Rising Insurance Costs May Alter Drug Use

Increasing co-payments charged by insurance companies may be leading people to stop taking needed medications, according to a study done by a group of Harvard Medical School (HMS) researchers.

The study, published last week in the New England Journal of Medicine, “compared utilization and spending patterns for three classes of drugs that are used to treat chronic illnesses,” said Richard Frank, Morris professor of health economics at HMS and one of the researchers involved in the study.

The researchers looked at how changes from a one-tiered and two-tiered formulary insurance plan to a three-tiered formulary at two companies affected employees’ spending on and use of medication. In particular, the researchers focused on the use of proton-pump inhibitors, which treat heartburn; ACE inhibitors, which treat high blood pressure; and statins, which lower cholesterol.

A three-tier plan charges three possible prices for medications—the lowest price for generic drugs, the middle price for drugs that are low in cost or are preferred by the insurance company, and the highest price for expensive drugs or for drugs that the company does not prefer.

One-tier plans offer generic and brand name drugs for one retail price and a different mail order co-payment price. Two-tier plans offer generic and brand name drugs for the same retail and mail order co-payment price.

“For the plan that moved from a one-tier formulary to a three-tier formulary, you saw a small to medium amount of savings in total spending on drugs, you saw a significant reduction in the spending by the plan and you saw a very large increase in spending by consumers. There was a very substantial shift in who bears the cost burden,” Frank said.

Harvard students who are covered by their parents’ insurance plans and who suffer from chronic illnesses like depression may face similar problems with the costs of their medications, Frank said.

Tiered formularies are meant to give patients some control over which medications they use by covering many types of medications, although those medications preferred by the insurance plans cost less. Tiered formularies also give insurance plans the power to negotiate lower prices with drug companies, according to the researchers.

“When you use co-payments to get people to change what drugs they’re using, it can be effective,” Frank said. “The bad news is that if people don’t switch in very huge numbers, you’re essentially taking away some of their insurance coverage. They have to pay more out of their pockets.”

Although a number of people merely switched to lower-cost drugs when the three-tiered plans were put in place, the researchers found that some patients stopped taking their medicines. And while users of proton-pump inhibitors are not supposed to stay on the medications permanently, Frank said, ACE inhibitors and statins are meant for long-term use.

The researchers did not study the effects that stopping use of medication had on these patients.