click on “Search Your Formulary” to get the drug-pricing feature. Please visit the AdvancePCS Web site at: for more information.


6. Mail Order Pharmacy continues to provide the convenience of mail-order pharmacy service to members as a means to receive lower co-pays and larger supplies of medications. All mail order prescriptions are processed and returned to you within 14 days (10 days for refills). These turn around times apply to prescriptions that do not require additional information or intervention. In October 2003, AdvancePCS will send out information about using the mail order pharmacy to those who have maintenance medications filled at a retail pharmacy. For a complete understanding of when and how to use the AdvancePCS mail order pharmacy, see

First-time mail order users may contact AdvancePCS at 1-800-258-1247 for help enrolling in the AdvanceRx mail order pharmacy over the phone through the “Fast Start” service. Please look for additional information on this program from AdvancePCS.

Improvement — Beginning October 18th, will be changing its bottle size from 200cc bottles to 120cc bottles. AdvancePCS implemented this change due to member feedback indicating that they would prefer smaller bottles for ease of storing and transporting medications.

AdvancePCS identified a small number of members whose prescriptions will now be shipped in two or more bottles as a result of the change to smaller bottles. AdvancePCS will be sending a letter to those members and including an insert in each order for several weeks following the change.


7. Prior Authorization (PA) and Appeals

There are several drug classifications that require Prior Authorization (PA). These drugs are on the PA list due to safety and cost concerns. The plan requires that use of the drug meets clinical criteria and follows acceptable, evidence-based treatment guidelines. If your drug requires a PA, your physician must call AdvancePCS at 1-800-294-5979 before the medication can be approved. Drugs on the PA list can be found at:

PPI Prior Authorization at 120 days

Members on any PPI drug (Aciphex, Nexium, omeprazole, Prevacid, or Prilosec) should be aware that after 120 days of PPI use per calendar year, further supplies must be approved by AdvancePCS. The member’s physician should call AdvancePCS at 1-800-294-5979 for a prior authorization each year. FDA guidelines, for most indications, approve use of PPI therapy for short-term therapy use only; thereafter the member must demonstrate they meet clinical guidelines for continued therapy. Physicians will discuss with AdvancePCS the patient status and need for continued PPI therapy. Use of an H2 receptor antagonist, such as ranitidine, may provide adequate therapy and would not be subject to this restriction. Members can discuss this as an option with their physicians, as it is not appropriate for everyone.


8. How to Lower Your Co-Pays

  1. Ask your physician or pharmacist if a generic alternative is available, which will result in a lower co-pay.
  2. Ask your physician if a “preferred” drug is available.
  3. Order your maintenance medications from mail order…you can receive up to a 90-day (3-month) supply for only two (2) times the co-pay and save one months’ co-pay every time you use mail order.


9. General Reminders

Travel Supplies
If you plan on traveling and need an additional one-month supply of medication, call AdvancePCS toll free at 1-866-485-0268 and ask for a “vacation override.” If you are leaving the U.S. for more than 90 days and need additional supplies, the HR/Payroll Service Center at 734-615-2000 or 1-866-647-7657 (toll free).

Paper Claims
Members should always use the AdvancePCS card for prescription drugs whenever possible. For exception situations, paper claims can be submitted to AdvancePCS. If you use a non-network pharmacy you will only be reimbursed at the contracted in-network pharmacy rate. Paper claims have a higher cost to U-M and to the member. To receive maximum savings, we encourage use of your AdvancePCS ID card whenever possible. We encourage members to call AdvancePCS Member Services at 1-866-485-0268 with any questions or concerns.


10. Customer Satisfaction Survey

Your opinion regarding your experience with AdvancePCS is important to the Benefits Office. In January 2004, we will be conducting a random customer satisfaction survey with 5,000 members who have used AdvancePCS retail or mail-order services. Please watch for the survey and participate. Your responses will be anonymous and confidential, and will help us continually improve the service provided by AdvancePCS.


The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.