Review of Incentive-Based Drug Benefit Designs

Differential pricing influences drug use, but more research is needed to assess its value and health outcomes.

For the first time, a systematic review of literature on incentive-based pharmacy benefit designs found evidence of spending shifts from payers to patients, but not much evidence on overall value or health outcomes.

The review published in The American Journal of Managed Care explored all English-language research published from 1980 to 2012 and found only 31 articles that evaluated the effect of differential cost sharing for prescription drugs. This represented only 28 unique interventions, because 5 of the articles discussed identical studies.

The focus of this systematic review was to evaluate published findings on how differential drug price changes affect (1) immediate patient response, (2) total spending, and (3) health outcomes.

Of the 31 articles identified, only 5 addressed all 3 criteria of interest in this review, and all 5 of those examined outcomes for at least 2 years. Almost all studied articles reported on patient behavioral response (29) and spending (24). Few articles evaluated health outcomes associated with incentive-based drug benefit design (8). Only 13 articles followed any post-intervention effects beyond 1 year.

Authors noted that none of the published research dealt with issues of heterogeneity among patients, such as clinically relevant subgroups, or distinguished between continuing and novel prescription users.

Summary Findings on Differential Drug Pricing Effects

Studied benefit designs varied, but most featured tiered formularies (19) or reference pricing (10).

Overall, the reviewed articles suggested that when faced with differential cost sharing, (1) some patients switch to the less expensive option, (2) overall plan spending on pharmacy decreases, and (3) overall patient out-of-pocket (OOP) spending on pharmacy increases. Reviewers believed that high OOP spending could be explained by some patients choosing to continue to use the more expensive drug option.

Reports on medication adherence were mixed and inconclusive overall but suggested a decrease in adherence to more expensive options. Utilization of more expensive options also tended to decrease.

Behavioral Responses

Fifteen of 18 articles reported significant increases in switching to less expensive drug options.

Six of 9 studies reported no change in medication adherence, while 2 of 4 found decreased adherence to more expensive drug options.

Sixteen of 16 articles found decreased utilization of high priced pharmaceuticals. Two reports found short-term increases in physician visits immediately after a differential pricing intervention, but 5 of 7 reported either no change or a longer-term decrease in doctor utilization.

Pharmacy Spending Impact

Nine of 12 articles reported overall decreases in pharmacy spending as a result of incentive-based benefit design.

Suggesting a significant cost shift toward patients, 13 of 14 reports observed spending increases for patients, while 19 of 21 measured spending decreases for payers.

Four of 6 reports found an increase in plans’ nonpharmacy spending after intervention, yet all articles that examined overall medical spending observed decreases.

Impact on Health Outcomes

Of the 8 articles that examined health outcomes, 6 found no significant changes.

All 6 articles that looked at ER visits and 5 of 6 that looked at in-patient hospitalization found no change in utilization rates after a differential drug pricing intervention.


Authors summarized that patient drug use can be influenced by differential cost sharing designs, but existing research is insufficient to demonstrate long-term value or to guide good policy decisions.

The review concluded that the differential pricing of drugs can become a useful tool for pharmacy benefit managers, but called for future studies on its long-term effects, considering health outcomes and sensitive subgroups like the elderly and individuals with multiple comorbidities.