Drug Coverage, Adherence, and Costs

I’m not yet sure if filling the Medicare Part D donut hole as the Affordable Care Act does by 2020 is a good use of taxpayer money. It will require a careful welfare analysis for me to form an opinion.

But it is clear that more complete drug coverage is of value to beneficiaries. It may even be good for their health. That’s the conclusion one reaches from the literature on cost-related adherence to drug regimens. The conceptual model is that lower drug costs lead to better adherence which, in turn, leads to better control of health conditions that might otherwise contribute to health complications and/or hospitalizations and the commensurate costs.

Two recent papers add to the growing body of work that supports one or another link in this causal chain. In a January 2010 article in the American Journal of Managed Care, Matt Maciejewski and colleagues studied the $2 to $5 Veterans Affairs (VA) copayment increase that went into effect in 2002. Their focus was on populations of VA patients with diabetes or hypertension, two conditions for which lack of adherence to medications can have severe consequences on mortality and morbidity.

The authors conclude that the copayment increase “adversely impacted medication adherence for veterans subject to copayments taking oral hypoglycemic agents, antihypertensive medications, or statins.” Depending on the condition and medication, long-term decline in adherence rates varied between 1.9% and 10.3% from the pre-copayment increase period. That is, even this modest copayment proved important for medication adherence in the population studied.

In a December 2009 Health Services Research article Vicki Fung and colleagues examined the effect of donut hole (or “gap”) coverage on drug costs and adherence among Medicare beneficiaries with diabetes. The authors found that donut hole coverage

resulted in lower total drug costs, but higher out-of-pocket spending and worse adherence compared with having no gap. Having generic-only coverage during the gap appeared to confer limited benefits compared with having no gap coverage.

Specifically, drug spending was 3 and 4 percent lower among beneficiaries without gap coverage and generic-only gap coverage, respectively, relative to beneficiaries with full gap coverage. Out-of-pocket spending was 189% higher for beneficiaries without gap coverage. Also, adherence levels were 4-8 percentage points lower for beneficiaries without gap coverage for diabetes, hypertension, and hyperlipidemia drugs.

None of these results are in any way surprising. Beneficiaries will use more of something when someone else is paying more of the bill. That may be good for the beneficiaries, but it is it good value for the “someone else,” which is to say, the taxpayer? That’s a tougher question.

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