Industry Research

Pharmacy Benefit Design

Published in 2007

Cox ER, Kulkarni A, Henderson R. Impact of Patient and Plan Design Factors on Switching to Preferred Statin Therapy. Ann Pharmacother. 2007 Dec;41(12):1946-53.
Available at the Annals of Pharmacotherapy Website

This study examined the relationships among patients, plan-design factors and formulary adherence after the formulary status change of atorvastatin. This was a retrospective cross-sectional study of patients enrolled in one of 2,139 commercial plans (no Medicare or Medicaid) that offered a 3-tier benefit design and changed atorvastatin from formulary status to nonformulary status. Adults on atorvastatin therapy receiving targeted communications were included for analysis. A total of 211,083 patients met the study inclusion criteria and more than 42% switched from atorvastatin to a formulary statin. Patient-related factors that consistently predicted switching across retail and Home Delivery (HD) channels included females, prior statin switching, and members contacting Express Scripts for more program information. Plan-design factors that influenced switching to the preferred agent included step therapy, brand preferred copayment and nonpreferred copayment differential; and among retail users, receipt of a Rapid Response educational letter. In both retail and HD, an increase in copayment differential (difference between preferred and nonpreferred brand copayment) was associated with increased odds of switching to a formulary preferred agent. Through appropriate programs and benefit-plan design, plan sponsors' impact on formulary adoption is maximized.

Mager DE, Cox ER. Relationship Between Generic and Preferred-Brand Prescription-Copayment Differentials and Generic-Fill Rate. American Journal of Managed Care. 2007;13(6):347-352.
Available on the AJMC Website (PDF file)

This study was designed to evaluate the impact of a plan sponsor's pharmacy-benefit characteristics — specifically benefit structure — on the use of generic medications. The study used a cross-sectional research design, with demographic and retail prescription-utilization data, aggregated at the plan-sponsor level. Plan sponsors included in the study were enrolled at Express Scripts throughout 2005, were commercially insured, offered a subsidized benefit, adopted one of two formularies and had at least 100 members. A total of 3,979 clients were selected for the study. Results indicate that controlling for plan demographics, several benefit-plan factors significantly and positively influenced generic-fill rates, including implementation of at least one step-therapy program, using a three-tier benefit structure, and setting a copayment differential between preferred brands and generics of at least $11. These results, which provide insight into how plan-design structure influences generic utilization, can help plan sponsors design their benefits.

Published in 2006

Cox E, Behm A, Mager D, et al. Use of generic therapeutic substitution can save billions in drug costs. Drug Benefit Trends. 2006;18:165-179.

The potential savings from increased use of generic medications has never been greater and will continue to surge, because patents on brand-name pharmaceuticals worth more than $43 billion in sales are expected to expire through 2009. Despite the availability of tools to encourage greater use of generic drugs, their adoption rates vary. This study, based on findings of the 2004 Generic Drug Usage Report compiled by Express Scripts, estimates the potential opportunity for cost savings based on the use of chemically equivalent generic substitution and generic therapeutic substitution across six therapy classes. Among the findings: the estimated annual savings opportunity among commercially insured members was more than $20 billion. The greatest savings opportunity came from increased use of generic medications in the GI therapy class, in which reaching generic targets would save employers, state governments, and members more than $5 billion annually. The overall generic fill rate in 2004 varied by state, from a low of 41% in New Jersey to a high of 56% in Oregon, Massachusetts, and New Mexico.

Published in 2005

Delate T, Henderson RR. Effect of patient notification of formulary change on formulary adherence. J Manag Care Pharm. 2005 Jul-Aug;11(6):493-8.

The purpose of this study was to evaluate the impact of patient notification of impending formulary changes on formulary adherence. Using a randomized controlled trial design, members of a large, Midwest-based health insurer facing a change in formulary status of their current medication were targeted to receive a letter based intervention or no letter. Patients in the intervention arm were sent a targeted communication that described the patient’s formulary change medication(s) and provided therapeutic option(s) for the formulary change medication(s). Review of prescription claims 110 days after the date of the mailing was made to determine if there was a switch to a formulary alternative. A higher proportion of those in the intervention arm changed to formulary medication compared to the control arm (19.2% vs 12.0%, P < 0.001). After adjustment for baseline differences, regression modeling indicated that subjects in the intervention arm were 1.33 times more likely to switch to a formulary alternative (P < 0.001). These findings suggest that informing members of lower cost alternatives is an effective strategy for encouraging use formulary agents.

