The Formulary Files

Beneficiaries pay more despite decreased utilization


Krishna Rutvij Patel, PharmD

A common payer strategy is to increase cost-sharing to induce the patient to use drugs prudently. According to the Health Care Costs and Utilization Report, published by the Health Care Cost Institute (HCCI) in October, beneficiaries continue to respond as planned — yet spending has risen.

Health care expenditure distribution

Beneficiaries have cut back the most on branded drugs, although that’s also the segment in which their spending rose most. The result is a chain of events in which beneficiaries blame payers for higher cost-sharing as payers in turn blame drug companies for hiking prices. But do we have to play the blame game? Is there constructive action to be taken, or should we look forward to an end of pharmacy payers as we know them because they can’t keep beneficiary costs down? The optimist in me sees constructive action.

Rising beneficiary expenditure despite decreased utilization (2012–2013)

Source: 2013 Health Care Cost and Utilization Report, Health Care Cost Institute, Oct. 28, 2014. Available at: http://www.healthcostinstitute.org/research/annual-reports/2013-health-care-cost-utilization-report/.

Increasingly, formulary decision makers are adopting quality measures to keep costs down. They can go a step further and react to newly published guidelines, where quality measures originate. There is roughly a 16-month lag between release of a guideline and release of updated quality measures. That’s more than an entire fiscal year of lost opportunity.

For example, new lipid guidelines say that lower LDL-C is better, but quality measures reflecting this will not be released until 2015. The CDC has new recommendations on pneumococcal vaccination, based on results of a head-to-head trial. Quality measures reflecting these recommendations will be released in 2016, but plans can change formularies now to reflect the latest evidence and to lower hospitalization rates for pneumonia.

In addition to guidelines, studies linking drugs to outcomes, such as a study released in mid-November regarding Abilify Maintena, are constantly being released. Formulary decision makers can use these sources of evidence to inform their decisions.

Although the increase in prescription drug cost sharing is no surprise, considering the influx of expensive specialty drugs, appropriate formulary placement of drugs can result in reduced cost sharing in other areas, such as professional expenditure and acute inpatient admissions, which together constitute 55% of beneficiary spending. Take a look at HCCI’s report for a detailed analysis, as this is one of the largest datasets on the privately insured ever assembled.