Background: Many employers are changing their pharmacy benefit designs to contain cost increases. The objective of this study was to evaluate employee awareness of the cost-saving potential of these changes in the context of one such employer initiative. Methods: We analyzed data from a survey of employees in 16 firms in Minneapolis, MN, USA. All of the firms offered prescription drug coverage administered by Express Scripts, a large pharmacy benefit management company. A total of four firms introduced 3-tiered pricing for both retail and mail-order drugs in 2002, whereas 11 kept their traditional, less-restrictive drug benefit plans. One company offered a pharmacy benefit choice that was tied to the overall medical plan. We use ordered probit analysis to examine the set of factors associated with employee awareness of the cost-saving potential of formularies, generic drugs, and mail-order drugs. Results: Age and education were positively associated with giving the correct response to a question on the cost-saving potential of formularies, generic drugs, and mail-order drugs. However, we found no significant effect of the drug benefit design change itself or of strategies used by the employers to communicate information about health benefits to employees. Conclusions: Education is a powerful influence for single employees' awareness and a significant but less powerful influence for families' awareness of the cost-saving potential of formularies, generic drugs, and mail-order drugs. Our failure to find that employer communication methods had a significant impact on employee awareness may be because of the lack of specificity in the measurement of employer strategies. Future research might include questions more specific to employer strategies for informing employees about pharmacy benefits.