Glossary

This glossary of prescription drug and related terms is to help you learn more about your Hyde Rx prescription benefit program and how to achieve the lowest, clinically effective cost for your prescription drugs. We welcome your requests and suggestions for additions to this list.

Adjudication
Processing a pharmacy claim.

AWP
The average wholesale price (AWP) is a standard cost used by many pharmacies, pharmacy benefit managers (PBMs) and others for establishing the prices actually charged for a prescription drug.

Benefits Package
The health services and products that you use and which your employer or insurance company will pay all or a portion. These benefits include conditions and limitations, and may include patient incentives for prudent use.

Brand Name Drug
A prescription drug that is sold under a trademarked name. An equivalent generic drug may or may not be available at lower cost, depending upon whether the patent on the brand name drug has expired.

Calendar Year
January 1 through December 31 of any given year. This period is usually used to calculate deductibles and out-of-pocket maximums to be paid by a member.

Carrier
The provider of a member's health benefits. It may be an insurance company, HMO, or the employer itself, usually in concert with a TPA (third party administrator) and PBM (pharmacy benefits manager) such as Hyde Rx.

Chronic Disease
A disease or condition which is long lasting in nature, and often not subject to complete cure. Chronic disease is contrasted with acute disease, which tends to be short term in nature.

Chronic Disease Medication (see Maintenance Drug)

Claim
A request for payment from a pharmacy or member for a prescription drug which has been dispensed to the member under a drug benefit plan. Hyde Rx processes all drug claims for its clients and members.

COB or Coordination of benefits
COB is the process by which a Carrier seeks to reduce the member's and/or client's cost by taking advantage of a member's entitlement to benefits from another plan or carrier. This is most commonly the case when a family member has primary coverage through another employer. Member assistance and cooperation is usually essential to achieve these savings.

Contraindication
Any condition, behavior, or characteristic of a patient which is considered a real or potential risk when combined with a particular medication under consideration.

Copayment or Copay
A copayment is the out-of-pocket payment a member makes at the time a prescription drug is dispensed. It may be either a fixed dollar amount or a percentage of the drug's allowable cost. Copayments usually represent 20-40% of total prescription drug benefit costs. The lowest copayments are almost always tied to the use of generic drugs. More expensive brand name drugs usually involve higher copayments. Drugs for which there are lower cost, clinically effective alternatives usually command the highest copayments. Members can usually reduce their copayments significantly by always asking their doctors and pharmacists "The Seven Questions".

DAW
Many states allow a pharmacist to dispense the generic version of a prescribed brand name drug, unless the doctor checks a "Dispense as Written (DAW)" box on the prescription form. When the doctor specifies DAW, the pharmacist can only dispense the more expensive brand name drug, and not the generic. There are relatively few drugs (called Narrow Therapeutic Index drugs or NTIs) or conditions (such as allergies to a generic drug's inactive ingredients) for which this practice is appropriate. Most prescription benefit plans will only pay the generic drug reimbursable amount, requiring the patient to pay a much higher copayment when the brand is dispensed. Hyde Rx's Value Based Formulary recognizes NTI drugs, and depending on the member's employer policy, may require only a standard copayment when such brands are prescribed by the doctor.

Deductible
A deductible is the amount a patient must first pay for a specified health benefit before the employer-paid benefit begins to pay. For example, a $100 prescription drug deductible means that the member must pay the first $100 of any allowable prescription drug costs in a calendar year. After that, the patient pays only a defined copayment for each drug purchased. You can still save money, even when spending under your deductible, by always buying your prescription drugs at a discount at a participating HydeRx pharmacy.

Dispensing Fee (also called Filling Fee or Fill Fee) A dispensing fee is an amount negotiated between a pharmacy and a PBM. It is paid to the dispensing pharmacy in addition to the agreed upon ingredient cost of the drug.

DMR or Direct Member Reimbursement
Occasionally a member will need to pay the entire cost of a drug at the pharmacy, perhaps because he has forgotten his membership card or because the pharmacy's billing computer is down. In such cases, the member mails the Rx receipt and claim form to Hyde Rx, which will process the claim for reimbursement directly to the member.

DUR
Drug utilization review (DUR) is an automatic process which checks a drug being dispensed against a variety of potential contraindications, such as other drugs the patient is taking that may harmfully interact with the new drug. Besides such drug-drug interactions, DUR may check for drug-gender, correct dosage range, drug-pregnancy, drug-age, and therapeutic duplication. The purpose of DUR is to protect the patient from errors that sometimes occur during prescribing, transcribing, or dispensing. DUR is not effective for checking against OTC or prescription medications that are not in the DUR database.

Edit
An edit is a process utilized in processing a prescription drug claim during drug dispensing at the pharmacy. Edits are designed to help assure that the drug is being dispensed in a manner consistent the member's drug benefit plan. For example, an edit may flag and communicate to the pharmacist a potential risk identified by DUR. Another edit tells the pharmacy how much copayment to collect from the member. Restriction edits may communicate that the prescribed drug is not in the formulary. A carrier edit may check to see that the quantity being dispensed is within the covered benefits. Soft edits may offer suggestions to the pharmacist and to the patient to discuss alternatives that may then need to be requested from the doctor.

