"Tiered prescription drug plans are fairly new, but they now dominate the market with roughly 57 percent of workers in a three-tiered prescription drug plan," said lead author Haiden Huskamp, Harvard Medical School assistant professor of health economics, Department of Health Care Policy. "This is one of the first studies to show how employees being treated for chronic illnesses react to changes in their drug plans."
The study followed two employers as they changed their prescription coverage plans in 2000 to incentive formulary plans. Employer A switched from a one-tier to a three-tier plan and increased co-payments across all tiers . Employer B's employees switched from a two-tier to a three-tier formulary and increased co-payments for the third tier only. The study authors also identified two comparison groups, employers that had similar plans to Employer A and B, which allowed the authors to see what would have happened if no changes had occurred.
Employer A's workers that experienced substantial co-payment increases had a marked reaction to the changes in that some enrollees stopped taking necessary medications. For example, 16 percent of patients using tier three ACE inhibitors for their blood pressure stopped taking their medications (only 6 percent stopped in the comparison group). Twenty-one percent of patients using tier three cholesterol lowering statins stopped taking their medications (only 11 percent stopped in the comparison group), and 32 percent of patients using tier three acid-relieving proton pump inhibitors stopped taking their medications (only 19 percent stopped in the comparison group).
Employer A also saw many of its enrollees facing the largest co-payment increases switch the drug they currently took to a drug in a lower-tier. Nearly 42 percent of patients taking ACE inhibitors switched their current tier three medication to a lower-tiered drug (only 4 percent switched in the comparison group); 35 percent of patients taking tier three proton pump inhibitors switched to a lower-tiered drug (only 1 percent switched in the comparison group); and 49 percent of patients taking tier three statins switched to a lower-tiered drug (17 percent switched in the comparison group).
Due to the increase in co-payments, the enrollees in Employer A's plan experienced a dramatic change in out-of-pocket expenses. Relative to patients in the comparison group, patients in Employer A's plan paid 142 percent more for ACE inhibitors, 148 percent more for proton pump inhibitors, and 118 percent more for statins.
Conversely, Employer B did not see a significant impact in compliance or spending among its members based on its modest plan design change. However, Employer B's members were more likely to switch from a non-preferred brand name medication to a less expensive brand name or generic medication. Nearly 41 percent of patients taking ACE inhibitors switched to a lower-tiered drug (15 percent switched in the comparison group); 18 percent of patients using a proton pump inhibitors switched to a lower-tiered drug (only 2 percent switched in the comparison group); and 48 percent of patients using a tier three statin switched to a lower-tiered statin (8 percent switched in the comparison group).
"This study shows that the devil is in the details when trying to predict the effects of a formulary change," said Huskamp. "Sizeable co-payment increases could have worrisome effects."
As Medicare gets ready to implement a prescription drug benefit that relies on Pharmacy Benefit Managers and formularies to control drug costs, these results may offer insights into how a Medicare drug benefit may function in the future.
The same Harvard Medical School and Medco Health Solutions team that collaborated on this study are currently conducting another study that looks at how retirees and older employees are affected by similar changes.
The study was supported by the Robert Wood Johnson Foundation's Changes in Health Care Financing and Organization (HCFO) program, the National Institute of Mental Health, and the Agency for Healthcare Research and Quality.
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