REVIEW
`
`Prescription Drug Cost Sharing
`Associations With Medication and Medical Utilization
`and Spending and Health
`Dana P. Goldman, PhD
`Geoffrey F. Joyce, PhD
`Yuhui Zheng, MPhil
`
`MEDICAL PRACTICE IN THE
`
`U n i t e d S t a t e s h a s
`changed dramatically in
`the last several decades,
`including an increase in use of pre-
`scription drugs. More and better-
`quality drugs are available to prevent
`and manage chronic illness, and these
`drugs reduce mortality, forestall com-
`plications, and make patients more pro-
`ductive.1 Thus, access to outpatient
`drugs is now a cornerstone of an effi-
`cient health care system.
`But with recent increases in phar-
`macy spending, pharmacy benefit man-
`agers and health plans have adopted
`benefit changes designed to reduce
`pharmaceutical use or steer patients to
`less-expensive alternatives. The rapid
`proliferation of mail-order pharma-
`cies, mandatory generic substitution,
`coinsurance plans, and multitiered for-
`mularies has transformed the benefit
`landscape. In this review, we analyze
`how the salient cost-sharing features of
`prescription drug benefits may affect ac-
`cess to prescription drugs and synthe-
`size what is known about how these fea-
`tures may affect medical spending and
`health outcomes.
`Most beneficiaries are now covered
`by incentive-based formularies in which
`drugs are assigned to one of several tiers
`based on their cost to the health plan,
`the number of close substitutes, and
`other factors.2 For example, generics,
`preferred brands, and nonpreferred
`brands might have co-payments of $5,
`$15, and $35, respectively. In con-
`
`Context Prescription drugs are instrumental to managing and preventing chronic dis-
`ease. Recent changes in US prescription drug cost sharing could affect access to them.
`Objective To synthesize published evidence on the associations among cost-
`sharing features of prescription drug benefits and use of prescription drugs, use of non-
`pharmaceutical services, and health outcomes.
`Data Sources We searched PubMed for studies published in English between 1985
`and 2006.
`Study Selection and Data Extraction Among 923 articles found in the search,
`we identified 132 articles examining the associations between prescription drug plan
`cost-containment measures, including co-payments, tiering, or coinsurance (n=65),
`pharmacy benefit caps or monthly prescription limits (n=11), formulary restrictions
`(n=41), and reference pricing (n=16), and salient outcomes, including pharmacy uti-
`lization and spending, medical care utilization and spending, and health outcomes.
`Results Increased cost sharing is associated with lower rates of drug treatment, worse
`adherence among existing users, and more frequent discontinuation of therapy. For
`each 10% increase in cost sharing, prescription drug spending decreases by 2% to
`6%, depending on class of drug and condition of the patient. The reduction in use
`associated with a benefit cap, which limits either the coverage amount or the number
`of covered prescriptions, is consistent with other cost-sharing features. For some chronic
`conditions, higher cost sharing is associated with increased use of medical services, at
`least for patients with congestive heart failure, lipid disorders, diabetes, and schizo-
`phrenia. While low-income groups may be more sensitive to increased cost sharing,
`there is little evidence to support this contention.
`Conclusions Pharmacy benefit design represents an important public health tool for
`improving patient treatment and adherence. While increased cost sharing is highly cor-
`related with reductions in pharmacy use, the long-term consequences of benefit changes
`on health are still uncertain.
`JAMA. 2007;298(1):61-69
`
`www.jama.com
`
`trast, plans may require beneficiaries to
`pay coinsurance—ie, a percentage of the
`total cost of the dispensed prescrip-
`tion. The purpose of tiered co-
`payments and coinsurance is to give
`beneficiaries an incentive to use ge-
`neric or low-cost brand-name medica-
`tions and to encourage manufacturers
`to offer price discounts in exchange for
`inclusion of their brand-name prod-
`ucts in a preferred tier. By 2005, most
`workers with employer-sponsored cov-
`erage (74%) were enrolled in plans with
`3 or more tiers, nearly 3 times the rate
`in 2000 (27%).3
`
`Some plans also impose benefit caps
`that limit either the coverage amount
`or the number of covered prescrip-
`tions. For example, the standard Medi-
`care Part D benefit offers beneficiaries
`coverage of up to $2400 in spending in
`2007, at which point coverage stops un-
`til beneficiaries reach a catastrophic cap
`
`Author Affiliations: Health Economics, Finance, and
`Organization (Drs Goldman and Joyce) and Pardee
`RAND Graduate School (Ms Zheng), RAND, Santa
`Monica, California.
`Corresponding Author: Dana P. Goldman, PhD, RAND
`Corporation and National Bureau of Economic Re-
`search, 1776 Main St, Santa Monica, CA 90407-
`2138 (dgoldman@rand.org).
`
`©2007 American Medical Association. All rights reserved.
`
`(Reprinted) JAMA, July 4, 2007—Vol 298, No. 1 61
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`
`PRESCRIPTION DRUG COST SHARING
`
`Figure. Study Design
`
`944 Articles requested
`923 Identified by library search
`21 Identified in reference lists
`
`812 Excluded of the 923 identified by
`library search
`316 Descriptive or editorial
`160 No cost-sharing measures
`113 Examining behaviors of
`stakeholders other than
`the patient
`103 Simulation or cost-effectiveness
`study, cost-utility analysis,
`comparative study, or
`theoretical model
`74 No cost-sharing measures
`or relevant outcomes
`36 No relevant outcomes
`8 Review or methodological study
`2 Article not found
`
`132 Articles selected for analysis∗
`65 Examined co-payments,
`tiering, or coinsurance
`11 Examined benefit caps
`16 Examined reference pricing
`41 Examined prior authorization
`or formulary restrictions
`
`*One article examines the effects of both co-
`payments and benefit caps.
