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Book part
Publication date: 25 March 2010

Avi Dor, Maureen J. Lage, Marcy L. Tarrants and Jane Castelli-Haley

Purpose – The authors focus on understanding the relationship between costs and cost sharing on medication adherence for individuals who initiated a disease-modifying therapy…

Abstract

Purpose – The authors focus on understanding the relationship between costs and cost sharing on medication adherence for individuals who initiated a disease-modifying therapy (DMT) for the treatment of multiple sclerosis (MS). DMTs reduce the risk of relapse and are an essential component of MS treatment. Furthermore, the authors compare monthly payment levels for copayments versus coinsurance and estimate the effects on adherence.

Methods – Using the MarketScan Commercial Claims and Encounters database evidence from July 1 2005 to March 31 2008, the authors employ a multivariate two-stage least-squares model (2SLS) to examine the impact of copayments or coinsurance on the medication possession ratio (MPR).

Findings – Descriptive results show that the mean out-of-pocket (OOP) costs of DMT per month were higher for patients with coinsurance than for patients with copayments. For the cohort of patients with copayment there was little difference in monthly copayments across adherence thresholds. Regression analysis shows that an increase in cost sharing reduces adherence overall, but this effect was small and insignificant in the copayment cohort. In contrast, in the coinsurance cohort increased cost sharing was significantly associated with decreased adherence to DMT medication; with a 10% increase in cost sharing leading to an 8.6% decline in adherence.

Implications – Employers increasingly rely on coinsurance, despite evidence that reliance on coinsurance results in lower adherence. Our research findings suggest that coinsurance appears to be a greater obstacle to compliance, confirming predictions found in the theoretical literature.

Originality – This research converted counts of injectable treatments into a continuous adherence measure. Previous literature on cost sharing did not examine MS.

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Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Content available
Book part
Publication date: 25 March 2010

Abstract

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Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Book part
Publication date: 25 March 2010

Avi Dor

Pedro Pita Barros reviews pharmaceutical policies adopted by health care systems in European (OECD) countries. He notes that cost-sharing for pharmaceuticals is higher than…

Abstract

Pedro Pita Barros reviews pharmaceutical policies adopted by health care systems in European (OECD) countries. He notes that cost-sharing for pharmaceuticals is higher than cost-sharing for other services. However, although pharmaceutical cost-sharing is pervasive across the European Union, concerns over equity have led most countries to adopt sliding fee schedules and even outright exemptions from copayments for vulnerable populations such as the elderly and low income households. The most common form of price regulation in these countries is reference pricing, either “external” (pegging pharmaceutical payments to lowest prices in a group of countries) or “internal” (pegging pharmaceutical prices to the lowest price within a therapeutic class), as well as outright administrative price controls. In his theoretical results, Barros shows that reference pricing lowers cost to consumers the most, followed by administrative price lists, while the pure coinsurance system yields the higher total cost. To foster innovation, Barros proposes adoption of innovative payment schemes based on supply-side risk sharing whereby payments to drug manufacturers are tied to treatment results and patient outcomes. Such schemes are akin to pay-for performance methods used to reimburse physicians in certain managed care settings in the United States.

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Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Book part
Publication date: 25 March 2010

William E. Encinosa, Didem Bernard and Avi Dor

Purpose – To estimate the impact of diabetic drug adherence on hospitalizations, emergency room (ER) visits, and hospital costs.Methods – It is often difficult to measure the…

Abstract

Purpose – To estimate the impact of diabetic drug adherence on hospitalizations, emergency room (ER) visits, and hospital costs.

Methods – It is often difficult to measure the impact of drug adherence on hospitalizations since both adherence and hospitalizations may be correlated with unobservable patient severity. We control for such unobservables using propensity score methods and instrumental variables for adherence such as drug coinsurance levels and direct-to-consumer advertising.

Findings – We find a significant bias due to unobservable severity in that patients with more severe health are more apt to comply with medications. Thus, the relationship between adherence and hospitalization will be underestimated if one does not control for unobservable severity. Overall, we find that increasing diabetic drug adherence from 50% to 100% reduces the hospitalization rate by 23.3% from 15% to 11.5%. ER visits reduce by 46.2% from 17.3% to 9.3%. Although such an increase in adherence increases diabetic drug spending by $776 a year per diabetic, the cost savings for averted hospitalizations and ER visits are $886 per diabetic, a cost offset of $1.14 per $1.00 spent on diabetic drugs.

Originality – Most of the drug cost-offset literature focuses only on the impact of cost-sharing and drug spending on cost-offsets, making it impossible to back-out the empirical impact of actual drug adherence on cost-offsets. In this chapter, we estimate the direct impact of adherence on hospitalizations and costs.

