Joseph J. Doyle, MBA, RPh

Payers continue to search for effective ways to control healthcare costs. Efforts often have focused on drug cost containment by shifting costs to employees. In 2000, 27% of employer-sponsored health plan members received pharmacy benefits through a 3+ tiered plan, compared with 74% in 2005.

 Mean prescription drug copayments in employer-sponsored health plans increased from $7, $13, and $17 in 2000 to $11, $24, and $38 in 2006 for generics, preferred brands, and nonpreferred brands, respectively.

 Based on a review of the literature from 1985 through 2006, Goldman et al

 estimated a decrease in prescription drug expenditures of 2% to 6% for each 10% increase in cost-sharing. Although implementation of these strategies, formulary restriction strategies, stepped-care therapy, monthly prescription limits, and benefit caps is common, concerns exist over the impact of such policies on medication adherence and medical outcomes and costs, with recent studies evaluating the impact of decreased drug cost-sharing.

In value-based benefit design, the level of cost-sharing is determined by the value of a particular healthcare service. Pitney Bowes

 instituted a value-based benefit design using decreased drug cost-sharing and disease management efforts for selected chronic conditions, resulting in increased compliance scores and decreased total costs. Chernew et al

 evaluated a reduced copayment/disease management intervention compared with a disease management intervention alone and found nonadherence was reduced by 7% to 14% in 4 of 5 medication classes in the reduced copayment/disease management group.

The objectives of this study were to evaluate the impact of reduced member prescription cost-sharing on healthcare costs for a large US employer and to assess corresponding changes in resource utilization and days supply of medications.

The employer participating in this study was Novartis. Novartis is a global healthcare company whose mission is to discover, develop, and successfully market innovative products to cure diseases, ease suffering, and enhance the quality of life for its customers. It is headquartered in Basel, Switzerland, and operates in 140 countries. More than 98,000 people worldwide work for Novartis; 13,000 associates make up the US Pharmaceutical sector. All employees and dependents enrolled in the Novartis US Pharmaceuticals self-insured health benefit plan were eligible to participate in the study. Participants were required to have continuous enrollment for 48 months (January 1, 2004-December 31, 2007) and to be between the ages of 18 and 64 years during this time period. Members meeting these criteria were placed into the control cohort.

Asthma, hypertension, and diabetes cohorts were selected from the control cohort based on a plan member having at least 2 prescriptions in 2004 for a medication used in the management of the respective conditions. Asthma medications included short-acting beta agonists, long-acting inhaled beta agonists, leukotriene modifiers, corticosteroids, methylxanthines, mast cell stabilizers, and combinations of these drugs. Hypertension medications included angiotensin-converting enzyme inhibitors, alpha/beta-blockers, calcium channel blockers, angiotensin II receptor blockers, diuretics, central alpha-2 agonists, and aldosterone receptor blockers. Diabetes medications included insulin and oral hypoglycemics.

A retrospective claims analysis was conducted, using the deidentified, standardized medical and pharmacy administrative claims data for the selected Novartis plan members. The program for prescription benefit design change, reflecting reduced prescription cost-sharing, was implemented on January 1, 2005. Copayments were eliminated, and members paid 10% and 7.5% of the cost of retail and mail order prescriptions, respectively, for drugs used in the treatment of asthma, hypertension, and diabetes, compared with 20% retail and 10% mail order coinsurance levels for all other drugs. Cost-sharing was not required for Novartis products. This pharmacy benefit structure remained in place from 2005 through 2007, regardless of the specific third-party administrator for the benefit. Study metrics were quantified separately for 2004 (the preprogram year) and for each of the 3 years postimplementation (2005, 2006, and 2007). These metrics included resource utilization and costs (defined as net payments by Novartis) for prescriptions, office visits, emergency department (ED) visits, and hospitalizations, both overall and associated with the respective conditions. (See 

 for definitions of disease-specific and disease-related costs.) Days supply (used as a proxy for adherence), cost-sharing dollars (defined as member out-of-pocket costs), and medication possession ratios (MPRs) for prescriptions used in management of each condition also were quantified. The MPR was computed by dividing the average days supply per patient, weighted by the number of drugs per patient, by 365. Descriptive statistics were generated comparing preprogram to postimplementation metrics within each condition cohort and the control cohort.

Materials outlining the benefit changes were distributed in annual enrollment packages. General disease management services for asthma, hypertension, and diabetes (disease-specific information to members) were provided by third-party wellness vendors, beginning in 2005 for point-of-service and indemnity plan members and for all members in 2007.

The control cohort consisted of 9624 members between the ages of 18 and 64 years who were continuously enrolled in the self-insured plan from 2004 through 2007. Their average (SD) age was 40.8 (9.2) years. Men and women comprised 47% and 53%, respectively, with 56% residing in the Northeast region of the United States. Employees accounted for 60% of cohort members. Of these 9624 members, 386 had asthma, 1351 had hypertension, and 161 had diabetes. The average (SD) age was 41.1 (9.5) years, 45.5 (8.4) years, and 47.9 (8.7) years for the asthma, hypertension, and diabetes cohorts, respectively. Members of the hypertension and diabetes cohorts were older and more likely to be male compared with the control cohort, whereas members in the asthma cohort were more likely to be female. Within the asthma cohort, 56% were female, 53% resided in the Northeast, and 58% were employees. Corresponding numbers within the hypertension cohort were 42%, 54%, and 66%, respectively; within the diabetes cohort those numbers were 31%, 63%, and 64%, respectively.

