With prescription drug costs rising, employers and insurers are placing more of the burden on consumers, especially those with health conditions that require expensive brand-name drugs.

If you’re in an employer-sponsored or Medicare Part D plan with higher co-pays or co-insurance, you may have to pay thousands of dollars a year for life-saving prescription drugs.

Insurance companies typically classify prescription drugs into tiers based on the type of drug and the co-pay or co-insurance you are charged for a drug in that category. Some health insurance plans have only one tier, with one co-payment regardless of the type of drug, while others have two or three, with generic drugs typically having lower co-pays than brand name drugs.

More companies add Tier 4

In the past several years, more insurance companies are adding Tier 4 and in some cases Tier 5, which typically include biologics — biotechnology drugs with exceptionally high prices — and lifestyle drugs such as those for erectile dysfunction, baldness and obesity.

More than 75 percent of employees covered by health insurance with a prescription drug benefit have three or four payment tiers, and the percentage of workers covered facing Tier 4 cost-sharing plans has increased from 3 percent in 2004 to 7 percent in 2007, according to a survey of employer health benefits conducted in 2007 by the Kaiser Family Foundation and the Health Research and Educational Trust.

The impact? Devastating, especially for consumers with chronic or life-threatening illness, who are faced with the prospect of financial ruin.

“Cancer patients deserve the right to fight for their lives without risking their own and their families’ financial security,” says Christy Schmidt, senior director of policy at the American Cancer Society.

“A study by Kaiser and Harvard last year looked at issues of adequacy in health insurance for cancer patients and found that one in five who had insurance used all or most of their savings during the course of their treatment.”

With life spans increasing, one in three women and half of all men will get cancer in their lifetime, according to the American Cancer Society. Couple those statistics with other life-threatening and chronic conditions experienced by hundreds of thousands of Americans and you’ve got a recipe for a major problem. (To compare insurance policies and quotes, visit Insureme.com, a Bankrate company.)

The fear among health advocacy and consumer rights activists is that higher-tiered pricing will continue to make inroads in health insurance plans, transforming the newest medications — those that offer the best hope to many patients with cancer, AIDS, multiple sclerosis and other conditions — into costly burdens that are, in essence, unaffordable to all but the wealthy.

The impact

If you’re diagnosed with one of these conditions and have a health plan with Tier 4 prescription pricing, you could pay anywhere from hundreds to thousands of dollars a month for your medications. In addition, your health plan may cap your prescription benefit in terms of how much it will pay for over a month, a year or a lifetime of coverage.

Some consumers are encountering caps on the number of radiation and chemotherapy treatments they can receive in a month, leaving them with the choice of paying for needed treatments out of pocket or postponing them and risking their health.

For example, the biologics available for rheumatoid arthritis, which include Enbrel, Remicade and Humira, cost from $1,900 to $3,100 for a month’s treatment, according to data supplied by PharmacyChecker.com.

A Tier 4 plan may require you to pay 25 percent of the cost of the drug, up to a certain amount, such as $300 per month. Many patients with chronic or life-threatening illnesses require long-term treatment with these medications and many require multiple medications, some of which are used to treat side effects of others.

Virtually none of these drugs are available in generic form and you can’t save much, if anything, by shopping around. Pharmacy Checker, which has access to data from hundreds of U.S. and overseas pharmacies, found no variation in prices of the drugs for rheumatoid arthritis and little variation in other drugs for cancer and multiple sclerosis. Even when there is variation — such as in the price of Tarceva, a cancer drug — the low price is so high ($6,429) that most Tier 4 plans will cap the co-pay at a lower rate.

This leaves consumers with limited insurance or with Tier 4 prescription plans in a bind, as they may not be able to afford the medications they so desperately need.

“Consumers whose employers and health plans put these medications in a higher tier that requires a very high co-pay are facing an unacceptable situation,” says Steve Findlay of Consumer’s Union. “Companies and health insurance plans cannot shift the cost onto their workers and consumers, as the costs are much too high for even a middle-class or upper-middle-class family, and prohibitive for a low-income family.”

For lifestyle drugs, the issue is more a matter of choice than necessity, so costs will likely continue to rise as insurance companies and employers seek to keep a lid on costs.