Eligibility
Eligibility consists of the specific requirements set by the members' employer which members of a health plan must satisfy in order to be insured. Eligibility is also used to identify the drugs and therapies that are covered by the employer's particular plan.

EOB
An explanation of benefits (EOB) is a report generated by Hyde Rx which explains how a benefit reimbursement check amount was calculated. EOBs accompany checks issued to pharmacies or members.

FDA
The U.S. Food and Drug Administration (FDA) is the public health agency responsible for protecting American consumers by enforcing the federal food, drug, and cosmetic act, as well as several other related health laws. All prescription drugs sold in the United States must be approved by the FDA as safe, effective, and properly manufactured and distributed.

Filling Fee (see Dispensing Fee)

Formulary
The Hyde Rx Value-Based Formulary is a list of preferred generic and brand name drugs that have been proven to provide safe, effective treatment at lower cost. Formulary drugs generally cost less and require a lower copayment. The formulary is a valuable tool for members to combat an alarming trend of expensive, heavily promoted "me too" drugs that offer little or no improvement in treatment - only higher prices. Combined with the techniques described in "Saving Money", this formulary can help patients meet their medication needs without breaking their budgets.

Formulary Drug
Any drug listed in either Tier 1 or Tier 2 of the Hyde Rx Value-Based Formulary.

Generic Drug
An FDA approved drug manufactured by a company other than the innovator, due to the expiration of the innovator's original patent. A generic drugs is chemically and therapeutically equivalent to the original brand name drug. Generic drugs are usually referred to by the chemical name of the drug. Because there are usually multiple competing manufacturers for a generic drug, prices are usually much lower than for the original brand name drug which was manufactured by a single company.

Legend Drug
Any drug which bear the legend, "Caution: Federal law prohibits dispensing without a prescription."

MAB
The Maximum Allowable Benefit (MAB) is a dollar amount set by the health plan limiting the prescription benefits available to a member or family. Once the maximum amount is met, members are required to pay the full cost of future prescriptions.

MAC
A maximum allowable cost (MAC) is a negotiated price applied to many generic drugs to encourage generic utilization. MACs are usually lower than AWP-based pricing methods, and thus represent money saving opportunities for both patients and their employers.

Mail Service Pharmacy
Mail service pharmacies are offered by many plans as a convenient, cost saving alternative to retail pharmacies. Members can usually purchase discounted 90-day supplies of medications for home deliver versus more expensive 30-day supplies which have to be picked up by the member at retail. Members usually order their drugs by mail, fax, telephone, email, or the Internet. Prescriptions can be paid with a personal check or credit card. Once a prescription order is transmitted to the mail order pharmacy, members usually receive their prescription within 2-4 days.

Maintenance Drug
Any medication taken over an extended period of time to treat a chronic disease or condition.

Non-Formulary Drug
Higher copayment drugs not listed in Tier 1 or Tier 2 the Hyde Rx Value Based Formulary. These drugs sometimes require a prior authorization (PA) for coverage, or may be excluded altogether from coverage.

Out of Pocket
The member's share of drug costs for deductibles, copayments, non-covered items, etc..

OTC Drug
An Over-the-counter (OTC) drug is one that may be purchased without a prescription. There are now many OTC highly effective, safe drugs that formerly required a prescription (e.g., Claritin, Prilosec, Naprosen). OTC meds can often be an effective alternative to prescription drugs. Such OTC drugs represent a double savings. Not only does the member spend much less for the OTC drug, but he also doesn't incur the cost of a doctor's office visit. However, one should never substitute an OTC drug for an existing prescription medication without a doctor's approval.

Prior Authorizations or PAs
Prior authorizations (PAs) are required to override claims that would otherwise be denied. Some drugs, for example, may not be covered unless an equivalent formulary drug has first been tried and found not to be effective.

PBM
A pharmacy benefit management company. Hyde Rx Services Corp. is a pharmacy benefit manager that provides comprehensive services to its clients and members. Hyde Rx's goal is to provide the lowest, clinically effective cost for your prescription drug needs.

Point of Sale (POS)
The point-of-sale (POS) is the actual pharmacy where the prescription is dispensed and where the member pays his copayment.

POS edits
Point of Sale Edits set up by the plan that are processed when the claim is submitted electronically by a pharmacy. Such point-of-sale (POS) edits give pharmacists dispensing restrictions or instructions, as well as alternative therapeutic substitution messages such as "Use generic" or "Substitute with_____."

Prescription Drug
A drug that has been approved by the FDA and which, under federal or state law, cannot be dispensed without a prescription written by a licensed physician or other licensed provider.

Restriction
A limitation on a particular drug or group of drugs. Examples of restriction edits are: PA required, member age restriction, not in formulary, or quantity limits.