NEW SCOTLAND — The decision made last spring by the Voorheesville Central School District to increase what it pays every month for employee and retiree prescription-drug coverage has so far steadied a once volatile budget line that blasted a half-million-dollar hole in the district’s finances, leading to cuts in staff and programs in this year’s school budget — some of which have since been restored. 

During the 2018-19 school year, the district’s self-funded prescription-drug plan, after years with barely any increase, saw a 35-percent spike in costs, which led to deep cuts to balance this year’s school budget. 

In an effort to stave off a repeat performance, the district this past spring made the decision to increase its prescription-drug premium payments from $125 per employee per month to $169 per employee per month, a move that has since allowed Voorheesville to slowly build back up its prescription-drug fund-balance reserve. The increases went into effect on July 1. 

“They’ve stabilized,” Francis Rielly, Voorheesville’s assistant superintendent of finance and operations, said of prescription-drug costs. 

However, Rielly is also clear that any stabilization in costs is due the district increasing its monthly premium payments, which at $169 per employee per month is still well below the average monthly premiums paid by other members of the Capital Area Schools Health Insurance Consortium, a health-insurance trust made up of 19 school districts in the Capital Region, where the average premium paid by consortium members is $207 per employee per month, Rielly said. 

Premium costs are split between the employee and the district, and are dependent on which bargaining unit represents the employee — as well as a few other factors, Rielly said; for example, teachers pay for 18 percent of their prescription-drug premium. 

With premiums now covering claims, the district has slowly begun to build a surplus, Rielly said. In the past few months, the surplus has added up to around $30,000 to $40,000; currently, there’s about $690,000 in the reserve. 

Voorheesville ended its 2019 fiscal year with about $330,000 in its prescription-drug fund-balance reserve. At the start of the new fiscal year, July 1, the school district was able to move $300,000 from the end-of-fiscal-year fund balance to the prescription-drug fund-balance reserve, giving the district a total reserve of about $630,000 to start the new school year. 

Last year’s spike in costs was due in large part to the exorbitant price the district had been paying for biologics, which are not made like typical drugs. Biologics are derived from lab-grown living material — a sharp contrast from conventional drugs which are “chemically synthesized” and “have a well-defined structure and can be thoroughly verified,” according to the United States Food and Drug Administration.

The root of Voorheesville’s prescription-drug problem is that the district is enrolled in a drug plan that has no mechanism for containing costs; whatever the price of the drug, the district has to pay it. 

Voorheesville pays for biologic maintenance drugs, meaning the person taking the drug is likely to be on it — if not in perpetuity — for a very long time, Rielly said. In addition to the cost increases brought on by biologics, the district is also paying for brand-name drugs for which there are generic equivalents available, but, because of the way the district’s plan is set up, Voorheesville continues to pay through the nose for brand-name drugs.

Former Superintendent Brian Hunt told The Enterprise in March that, including current employees, retirees, and family members, the school district had been providing prescription-drug benefits to approximately 680 individuals, of which just 20 were specialty-drug users.

Rielly said one “tell-tale sign” that will affect whether or not prescription-drug costs will continue to be a problem for the district will be when November’s bills come due. 

Voorheesville’s billing cycle is set up such that the district receives three bills for every two employee pay periods, so, in the months where claims exceed premiums, the reserve fund takes a hit — like in November 2018.

Last November, using rough numbers, Rielly said that the district took in about $110,000 in premiums but spent about $260,000 covering claims. 

“Those are the months that kind of make you nervous because you know that your premiums aren’t going to cover that extra two weeks of claims,” he said.

Once Voorheesville gets through its November billing cycle, Rielly thinks the district should be able to forecast with more confidence its prescription-drug costs for the rest of the year. But, he said, it’s difficult to project if someone is going to get sick and be put on a drug that costs $10,000 per month. 

“You’re at the mercy of health issues,” Rielly said. 

This past summer, Interim Superintendent Mark Doody suggested one way to generate more immediate savings for the district was increased use of CanaRx, a Canadian drug-distribution company, which sells lower-cost prescription drugs to both public and private employer-provided health-care programs. Doody said in July the goal was to make staff more aware of the CanaRx option at the start of the new school year. 

Rielly told The Enterprise this week that some Voorheesville employees had begun to take advantage of the CanaRx program, but he did not have those numbers available at the time of the interview. 

Locally, the city of Albany as well as Schenectady and Saratoga counties offer current and former municipal employees the option to purchase lower-cost medications through CanaRx. 

In 2004, Schenectady became the first county in the state with a CanaRx program. As of 2017, Schenectady’s overall prescription-drug costs were about 10-percent lower than they were in 2001, according to the county. In contrast, Voorheesville’s health-insurance costs went from about $1.2 million in 2001-02 to almost $5 million this year, an increase of about 315 percent. 

Had Schenectady not enrolled with CanaRx, then, between 2004 and 2015, according to the county, total prescription costs would have increased from about $4.2 million to about $14.8 million. Actual prescription-drug costs for Schenectady County in 2015 were about $3.3 million.