Increases in Rx Cost-Sharing Gets Mixed Review

SANTA MONICA, Calif., July 5 -- When patients have to pay more for their prescriptions, spending on drugs goes down, but so does adherence, a new study shows.

Every 10% increase in consumer cost-sharing resulted in a 2% to 6% decrease in spending on prescription drugs, according to a report from the RAND Corporation published in the July 4 issue of the Journal of the American Medical Association.

However, they said, increased cost-sharing resulted in decreased adherence to treatment plans and more frequent discontinuation of therapy, and triggered increased spending in other medical services, including hospitalizations, and emergency department use particularly in several chronic conditions -- heart failure, dyslipidemia, diabetes, and schizophrenia.

The data revealed some large effects on pharmaceutical use, even for medications taken for chronic conditions, "suggesting that there are long-term health consequences," wrote Dana P. Goldman, Ph.D., and colleagues

Data limited to chronically ill patients were unambiguous, the authors continued, ". . . greater use of inpatient and emergency medical services are associated with higher co-payments or cost sharing for prescription drugs or benefit caps."

Their findings came from an analysis of 132 published studies examining the impact of prescription drug plan cost-containment efforts and outcomes such as pharmacy use, medical service use and spending, and outcomes.

The studies emerged against a backdrop of competing interests: access to newer, better-quality drugs to prevent and manage chronic illness versus a trend among pharmacy benefit management and health plans to adopt practices to reduce pharmaceutical use or steer patients to less expensive alternatives.

Almost half the studies (65) assessed the effects of three common strategies: increased co-payments, co-insurance, and tiered systems that arrange drugs within the same therapeutic category according to cost or health care plan preference.

The investigators expressed their findings relative to those strategies in terms of "price elasticity of demand," which refers to the change in spending in response to a 1% increase in cost-sharing.

The various studies they reviewed showed changes of -0.2 to -0.6, a 2% to 6% decrease in pharmacy use for every 10% increase in cost sharing. Studies that looked specifically at co-insurance generally showed effects at the lower end of the range.

Dr. Goldman and colleagues noted that some evidence suggests cost sharing has a different impact according to a drug's therapeutic class. But their analysis of studies that focused on therapeutic class showed no consistency in the impact of cost sharing.

The authors identified 11 studies dealing with benefit caps, a strategy employed in part by the recently enacted Medicare Part D drug benefit plan. They found one study to be particularly relevant, a closed-network HMO that capped pharmacy benefits at ,000. Data from that study showed a 31% reduction in pharmacy costs compared with a group of enrollees that did not have a benefit cap.

Reference pricing, not widely used in he U.S., uses caps to establish a price ceiling within a therapeutic class. Studies that evaluated reference pricing generally showed large increases in drugs priced at the bottom of a class and declines in the use of higher-priced drugs that required cost sharing.

Studies that evaluated strategies requiring prior authorization from a health plan for certain drugs tended to show reductions in the use of higher-priced drugs and increased use of generics and lower-cost brand-name drugs in the same class. Formulary restrictions produced inconsistent results in the studies evaluated.

Results that focused on clinical outcomes showed differences according to whether a study evaluated a specific condition or took a broader view of outcomes. Whereas the findings were clear with respect to specific chronic conditions, the data from more general studies provided no consistent view on the impact of cost sharing.

In summarizing their findings, the authors cited five areas that require more research to clarify the impact of cost-sharing:

• Mechanisms, especially behavioral mechanisms, involved in reduced pharmacy use
• Long-term impact of cost-sharing on chronic conditions
• Impact of cost-containment policies on low-income individuals
• Influence of the Medicare Part D prescription benefit on drug expenditures
• Cost-containment's impact on use of targeted therapies and other specialty drugs, which is expected to increase in the future.