`
`($5451). Once the catastrophic cap is
`reached, coverage resumes with mini-
`mal cost sharing. Prior to the introduc-
`tion of Part D, benefit caps—without
`this catastrophic limit—were a stan-
`dard feature of Medicare⫹Choice plans
`(now known as Medicare Advantage)
`and some retiree plans. As of 2002, 94%
`of Medicare ⫹ Choice plans that cov-
`ered branded drugs had an annual dol-
`lar cap ranging from $750 to $2000 per
`year.4 Analogous policies used by state
`Medicaid programs place limits on the
`number of prescriptions dispensed per
`patient per month. Because benefit caps
`represent an extreme version of cost
`sharing—patients who reach them must
`pay all additional pharmacy costs out
`of pocket—and their central role in Part
`D, we include them in our review.
`Additional cost-saving measures in-
`clude prior authorization (requiring
`permission before certain drugs can be
`dispensed), step therapy (requiring use
`of lower-cost medications before pro-
`viding coverage for more expensive al-
`ternatives), closed formularies, man-
`datory generic substitution, and
`reference pricing (a cap on the amount
`
`a plan will pay for a prescription within
`a specific therapeutic class). There is a
`growing literature on each of these cost-
`containment measures.
`
`METHODS
`We conducted electronic searches of
`PubMed for studies published in
`English between 1985 and 2006. The
`primary search was based on combi-
`nations of 2 sets of key words. The
`first set included various terms for
`drug cost sharing: cost-sharing,
`incentive-based, copay, coinsurance,
`tiered benefit, benefit cap, patient
`charge/fee, user charge/fee, prescrip-
`tion charge/fee, step therapy, reference
`pricing, prior authorization, formu-
`lary, formulary restriction, formulary
`limit, closed formulary, open formu-
`lary, and generic only. The second set
`included drug spending, drug cost,
`prescription drug, medication, and
`pharmacy benefit. Articles that con-
`tained at least 1 term were included.
`We performed another search spe-
`cifically for Medicaid-related drug
`cost sharing measures by combining
`one of the terms access restriction,
`drug/prescription/reimbursement limit,
`or preferred drug list with Medicaid
`and with one of the terms spending,
`use, orcost. We excluded issue briefs,
`comments, letters, editorials, essays,
`articles without author names, and
`reviews. This process yielded 923
`studies. We then screened these
`studies based on titles, abstracts, and,
`in a few cases, the full text, as
`described in the FIGURE.
`A study was included in this review
`if (1) the article was published in a peer-
`reviewed journal; (2) it examined the
`effects of cost sharing (co-payments,
`tiers, coinsurance, reference pricing,
`formulary restrictions, or benefit caps)
`on at least 1 of the relevant outcomes
`(prescription drug utilization or spend-
`ing, medical utilization or spending, or
`health outcomes); and (3) it analyzed
`primary or secondary data (to exclude
`simulations).
`Among the 923 studies, 111 met
`these criteria. An additional 21 stud-
`ies were added based on reference lists,
`
`resulting in 132 studies for final analy-
`sis. Sixty-five studies examined co-
`payments, tiers, or coinsurance5-69; 11
`examined benefit caps4,43,70-78; 41 ex-
`amined formulary restrictions79-119; and
`16 examined reference pricing.120-135
`(One study examined both co-
`payments and benefit caps.43)
`Because the majority of these stud-
`ies analyzed observational data, under-
`standing how the associations be-
`tween cost sharing and the outcomes
`of interest were measured is impor-
`tant. We classified study designs as fol-
`lows:
`• (Aggregated) time series: ana-
`lyzed changes over time in data aggre-
`gated at the geographic or plan level,
`with the data spanning a period when
`benefits changed
`• Cross-sectional: analyzed indi-
`vidual-level data at a single time point
`for multiple benefit designs—for ex-
`ample, across health plans
`• Repeated cross-sectional: ana-
`lyzed cross-sectional data from mul-
`tiple time periods
`• Longitudinal: analyzed individual-
`level data with repeated observations for
`the same beneficiaries over time
`• Before-and-after: compared out-
`comes at 2 points in time, before and
`after a benefit change
`• Randomized trial
`The literature on cost sharing is
`much more diffuse than many medi-
`cal interventions, which benefit from
`clear delineation of primary and sec-
`ondary clinical end points. For ex-
`ample, some articles examine pharma-
`ceutical spending, while others observe
`utilization. And, among the latter, uti-
`lization is measured in at least 5 differ-
`ent ways: medication possession ra-
`tio, proportion of days covered,
`cumulative multiple-refill gap, num-
`ber of prescriptions, and aggregate days
`supplied. This problem is further ex-
`acerbated by the wide range of “treat-
`ments”—eg, adding a second or third
`tier, raising co-payments, requiring co-
`insurance—and treated populations
`with very different diseases. The re-
`sult is tremendous heterogeneity in ben-
`efit changes, the way results are re-
`
`62 JAMA, July 4, 2007—Vol 298, No. 1 (Reprinted)
`
`©2007 American Medical Association. All rights reserved.
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