The impact of increasing patient prescription drug cost sharing on therapeutic classes of drugs received and on the health status of elderly HMO members - health maintenance organizations

Health Services Research, April, 1997 by Richard E. Johnson, Michael J. Goodman, Mark C. Hornbrook, Michael B. Eldredge

BACKGROUND AND SIGNIFICANCE

Drug treatment is a necessary component of maintaining the health and functioning of elderly persons. These individuals form the population segment much more likely than the younger adult segment to have multiple potentially disabling medical problems manageable with drug treatment. As a result, persons 65 years of age, while currently constituting about 12 percent of the U.S. population, receive about 25 percent of the total number of prescriptions dispensed per year (National Council on Patient Information and Education 1988; Guralnik, Yanagishita, and Schneider 1988). It is estimated that, by the year 2000, the nearly 35 million elderly will consume one-half of all prescription drugs (National Council on Patient Information and Education 1988). This has important implications for medical care delivery in the future and for future drug policy in particular.

While drugs are a necessary component of healthcare, they are not sufficient to maintain the health and functioning of elderly populations unless they are both accessible and used. While the Medicare and Medicaid programs have dramatically increased the elderly population's access to healthcare services in general, the Medicare program, which serves by far the largest part of the elderly population, does not provide a prescription drug benefit. As a result, nearly 46 percent of the elderly have no prepaid prescription drug coverage, either through private insurance or public assistance programs (Long 1994).

Studies have shown that prescription drug insurance increases prescription drug utilization in a population or community, including the elderly segment (Greenlick and Darsky 1968; Lohr, Brook, Kamberg, et al. 1986; Weeks 1973; Stuart et al. 1991; Sullivan 1992; Stuart and Grana 1993). It is important to note, however, that those with prescription drug coverage, including the elderly, are not random samples of the population. They are by definition a self-selected subgroup more likely to require prescription drugs. Thus, the findings are not indicative of the increased use of medications were the entire population to have prescription drug insurance.

The question of a prescription drug benefit for the elderly population is a continuing one. Congress attempted to address the elderly's prescription drug needs with the enactment of PL 100-360, the Medicare Catastrophic Act of 1988 (Department of Health and Human Services 1989). The act included coverage for outpatient prescription drugs for the highest 16.8 percent of users after a $540 deductible. The act was repealed, however, before implementation.

For future efforts designed to provide prescription drug coverage for the elderly, a major policy question asks to define the kind and level of prescription drug benefit that will provide the drug treatments necessary to maintain the health and functioning of the elderly and, at the same time, contain prescription drug costs. One technique increasingly employed by third-party payors to contain medical care costs and prescription drug costs is patient cost sharing. This approach shifts a share of the cost of the service to the patient. Mechanisms for patient cost sharing include deductibles, coinsurance, and copayments. Underlying the use of cost-sharing techniques is the premise that when a service is free or costs very little, patients may use it beyond what is necessary to realize the benefits from the service. In other words, the cost of the utilization can exceed the benefits from that utilization. Cost sharing, where some of the cost of the service is shifted to the user, can be an attempt to ensure cost-conscious consumption appropriate to a user's actual needs.

The application of this idea to the use of prescription drugs means that inefficient use of prescription drugs is likely among persons with no or little out-of-pocket drug costs, and the introduction of patient cost sharing will reduce or eliminate unnecessary prescription drug use. No adverse health consequences should occur given the assumptions that we have an informed consumer and that the use of the drug is not necessary to maintain health. If this can be shown to be the case, then patient cost sharing of prescription drug use can be an effective way to ensure appropriate use of prescription drugs and to help contain drug costs.

However, patient cost sharing may not affect everyone equally. Those with small, fixed incomes, such as the elderly, may be more likely to reduce drug consumption than those with higher incomes. Smart and Grana (1993) found the probability that the elderly would medicate a health problem to increase 2 to 3 percent per additional $3,000 of income up to an annual income of $18,000, after which the effect diminished. Consequently, cost sharing may increase the risk that some necessary utilization could be reduced, which, in turn, could increase the risk of adverse health consequences.

Several studies have attempted to show the impact of increased prescription drug cost sharing on the use of various therapeutic classes of drugs, from those that are chronic disease-specific (e.g., antihypertensives, antidiabetics, anti-Parkinsons) to those less disease-specific (e.g., analgesics, sedatives, cough preparations) (Foxman, Valdez, Lohr, et al. [1987]; Greenlick and Darsky [1968]; Harris, Stergachis, and Ried [1990]; Lohr, Brook, Kamberg, et al. [1986]; Nelson, Reeder, and Dickson [1984]). The findings were mixed regarding whether the utilization of more essential types of medications or less essential types of medications or all classes of medications were more likely to be reduced. Ryan and Birch (1991) concluded, upon examining increases in patient prescription drug cost sharing in the British National Health Service over time, that it should not be assumed that unwarranted and frivolous utilization had been reduced given the patients' lack of information on the effectiveness and efficiency of prescribed drugs.