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High Rx Co-Pays Discourage Newly Diagnosed from Treatment
Sidebar: Design Rx programs for drug regimen compliance.

By Stephen Miller  5/8/2009
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Patients newly diagnosed with hypertension, diabetes or high cholesterol are significantly more likely to delay initiating recommended drug treatment if they face higher-than-average co-payments for medications, according to a new study by the RAND Corp., a nonprofit research institute.

The delay was significant across all conditions, but the impact was largest among patients who had not previously used prescription drugs, according to the study published in the April 27, 2009, edition of the Archives of Internal Medicine.

To reduce their overall health care spending, some group health plan sponsors have increased drug co-pay amounts paid by health plan participants (i.e., cost shifting). While several studies have established that higher drug co-pays discourage some patients from taking their medications, the authors of the new study say their research is the first to examine the impact of higher out-of-pocket costs on patients who are just beginning drug treatment after being diagnosed with a chronic illnesses.

"Our study clearly shows that out-of-pocket costs reduce patients’ willingness to start treatment for their chronic illnesses," says Matthew D. Solomon, the study’s lead author and a medical resident at Stanford University. "It is indisputable that avoiding treatment for these conditions will lead to higher rates of heart attack and stroke"—and ultimately higher health costs for group health plan sponsors.

"Epidemiologic studies tell us that we do a terrible job of treating patients with these conditions. Now we know one reason why," Solomon says. "Along with behavioral and lifestyle modification, prescription drug therapy is the cornerstone of management for these diseases. If left untreated, each of these conditions will increase a person's risk for having a potentially fatal cardiovascular event."

Along with lifestyle changes, prescription drugs are
the cornerstone for managing chronic diseases.

The study included 272,474 retirees who received health coverage from their former employers from 1997 to 2002 and were covered by 31 health plans. Researchers focused on 17,183 people from this group who were newly diagnosed with diabetes, high blood pressure or high cholesterol, examining their records to see when they began to fill prescriptions for needed medications.

For each of the conditions, patients who had higher out-of-pocket costs were less likely to start prescription drug therapy compared to other patients in the study:

Among those newly diagnosed with high blood pressure, those starting drug treatment within a year of diagnosis dropped from 55 percent to 40 percent when their co-pay doubled. After five years, the difference was 82 percent to 66 percent, according to the study.

Patients starting drug treatment within a year of diagnosis with high cholesterol dropped from 40 percent to 31 percent when patients' out-of-pocket costs doubled. After five years, the difference was 64 percent to 54 percent.

Among patients with diabetes, those starting drug treatment within a year of diagnosis dropped from 46 percent to 40 percent when co-pays doubled. After five years, the difference was 69 percent to 63 percent

The study showed that patients who had no experience with medications were even less likely to begin recommended drug treatment, an indication that some patients may have a preference against medication use that places their long-term health at risk.

Design Rx Programs to Improve Health Outcomes, Reduce Costs

A client survey by pharmacy benefit manager CVS Caremark released in April 2009 shows that a majority of the firm's U.S. employer clients are more focused on achieving savings through strategies to change their employees' health-related behaviors than by shifting costs to health plan participants.

Among the key findings:

·    65 percent of employer clients that participated in the survey indicated that plan design incentives to change behavior were a high priority.

·    56 percent mentioned wellness and disease management programs.

·    Only 15 percent focused on employer cost-share shifting.

"The current economic environment has understandably created a sense of urgency for companies to evaluate their benefit designs in order to meet financial goals, with 74 percent of our employer clients telling us that reducing overall health costs is their No. 1 measure of success in the coming year," says Tom Ryan, president and CEO of CVS Caremark. He adds that the firm's clients are looking to accomplish these savings "by increasing plan participant engagement in their health care decisions in order to keep them healthier and help reduce overall health care costs," rather than simply increasing their share of the cost. Innovative prescription drug plan designs, he notes, incorporate strategies such as:

·     Providing first-fill medication counseling to improve compliance with a new medication regimen, via phone or face to face at a local pharmacy.

·     Using refill reminders, via mail or phone, to improve medication adherence.

·     Increasing the use of less expensive generic medications as well as over-the-counter (OTC) products where appropriate, and moving branded medications with OTC equivalents to the highest tiers to reinforce the use of lower-cost drug options.

·     Providing an opportunity to receive medications by mail at a low cost.

The survey was conducted from Nov. 1 through Dec. 31, 2008, and includes responses from current CVS Caremark clients representing nearly 300 U.S. employers and 10.5 million plan participants.


Stephen Miller is an online editor/manager for SHRM. 

Related Article—External:

At Pitney Bowes, Value-Based Insurance Design Cut Copayments and Increased Drug Adherence, The Commonwealth Fund, November 2010

Related Articles—SHRM Online:

Brand-Name Drug Costs Soar, Generics Hold the Line, SHRM Online Benefits Discipline, April 2009

Value-Based Insurance Design Sparks Increased Interest, SHRM Online Benefits Discipline, February 2009

Rx Drug Pricing: Lower Co-Pays Reduce Health Care Costs, SHRM Online Benefits Discipline, January 2009

Related Video:

Generating Buzz on Generics, SHRM Multimedia, 2009

Value-Based Benefits Design, SHRM Multimedia, 2009

Quick Link:

SHRM Online Benefits Discipline

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