So-called lifestyle drugs are surrounded by debate—from what the definition should be, to whether they should be prescribed, to who should pay for them. With the cost of extended healthcare continuing to rise much faster than general inflation, and with drug costs comprising the majority of extended healthcare costs, more employers are concerned to spend limited healthcare dollars where they will do the greatest good. Lifestyle drugs—often developed for “cosmetic” or “discretionary” purposes—are often regarded as a low priority.

Certainly the results of an online survey conducted in April 2007 by Hewitt Associates indicate that many of the 200 respondent organizations are limiting their coverage of lifestyle drugs.

The conditions most frequently excluded from drug formularies are obesity, erectile dysfunction, male pattern baldness, infertility and smoking cessation, so the survey asked about coverage for lifestyle drugs to treat these conditions. The survey did not ask about coverage for oral contraceptives, given that the vast majority of organizations cover their cost, even though some would also classify them as lifestyle drugs.

By and large, it seems that employers’ willingness to cover lifestyle drugs is dependent on there being a connection to improving employee health. More than half(68%)of organizations covered smoking cessation drugs, while very few(5%)paid for remedies for male pattern baldness. With respect to other lifestyle drugs, 52% of employers provided coverage for infertility drugs, 33% covered drugs to treat obesity, and 26% covered erectile dysfunction medication.

In addition to canvassing employers on current coverage, the survey posed questions around plans for the future. Surprisingly, very few employers planned to discontinue coverage for lifestyle drugs. The following factors may be influencing their decision:

  • Covering lifestyle drugs may be part of the organization’s overall approach to healthcare. Employers that have a comprehensive philosophy when it comes to doing what they can to encourage employee health and wellbeing often cover lifestyle drugs. Some Canadian employers—unlike those in the U.S.—are also reluctant to interfere with the doctor/patient relationship. If a physician prescribes a treatment, employers don’t want to become involved in a debate as to whether it is “medically necessary.”
  • If only a small proportion of employees currently use these drugs, employers won’t experience huge costs for this coverage and therefore there is limited incentive to reduce coverage.
  • Cost control measures for lifestyle drugs, such as caps on coverage, may already be in place. Some survey respondents have imposed limitations on the amount of coverage. An annual maximum was commonly placed on coverage for obesity drugs($1,325)and erectile dysfunction drugs($1,100). Coverage for lifestyle drugs for infertility and to stop smoking was subject to a lifetime dollar maximum—on average $5,000 for drugs to treat infertility and $825 for smoking cessation medications.
  • Employers may be give employees choice with respect to lifestyle drug coverage. For example, according to survey respondents, coverage for male pattern baldness drugs was most commonly limited by funds available in a health spending account or covered in flexible benefit plan options requiring employee contributions.
  • Employees may be sharing in the cost of lifestyle drugs through greater co-insurance as part of a two-tier formulary structure.

Given that there are ways to control the cost of these drugs and there are relatively few organizations covering them, should employers that are not currently providing coverage rethink their approach? In an increasingly tight labour market, coverage for lifestyle drugs may be a differentiator.

If the decision is made to provide or increase lifestyle drug coverage, it is in everyone’s—employers, insurers and employees—best interests to ensure that there is clarity around what is and isn’t covered. If, for instance, coverage is allowed in some, but not all, circumstances, those situations and the evidence required to establish them must be clearly set out. Also, the definition of “lifestyle” is evolving and standard treatment protocols change—for example, new medical guidelines for treating obesity have been published in the last month that recommend the use of anti-obesity drugs in specified circumstances. These changes make it important to revisit policy coverage regularly to see whether benefit plans also need modification.

In deciding whether to provide coverage for lifestyle drugs, employers need to balance cost—which may be kept relatively low—with employee reaction. Offering lifestyle drug coverage may have some direct or indirect long-term impact on the health of employees. It may also provide an added incentive for employees to join or stay with an organization. While coverage won’t be a determining factor, it does send a message to workers that the employer is concerned to do all it can to improve their health, productivity and morale.

If you’d like to comment on this story, click here.

For more about our Online Expert Panel, click here.