Details

Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Content available
Book part
Publication date: 25 March 2010

Abstract

Details

Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Book part
Publication date: 25 March 2010

Abstract

Details

Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Book part
Publication date: 25 March 2010

Jie Chen and John A. Rizzo

Purpose – To examine how drug prices for specific diseases vary across payers in the United States and how insurer and patient out-of-pocket (OOP) costs vary by payer…

Abstract

Purpose – To examine how drug prices for specific diseases vary across payers in the United States and how insurer and patient out-of-pocket (OOP) costs vary by payer type.

Methodology – This study uses data from the Medical Expenditure Panel Survey (MEPS) from 1996 to 2006. We estimate multivariate price regressions for four major drug product classes (antihypertensive, antidepressant, antiasthma drugs, and non-steroidal anti-inflammatory drugs (NSAIDs)). Separate models are estimated for brand and generic drugs within each of these drug product classes. In addition to estimating overall transaction price equations for brands and generics, the study estimates patient OOP payments and insurer payments for drugs.

Findings – We find relatively modest differences among payers in terms of total prices (e.g., insurer plus OOP). The main difference is in terms of how prices were shared between insurers and patients. Medicaid paid significantly more than other payers for each drug class, while Medicaid beneficiaries paid significantly less.

Research implications – Our results shed light on how drug prices vary by different payers and how drug prices are shared by third party payers and patients. The relatively modest differences in total drug prices across payer type suggest that these payers do not differ greatly in terms of their ability to negotiate price concessions from their suppliers. Instead, larger differences emerge in terms of how total costs are shared among the payer and their patients. Understanding the reasons for these variations, and their implications for health outcomes, are important directions for further research.

Details

Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Content available
Book part
Publication date: 25 March 2010

Abstract

Details

Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Book part
Publication date: 25 March 2010

Yang Xie, John M. Brooks, Julie M. Urmie and William R. Doucette

Objective – To examine whether local area pharmacy market structure influences contract terms between prescription drug plans (PDPs) and pharmacies under Part D.Data – Data were…

Abstract

Objective – To examine whether local area pharmacy market structure influences contract terms between prescription drug plans (PDPs) and pharmacies under Part D.

Data – Data were collected and compiled from four sources: a national mail survey to independent pharmacies, National Council for Prescription Drug Programs (NCPDP) Pharmacy database, 2000 U.S. Census data, and 2006 Economic Census data.

Results – Reimbursements varied substantially across pharmacies. Reimbursement for 20mg Lipitor (30 tablets) ranged from $62.40 to $154.80, and for 10mg Lisinopril (30 tablets), it ranged from $1.05 to $18. For brand-name drug Lipitor, local area pharmacy ownership concentration had a consistent positive effect on pharmacy bargaining power across model specifications (estimates between 0.084 and 0.097), while local area per capita income had a consistent negative effect on pharmacy bargaining power across specifications(−0.149 to −0.153). Few statistically significant relationships were found for generic drug Lisinopril.

Conclusion – Significant variation exists in PDP reimbursement and pharmacy bargaining power with PDPs. Pharmacy bargaining power is negatively related to the competition level and the income level in the area. These relationships are stronger for brand name than for generics. As contract offers tend to be non-negotiable, variation in reimbursements and pharmacy bargaining power reflect differences in initial insurer contract offerings. Such observations fit Rubinstein's subgame perfect equilibrium model.

Implication – Our results suggest pharmacies at the most risk of closing due to low reimbursements are in areas with many competing pharmacies. This implies that closures related to Part D changes will have limited effect on Medicare beneficiaries’ access to pharmacies.

Details

Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

Book part
Publication date: 25 March 2010

Yuriy Pylypchuk

Purpose – To examine the effects of health insurance types on the use of prescribed medication that treat patients with hypertension, diabetes, and asthma. The study distinguishes…

Abstract

Purpose – To examine the effects of health insurance types on the use of prescribed medication that treat patients with hypertension, diabetes, and asthma. The study distinguishes between individuals with private health maintenance organization (HMO) plans and private non-HMO plans. The study also distinguishes between people with health insurance and drug coverage and people with health insurance and no drug coverage.

Methods – Joint discrete factor models are estimated to control for endogeneity of each type of coverage.

Findings – The main findings suggest that the effect of health insurance varies across patients with different conditions. The strongest and most significant effect is evident among patients with hypertension while the weakest and least significant is among patients with asthma. These findings suggest that patients with asymptomatic conditions are more likely to exhibit moral hazard than patients with conditions that impose immediate impairment. Additional results suggest that, relative to the uninsured and people with health insurance but no drug coverage, patients with drug coverage are more likely to initiate drug therapy and to consume more medications.

Originality – The results of the study indicate that moral hazard of drug utilization is condition specific. The variation in “silence” of conditions’ symptoms could be a key reason for difference in insurance effects among patients with hypertension, diabetes, and asthma.

Details

Pharmaceutical Markets and Insurance Worldwide
Type: Book
ISBN: 978-1-84950-716-5

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