If you use a lifestyle drug, it pays to shop around locally and online to get the best deal. According to Pharmacy Checker, shopping around can net you a 71 percent savings on the fertility drug Clomid (50mg, 30 pills), reducing the cost from $410 to $119. For Viagra (100mg, 20 pills), there is a 35 percent difference between the highest and lowest price found; for Propecia (1mg, 90 pills) for baldness, there was a 58 percent difference, from $330 to $138.

What you can do

There are a couple of steps you can take to stay up to date on what your prescription drug coverage is and to protect yourself in the event of an illness. The first is to educate yourself about your current plan — make sure you have the most current copy of what’s covered and ask your human resources department questions if there are aspects of your plan that you don’t understand.

The Department of Labor provides a guide to understanding your health plan, the federal Agency for Healthcare Research and Quality has an FAQ about health insurance and the National Association of Health Underwriters provides a Consumer Guide to Group Health Insurance.

If you notice changes in your plan that require you to pay more for your prescriptions, especially the addition of a Tier 4 that affects the medications you regularly take, find out what the impact is and make your concerns known.

“Go and make noise with your employer,” advises Dennis Bryan, a pharmacist in Chicago. “Explain how the higher co-pays are affecting you and see if they are willing to make changes.”

Some consumers who were covered by a Kaiser Permanente plan for federal government employees complained about a Tier 4 plan and the plan was changed, so complaining can have an effect.

Making sure you are fully insured in other ways can help prevent financial disaster in the event of high prescription drugs and health care costs. Disability insurance can provide a steady income in the event you don’t have group disability and supplemental insurance can cover out-of-pocket expenses for illnesses such as cancer.

Should illness strike, you’ll need to stay organized with your health insurance information and your prescription, hospital and treatment bills. If you are too ill to stay on top of this information yourself, enlist a family member or close friend to help you. If you don’t stay vigilant, you may find yourself unknowingly exceeding your coverage limits or getting treatment or medication that isn’t covered, says Schmidt.

Helpful resources

If you’re stuck in a tiered prescription drug plan or have hit your prescription drug ceiling, there is help available in the form of foundations and organizations that will either help you with your co-pays or co-insurance or assist you in finding help.

Here’s a list of Web sites and organizations that provide information about patient assistance programs:

Free Medicine Foundation: A nationwide patient advocacy program that links consumers to companies and organizations that provide free or no-cost prescriptions.

Needy Meds: This site provides a roundup of prescription drug assistance from state, local and federal governments as well as foundations, organizations and companies.

Here’s a list of organizations that directly provide financial help to patients who are uninsured or underinsured and need help with prescription drug co-pays, co-insurance or free drugs. Some of these organizations help people with specific illnesses while others are open to all.

  • Partnership for Prescription Assistance: A clearinghouse for prescription drug assistance programs, including 150 pharmaceutical companies that offer help, this organization will assess your need and connect you with companies and programs that can help.
  • Patient Access Network Foundation: Offers assistance with insurance co-pays, co-insurance and other out of pocket health care costs. Health conditions covered include breast cancer, chemotherapy induced anemia/neutropenia, colorectal cancer and other cancers and lymphomas.
  • Healthwell Foundation: A nonprofit foundation that provides co-payment and health insurance premium payments for individuals and families who earn no more than 400 percent of the federal poverty level and who suffer from conditions where funding is available.
  • Patient Advocate Foundation’s Co-Pay Relief Program: Covers co-pays and co-insurance for prescriptions taken for an eligible medical condition, including cancer, diabetes and macular degeneration.
  • Patient Services Incorporated: Provides financial assistance with co-pays and co-insurance for patients with certain medical conditions and also pays for medical supplies needed by patients with bleeding disorders.
  • Cancer Care: Provides limited financial assistant grants for transportation, child care and home care; also provides counseling and assistance for cancer patients.
  • National Organization for Rare Disorders: Helps patients pay for prescriptions they can’t afford as well as medications that are not yet on the market. Rare diseases covered include HIV/AIDs, Alzheimer’s disease, multiple sclerosis and Parkinson’s disease.
  • Caring Voice Coalition: Offers assistance in paying for prescription drugs to patients with pulmonary hypertension, idiopathic pulmonary fibrosis or Alpha 1.
  • Chronic Disease Fund: Offers assistance with co-pays and co-insurance for drugs needed by patients with certain chronic conditions. Patients who have no drug insurance may get free medications as long as they meet income, asset and medical condition guidelines.

More From Bankrate