There was a 26% increase in total net payments from 2004 to 2007 in the control cohort. Table 1 presents data for each condition on mean net payments per member per year within each of the study years. The asthma cohort had a 40% increase in net payments from 2004 to 2007, with over half of the $2207 increase driven by drug payments. The asthma-specific payments decreased by 2% during this time period. The $107 in increased costs for prescriptions was offset by decreased payments for outpatient (including ED) asthma care. Although asthma-specific office visits increased 14% between 2004 and 2007, asthma-specific ED visits decreased from 3.1 per 100 in 2004 to 0.3 per 100 in 2007, a 92% decrease.

Hypertension cohort and hypertension-related net payments had a 9% increase over the study time frame. The hypertension-related prescription drug cost increase  $180) was offset by a combined $101 decrease in inpatient and outpatient medical costs. Office visits with a primary diagnosis of hypertension decreased 26%, while hypertension-related ED visits and admissions decreased 85% and 6%, respectively.

Total net payments in the diabetes cohort decreased by 13% over the 4 years, while diabetes-related net payments decreased by 37%. Increases in prescription drug payments were offset by decreases in inpatient and outpatient care for both total and diabetes-related net payments. Specifically, the $1576 increase in drug costs in the total net payments was offset by a decrease of $3067 in medical costs, while the $341 increase in diabetes-related drug costs was offset by a decrease of $1607 in medical costs. From 2004 to 2007, office visits with a primary diagnosis of diabetes decreased by 9%, and there was a 65% decrease in net payments for diabetes-related admissions.

Regardless of the condition or the drug category, mean annual days supply increased on a per patient basis from 2004 to 2007 (

). Within the asthma cohort, the MPR for controller medications increased from 41% to 50%. Within the hypertension cohort, the MPR increased 9 percentage points to 73%. Within the diabetes cohort, the MPR increased from 67% to 71%. 

In the asthma cohort, member out-of-pocket costs on a per patient per year basis decreased by $28 and $21 for controller and rescue medications, respectively, from 2004 to 2007. In the hypertension cohort, costs decreased for all drug categories, with a range of $3 (angiotensin II receptor blockers) to $43 (beta-blockers). Cost data for the diabetes cohort were difficult to interpret because insulin claims were paid in full, with no member cost-sharing, in 2004. Member out-of-pocket costs for other diabetic drugs increased from 2004 to 2007, likely due to the use of newer, branded products in diabetes management, for which coinsurance versus copayment cost-sharing can result in higher patient costs.

In the current study evaluating the impact of reduced prescription cost-sharing, the increase in net payments for drugs used in the treatment of asthma, hypertension, and diabetes was offset by a decrease in net payments for medical services specific or related to these conditions. The offset was sufficient in the asthma and diabetes cohorts to produce a net savings in 2007 compared with 2004.

From 2004 to 2007, office visits increased 10% for the control cohort compared with decreases for the hypertension and diabetes cohorts (26% and 9%, respectively) and an increase of 14% for the asthma cohort, indicating slower or similar utilization growth for the condition cohorts. The decrease in office visits for hypertension and diabetes may be explained by 2 phenomena. Either the patients were not complying with recommended care, or they may have been healthier because of medication adherence and needed fewer visits. The demonstration of savings for both asthma and diabetes but not for hypertension is not surprising given that many of the  complications associated with hypertension (and thus the potential to avoid these complications) are evident primarily in the long term. The MPR for management drugs for all conditions increased from 2004 to 2007. However, there was a slight decrease from 2006 to 2007, which we attribute to random variation. 

The impact of drug benefit designs on prescription utilization and costs has been previously studied.

 The findings of the current study are consistent with data from the Pitney Bowes experience with diabetes, where annual total cost of care decreased 6% and ED visits decreased by 26%.

 Moreover, the MPR data from the current study, suggestive of improved adherence, also are consistent with the compliance scores found in the Pitney Bowes analyses. These compliance scores increased between 2001 and 2006 for asthma (from 33 to 62), diabetes (from 75 to 81), and hypertension (from 76 to 82).

 Prior studies have documented reduced adherence with increased copayments for antidiabetic

 found discontinuation or switching of medications increased by 26% for every $10 increase in copayments. Taira et al

 found that copayment level, independent of other determinants, was a strong predictor of compliance with antihypertensive medications.

There were several limitations to these analyses. First, 

International Classification of Diseases, Ninth Revision, Clinical Modification 

diagnosis codes were not used in identifying the study cohorts or in confirming selection based on prescription therapy. Building cohorts based on prescription drug use may have resulted in the exclusion of members who did not have these drugs in the preprogram year, members with milder disease not requiring prescriptions, members being managed with nondrug treatment options, or members who were prescribed medications but did not fill them. Second, communication of the change in pharmacy benefit was limited. Members may not have been aware of the decrease in cost-sharing. Thus, to the extent that lowering prescription costs for members can result in improved outcomes and decreased medical costs, these findings may have been underestimated. Third, the study did not control for the availability of disease management programs for asthma, diabetes, coronary artery disease, and congestive heart failure, nor did it examine the impact of other variables such as severity or duration of disease. Fourth, there was concern regarding days supply for multiple-use injectable and multiple-dose inhaler products due to potential unreliability and poor correlation between filling and adherence behavior.

In conclusion, preliminary findings suggest that cost-sharing reduction for prescription medications for asthma, hypertension, and diabetes can result in an increase in days supply of these medications and a decrease in disease-specific or disease-related utilization and costs. Further analyses are needed to confirm these results.

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A value-based benefit design program for prescription medications for asthma, hypertension, and diabetes could result in increased  prescription use and decreased healthcare utilization and costs.