Frankel Group Blog: Patient Access and Adherence in the Face of Rising Cost-Sharing

January 2012

“Drugs don't work in patients who don't take them.” — C. Everett Koop, M.D

An estimated one third to one half of all patients in the U.S. do not take their medications as prescribed by their doctorsⁱ. Non-adherence has been shown to result in $100 billion each year in overall healthcare costs and its indirect costs add another $77 billionⁱⁱ. The ramifications of poor prescription adherence affect virtually every aspect of the health care system.

Patient drug costs are a central factor that contribute to non-adherence. Yet, due to rising systemic healthcare costs, there has been a trend to increase cost-sharing, shifting more and more costs to the beneficiary.

In response to rising co-pays and co-insurance, pharmaceutical companies have increasingly provided financial assistance in the form of discounts. The use of co-payment cards, coupons, and other types of discounts has more than tripled since mid-2006, according to IMS Healthⁱⁱⁱ. (Note: Co-pay coupons are banned in Medicare and Medicaid. The focus of this blog will be on commercial plans.)

However, payers and pharmacy benefit managers (PBMs) are critical of such programs. A November 2011 report by The Pharmaceutical Care Management Association (PCMA) entitled, “How Copay Coupons Could Raise Prescription Drug Costs By $32 Billion Over the Next Decade” summarizes that payers and PBMs feel such programs induce consumers to choose higher cost brands over generics which leads to higher overall healthcare costs.

Ideally the goal of increased out-of-pocket (OOP) expenses is to incentivize the utilization of high-value care and discourage the use of low-value care, ultimately minimizing costs. Yet an abundance of evidence suggests that across the board increases in cost sharing leads to decreased utilization of lifesaving healthcare^iv,v,vi,vii. Payer concern over the high cost of prescription drugs is warranted, however I would argue that in certain key therapeutic areas, increased co-pays and co-insurance are not the appropriate tools to curb costs.

Patient Out-Of-Pocket Cost Sharing for Preventative Medications

A number of recent studies have shown that eliminating out-of-pocket costs for evidence-based preventative medications significantly improves patient adherence without increasing overall healthcare costs.

A November study published in NEJM showed that the elimination of copayments for drugs prescribed after myocardial infarction improved medication adherence and rates of secondary clinical outcomes while decreasing patient spending without increasing overall health costs^viii.

Additionally, reduced copayment rates for five classes of medication: ACEs and ARBs, beta-blockers, diabetes medications, statins, and inhaled corticosteroids while holding access to disease management programs constant, reduced medication non-adherence by 7-14%^ix.

Finally, it appears that consumers are quite sensitive to even small changes in co-pay amounts. A study among veterans showed that a copayment increase of just $5 adversely impacted adherence to oral hypoglycemic agents, antihypertensive medications, or statins^x.

Low cost patient access to both branded and generic preventative therapies is necessary to improve compliance and prevent potentially fatal events. However, whether the optimal approach relies on payer lowering / eliminating of co-pays for certain drugs or on pharma company patient assistance is yet to be determined. Numerous dynamics are not fully understood. For example, with the recent patent expiry of Lipitor, Pfizer has launched an aggressive campaign offering co-pay coupons and structuring deals with PBMs to head off generic competition. There are concerns about what effect of all these efforts will have on total cost to employers.

Patient Out-Of-Pocket Cost Sharing for Specialty Pharmacy

Today, more commercial payers have pharmacy benefits with 4 or more tiers (a 2010 Kaiser Family Foundation report identified that 78% of people with employer-sponsored health plans have benefits with a 4th tier or higher). Many plans require a 20% co-insurance for tier 4 drugs, which can often mean patients are responsible for tens of thousands of dollars per year in the absence of OOP maximums.

Source: American Health & Drug Benefits Vol. 3 (2010)

While annual OOP maximums help mitigate expenses, many plans do not offer them and those that do often have caps that are still financially prohibitive to patients.

Therefore, patients unable to pay the thousands OOP required are de facto being denied access.

Most pharmaceutical companies with specialty drugs offer patient assistance programs to ease patients’ OOP burden, but it is unclear the extent to which these programs are able to aid all patients who cannot afford such drugs.

While data on the impact of OOP cost on orphan drug compliance is limited, there is compelling evidence that out-of-pocket costs play a significant role with regard to compliance of oncology^xi and other specialty agents. A study of patients newly initiating oral cancer therapy identified from an 8 million member commercial plan found that 16% of patients filling prescriptions with cost-sharing amounts over $200 abandoned the prescription and did not follow up with another cancer medication within 90 days^xii. This rose to 29% of patients with cost-sharing amounts over $500. Additionally, per claim OOP expenses greater than $100 for TNF blockers and greater than $200 for MS medication have been associated with increased prescription abandonment^xiii.

With respect to specialty drugs, especially for rare and orphan diseases, there needs to be a balance between acceptable cost sharing without being overly burdensome to the patient. I would propose redesign of 4th tier co-pays to have lower monthly and annual OOP maximums. Cost-containment efforts should focus on ensuring appropriate prescribing rather than patient cost-sharing, especially considering patients often have no alternative therapies.

Closing Remarks

In conclusion, increasing patient OOP cost burden for preventative medicines or specialty pharmaceuticals adversely affects adherence and likely does not contain overall system costs. Therefore, alternative means to rein in prescription drug spending for these types of therapies need to be of greater focus.

One area that warrants deeper exploration is around authorizations and utilization reviews. Prior authorizations are widely used and they do help to control costs, however they incur consequences not adequately quantified in the market. Further understanding of how to use prior authorizations to provide quality care as defined by a balance of efficiency and efficacy is needed.

About the author: Susan Zawaski is a Consultant at the Frankel Group. To contact her regarding this post, email blog@frankelgroup.com.

Works Cited
ⁱCochrane Database Syst Rev. 2 (2008)
ⁱⁱPharmaceutical Commerce March 2009
ⁱⁱⁱNew York Times Jan 1, 2011
^ivCirculation 119: 3028-3035 (2009)
^vAm J Managed Care 12 SP5 (2006)
^viCirculation 119: 390–397 (2009)
^viiJ Oncol Pract 7: 46s–51s (2011)
^viiiN Engl J Med 365:2088-2097 (2011)
^ixHealth Affairs 27:103–112 (2008)
^xAm J Manag Care 16:e20-34 (2010)
^xiJ Oncol Pract. 7: 46s–51s (2011)
^xiiAMPC 2010
^xiiiJ Manag Care Pharm 15:648-58 (2009)