Study: Add Worker Drug Payments to Lower Health Plan Costs

November 5, 2002 (PLANSPONSOR.com) - Increasing how much employees have to pay out of pocket for prescription drugs could generate the cost savings so many employers and health care providers are searching for, according to a new study.

The study, by RAND Health of Santa Monica, California, found that raising copayments by $10 or $20 changes patients’ behavior. The researchers found that for enrollees in a one-tier plan with a $5 copayment for all drugs, the average annual spending was $725 per employee.

Doubling copayments to $10 for all drugs reduced the annual average drug cost by more than 22% from $725 to $563 per worker. Doubling copayments in a two-tier plan from $5 for generics and $10 for brand drugs to $10 and $20 copayments, respectively, reduced costs by almost 33% from $678 to $455, according to the study.

Adding an additional copayment of $30 for nonpreferred brand drugs to a two-tier plan ($10 generics; $20 brand) lowered overall drug spending by 4%, the study found.

Although the study found no evidence that people are going without essential medication because of the increase in cost sharing, the authors noted that additional studies are needed to see whether the shift to generics and higher copayments are having an impact on patient health.

The study, published in the Journal of the American Medical Association, was funded by the California HealthCare Foundation.

The study was conducted from 1997 to 1999 linking claims data of 420,786 people aged 18 through 64 years old who worked at large firms with health insurance benefits that included outpatient drugs.

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