Local 237’s Welfare Fund is one of the best in the city, and now it’s even better. Thanks to excellent management of the Fund’s prescription drug plan since it took over last August, HIP Health Plan of New York was able to save $870,000 of members' money, which has been reinvested in the Fund to make our two-year reserve that much stronger.

The rebate is a result of HIP’s review of how the union’s active and retired members make use of HIP’s drug formulary, even though they are not required to do so.

Local 237 President Carl Haynes, who is also chairman of the Welfare Fund for active members, and the Retirees’ Benefits Fund for retirees, defined the Funds’ guiding principle. “In these difficult times, we have to manage the Funds prudently and look for opportunities to make them grow,” said Haynes. “It’s our members’ money, and whatever we save through our contract with HIP stays in our reserve.”

While drug costs continue to soar and other unions are struggling to keep their welfare funds afloat, Local 237’s hefty bonus conserves assets and confirms that the Welfare Fund’s Board of Trustees, a separate trust from the union’s, made a wise choice in selecting HIP’s proposal over those of several other bids to manage pharmacy benefits.

“We saw immediate savings,” said Joel Sosinsky, one of the Fund’s Trustees who participated in the selection process, “and HIP assured the union it would analyze Local 237’s needs and work with pharmaceutical companies to negotiate rebates. HIP came through on its promise.”

“We are proud of the analysis we did and subsequent negotiations with pharmaceutical manufacturers that made a substantial rebate possible for the Welfare Funds of Teamsters Local 237,” said Anthony L. Watson, chairman and chief executive of HIP, which will continue to negotiate agreements with drug manufacturers based on its review of members’ utilization patterns.

At about $30 million per year, prescription drug cost is the Welfare Fund’s biggest expense. In 1964, when the Fund was established, prescription drugs cost only $100,000 a year. For the past few years, however, in addition to rising drug prices, consumers are using more prescriptions at younger ages and for more conditions, and substituting newer, more expensive medications for established products, according to a report posted on the AFL-CIO website at www.aflcio.org. As a result, pharmaceutical spending increased by 17.4 percent annually between 1999 and 2000, and another 16 percent from 2000 to 2001.

By working closely to monitor our members’ needs with HIP, the Fund has been able to maintain lower co-pays for prescription drugs than most other unions. Ask any union worker outside of Local 237 what their co-pay is, and you’ll be shocked to hear anywhere from $15 to $35 per prescription, compared with $3 to $5 for Local 237 members. In addition, the annual spending cap for each member is a generous $10,000 per year.

The Fund’s mail-order program provides up to a 90-day supply of prescription drugs with a zero copayment, excluding PICA medications, saving members the cost of multiple co-pays each time they fill a prescription for a chronic condition or other ailment that may last a long time. Members can have a larger supply of a prescription drug mailed directly to their homes at no cost when it is prescribed by a doctor.

The Fund also offers five brand-name prescription drugs with no copayment as long as they are prescribed by a doctor. These drugs are Zyrtec, Lipitor, Actonel, Prevacid and Celebrex. The last four drugs are on the Top 30 list of brand-name drugs used by the elderly, which is published by Families USA. The Top 30 list includes the percent price change for each drug from 2001 to 2004. Lipitor’s price, for example, rose 27 percent; Celebrex rose 23.7 percent, and Prevacid 19.3 percent. Meanwhile, the Welfare Fund has been able to absorb the price increases and remain strong and stable through sound fiscal practices.

Benefits such as prescriptions, dental, disability and optical have become major pieces in the healthcare package of Local 237 members and their families. “These benefits have grown considerably over the 40 years since the fund was founded,” says Welfare Fund Director Paul Juergensen, who has the fiduciary responsibility to protect the fund from abuse and fraud. “The fund and its trustees are constantly searching for ways to improve the program while preserving assets. Ours is the best plan for providing prescription drugs at minimum costs.”

Skyrocketing drug prices show no signs of stabilizing any time soon, and the issue of access to affordable drugs affects everyone. The Republican administration’s prescription-drug reforms are complex at best and deeply flawed when it comes to protecting low-income families and retirees from increasing drug costs that outpace inflation.

Under the 2003 Medicare law, the U.S. government is banned from negotiating prescription prices directly with manufacturers and can do nothing to rein in soaring prices except provide a $600 subsidy to eligible low-income beneficiaries through a confusing assortment of drug-discount cards. The discounts, which range from 10 percent to 25 percent, often can’t compete with savings through online pharmacies or Canada, where many consumers are traveling to shop for prescription drug bargains, according to the Alliance for Retired Americans.

“HIP understands how important it is to get the most bang for the buck,” says Sosinksky. “It’s the members’ money, and the Fund takes seriously its obligation to provide benefits cost efficiently.”

As a partner in managing prescription drug benefits to offer maximum coverage at minimal cost, HIP has proven it can cover members’ needs while containing drug costs, saving money and strengthening our reserve for the future.