Delate T, Mager DE, Sheth J, Motheral BR. Clinical and Financial Outcomes Associated With a Proton Pump Inhibitor Prior-Authorization Program in a Medicaid Population. American Journal of Managed Care. 2005;11(1):131-139.

The purpose of this study was to examine the outcomes associated with a proton pump inhibitor (PPI) prior-authorization (PA) policy. Using a time-series analysis, a 6-month pre and post design was used to estimate clinical and financial effects of the PPI PA program. Results indicated that expenditures per-member-per-month decreased 91% for PPIs and increased 223% for histamine 2-receptor antagonist (H2A) in the month immediately following the implementation of the policy. Analysis showed that the enrollees who received an H2A or no antisecretory drugs were no more likely to have incurred greater total medical care expenditure than enrollees who received a PPI. The use of prior authorization of PPIs encouraged the use of lower cost H2A medications, and reduced the use of high-cost PPIs without evidence of adverse medical consequences.

Published in 2004

Motheral BR, Heinle SM. Predictors of Satisfaction of Health Plan Members with Prescription Drug Benefits. American Journal of Health-System Pharmacy. May 15, 2004;61:1007-1014.

This study examined relationships between socio-demographic and health plan characteristics and health plan member satisfaction with prescription drug benefits. A survey was mailed to a stratified random sample of 14,141 members to assess their satisfaction, knowledge, and experience with their prescription drug benefits. A total of 3,819 surveys were returned (27% response rate). Respondents were more likely to be mail-order pharmacy users and less likely to be enrolled in a plan with a closed formulary. Results of the survey indicated the most important feature of the pharmacy benefit is out-of-pocket cost. Lower satisfaction with the prescription drug benefit was associated with higher copayments, coinsurance, closed formularies, intensive managed care, large health care premiums, a recent increase in copayments, and a recent denial of coverage. Greater satisfaction was associated with excellent health and use of mail-order pharmacy.

Published in 2003

Fairman KA, Motheral BR, Henderson RR. Retrospective, Long-Term Follow-Up Study of the Effect of a Three-Tier Prescription Drug Copayment System on Pharmaceutical and Other Medical Utilization and Costs. Clinical Therapeutics. 2003;25(12):3147-3161.

The purpose of this study was to examine the effect of a 3-tier copayment system on pharmaceutical and medical utilization and cost for 30 months after implementation in a population of commercially insured, preferred-provider organization members. Results showed reduced growth in net cost and lower utilization of third-tier medications. The intervention and comparison groups did not differ significantly with respect to numbers of office visits, emergency department visits or inpatient hospitalizations.

Motheral BR, Littlejohn S, A Winning Formula. Canadian Healthcare Manager.
www.chmonline.ca April 2003.

Because drug costs are soaring, plan sponsors are opting for three-tiered prescription drug formularies. Tier 1 contains generic drugs with the lowest copay amount averaging $7. Tier 2 contains formulary brand drugs averaging $15. Tier 3 contains non-formulary brand drugs with the highest copay amount averaging $30. This study shows the economic benefits of a three-tiered prescription drug formulary.

Published in 2001

Motheral BM, Fairman KA. Effect of a three-tier prescription copay on pharmaceutical and other medical utilization. Medical Care 2001;39(12):1293-304.

Plan sponsors increasingly are implementing three-tiered pharmacy benefits as prescription costs continue to grow at double-digit rates. The objective of this study was to examine the effect of a three-tiered pharmacy benefit on pharmaceutical utilization and expenditures, medication continuation, and use of other medical resources. The study population was continuously eligible, commercially insured enrollees of a preferred provider organization (PPO). A quasi-experimental pre-post with comparison group design was used, with the pre- and post-periods each being 12 months long. The intervention group included enrollees whose employer moved from the PPO's two-tier benefit to a three-tier benefit (N=6,881). The comparison group included enrollees whose employer remained under the PPO's two-tier benefit (N=13,279). The intervention group demonstrated slower growth in prescription utilization and expenditures and considerably reduced net costs relative to the comparison group. For 1 of the 4 chronic therapy classes studied, medication continuation rates were lower at 6 and 11 months. However, a definitive link between discontinuation and three-tier copay was not extant. No significant differences in physician office visits, inpatient, or emergency room use rates were found. Three-tier prescription copays can control drug costs without evidence of unintended consequences in the year following implementation.

Fairman KA, Motheral BR, Teitelbaum F. Effects of employee salary and chronic disease on response to a drug copayment increase.
Available on the Express Scripts Website (PDF file)

This study examined the effects of employee salary and chronic disease on response to prescription copayment changes in a commercially insured population. The study sample included 559 families (a service industry company's employees and their dependents) enrolled in an HMO. Prescription expenditures over the five months following implementation of a copayment increase were compared to expenditures over a five-month period prior to implementation. The expenditure changes of families with lower incomes and higher chronic disease scores were then compared with those of more affluent and healthier families. Findings suggest that response to a copayment change is influenced both by the magnitude of the change and by income. More affluent families may absorb significant copayment increases without diminishing their drug utilization. On the other hand, lower-income families may be more likely to reduce drug utilization in response to higher out-of-pocket costs. As pharmacy plan sponsors seek more aggressive means to manage costs, the popularity of plan designs that increase members' share of cost will undoubtedly continue to grow. This study suggests, however, that payers considering copayment increases may wish to take into account the ability of lower-income workers to pay the higher out-of-pocket costs.

Henderson RR, Motheral BR. Mail order pharmacy: a case study. Drug Benefit Trends 2001;13(9):28-38.

This study examined what type of patients use mail-order pharmacy, what medications are commonly purchased via mail order, persistence rates with chronic medications, and medication waste among mail-order users. Controlling for number of prescriptions and chronic disease score, older enrollees and females were more likely to use mail order. Mail-order prescriptions were filled almost predominantly for chronic conditions. Mail order was associated with greater medication continuation for some chronic therapy classes but not others. While the results of this study provide basic insight into the patterns of the mail-order pharmacy use within a commercial population, further research is needed.

Teitelbaum F, Martinez R, Parker A, Henderson R, Roe C, Kolling B, Ellis S. Drug Trend Report 2000. June 2001.
Available on the Express Scripts Website (PDF file)

The Drug Trend Report examines the complex dynamics producing the continuing increase in prescription drug costs. The factors driving trend include price inflation, the changing mix of drugs taken, units per prescription, increased usage and new therapies. The fifth edition discusses the magnitude of and reasons for prescription drug cost increases between 1996 and 2000, with particular emphasis placed on the 1999-2000 trend. In 2000, drug trend increased at a rate of 16.2 percent, slightly lower than in 1999; 2000 was the first time this has decreased since Express Scripts began monitoring drug trend.

Cox ER, Jernigan C, Coons SJ, Draugalis JR. Medicare beneficiaries' management of capped prescription benefits. Medical Care 2001;39:296-301.

Annual dollar limits in prescription coverage is a type of benefit design unique to Medicare beneficiaries. The purpose of this study was to determine the impact of capped prescription benefits on efforts to reduce out-of-pocket prescription expenses by beneficiaries at risk for reaching their cap. A self-administered questionnaire was sent to 600 Medicare HMO-risk enrollees with capped prescription benefits of $750, $1,000 and $3,000. Results indicate that approximately half of all respondents participated in at least one strategy to reduce their out-of-pocket prescription expense. Participation in selected strategies included obtaining samples from physicians (39.2%), taking less than prescribed amounts (23.6%), and discontinuing prescribed medications (16.3%). Additionally, 15% of respondents indicated going without necessities, and 12 percent indicated borrowing money to pay for their prescriptions. Those who reached their prescription cap were more likely to participant in any one behavior (OR=2.18), more likely to take less than prescribed (OR=2.83), more likely to discontinue a medication (OR=3.36), and more likely to obtain samples from their physician (OR=2.02) compared to those who had not reached their prescription cap. The results of this study suggest that Medicare beneficiaries who reach their prescription cap are taking steps to reduce their out-of-pocket prescription cost at a greater rate than those who did not reach their cap. While some behaviors would be considered prudent, other behaviors may be placing beneficiaries at risk for drug-related morbidity and mortality.

Published in 2000

Cox ER, Motheral BR and Fairman K. Exhaustion of prescription benefits and Medicare beneficiaries' disenrollment from managed care. Journal of the American Medical Association;284:2596-2597.

This study examines the relationship between exhaustion of capped prescription benefits and the risk of disenrollment from Medicare HMO plans across two-years (1997 and 1998) for three plans varying in cap amount and administration of benefits. The cap amounts in 1997 were $600 (plan A), $1,000 (plan B), and $1,500 (plan C) and all administered on a quarterly basis. The cap amounts in 1998 were all $1,000, administered quarterly in plans A and C and annually in plan B. Disenrollment rates among those enrolled in the first three months of each year were 19.3%, 28.9% and 6.8% in 1997 and 10.4%, 22.9% and 14.0% in 1998, respectively for plans A, B, and C. The findings suggest that the risk of disenrollment across all plans and both years was significantly associated with older age, greater disease burden (i.e., higher CDS score), and reaching cap. In 1997 the relative risks of disenrollment in any given month for those reaching cap were 2.62 (95% CI, 2.15-3.19), 2.21 (95% CI, 1.70-2.88), and 2.24 (95% CI, 1.43-3.50); in 1998, the relative risks of disenrollment were 3.04 (95% CI, 2.40-3.86), 1.79 (95% CI, 1.12-2.86), and 2.30 (95% CI, 1.86-2.86) for plans A, B, and C respectively. The findings suggest that exhaustion of prescription coverage, whether administered on a quarterly or annual basis, was associated with a 2 to 3 fold increase in the relative risk of disenrollment.

Motheral BR, Henderson R. The effect of a closed formulary in a noncontinuously eligible population. Journal of Managed Care Pharmacy 2000;6:293-297.

This study examines the effect of a closed formulary on pharmaceutical utilization and expenditures in a non-continuously eligible population. Controlling for age, sex, chronic disease score, and utilization in the pre-period, there was a higher generic fill rate, lower mean total claims PMPM, and a lower mean brand claims PMPM in the post-period. While the results of this study provide insight into the patterns of a closed formulary, further research should examine the effect of a closed formulary within therapy classes.

Teitelbaum F, Martinez R, Parker A, Henderson R, Roe C, Kolling B. Drug Trend Report 1999. June 2000.
Available on the Express Scripts Website (PDF file)

The Drug Trend Report examines the complex dynamics producing the continuing increase in prescription drug costs. The factors driving trend include price inflation, the changing mix of drugs taken, units per prescription, increased usage and new therapies. The fourth edition discusses the magnitude of and reasons for prescription drug cost increases between 1996 and 1999, with particular emphasis placed on the 1998-1999 trend. In 1999, drug trend increased at a rate of 17.4 percent, continuing a trend of increasing rates since Express Scripts began monitoring drug trend.

Vogel RJ, Cox ER. Analytic dimensions of a prescription-medication benefit in Medicare. Clinical Therapeutics 2000;22(4):470-493.

Many analysts believe that the lack of coverage for outpatient prescription medications represents a conspicuous deficiency in the Medicare benefits package. This article uses insurance theory to design and estimate the costs of a Medicare catastrophic-medication outpatient benefit considering both equity and efficiency criteria. Results led to preference of a benefit that would be means-tested by employing deductibles, coinsurance rates, and catastrophic limits, all of which would be progressively graduated for seven household income classes.

Published in 1999

Motheral BR, Henderson RR. The effect of closed formularies on prescription drug use and costs. Inquiry 1999-00 Winter;36(4):481-91.

Motheral BR, Henderson R. The effect of a copay increase on pharmaceutical utilization, expenditures, and treatment continuation. The American Journal of Managed Care 1999;5:1383-1394.

Teitelbaum F, Parker A, Martinez R, Roe C. Drug Trend Report 1998. June 1999.

Published in 1998

Teitelbaum F, Parker A, Martinez R. Drug Trend Report 1997. June 1998.

Motheral B, Teitelbaum F, Toan B. The 'Shoe-Box Effect'. Health Affairs. 1998;17(3):284.

Published in 1997

Teitelbaum F, Parker A, Navarro R. Drug Trend Report 1993-1996. June 1997.

Published in 1996

Motheral BR, Fairman KA, Teitelbaum F, et al. Factors influencing utilization and costs in a pharmacy benefit program. Drug Benefit Trends. 1996;October:10-18, 34.

Fairman KA, Teitelbaum F, Motheral BR, Barrow SM, Thomas ME. Comment on Horn et al.'s "Intended and unintended consequences of HMO cost-containment strategies". American Journal of Managed Care 1996;2:588,591-592.

 

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