Value-Based Insurance Design: A Bargain at $10 Per Day?

A recent edition of Health Affairs included two new studies of copay reductions for prescription medications, commonly referred to as a type of value-based insurance design (VBID).  These studies are a much-needed addition to the literature given the paucity of empirical studies.  The idea behind lowering copays for prescription medication is to increase medication adherence by removing cost as a potential barrier and to hopefully improve health outcomes, in the short or long-term.

The results of the two new evaluations are generally consistent with an earlier study.  When copays are partially or entirely waived, medication adherence, commonly measured as the medication possession ratio (MPR), increases by 2 to 4 percentage points, depending on the drug class.

Key Findings From Studies of Prescription Copay Waivers
Study Waiver Absolute Change in MPR
ACEIs Diabetes Statins
Choudry (2010)* Zero copay     ~ 2.3
Maciejewski (2010) Zero copay for generics; Brands moved from Tier 3 to Tier 2 2.9 3.8 1.8
Chernew (2008) Zero copay for generics; 50% copay reduction for brands 2.6 4.0 3.4

How meaningful is this change in adherence?

  • From a clinical perspective, the change represents 7 to 14 additional days of medication over a course of one year, the clinical benefit of which is simply unknown.
  • From a cost perspective, these copay waivers cost between $7 and $10 per additional day of medication use (using Chernew as the case study).
  • To put this figure in context, at the time of the Chernew study, daily drug cost ranged from $1.14 to $2.68 per day* for these medications—which means the copay waiver resulted in an incremental daily cost of treating these patients that was 3 to 6 times higher than the daily ingredient cost.

Does this represent good value?  Likely not.  Of course, plans can raise copays for low value therapy classes to offset these costs, but so far, the market has shown reluctance to do so.  Advocates of copay waivers might argue that this is siloed thinking because increased drug costs will be offset by reductions in medical spend.  Certainly sounds appealing, doesn’t it?  To learn more, look for Part 2 of this discussion in the near future.

Source for cost calculations: Fairman and Curtiss, JMCP 2008.

*Choudry used a similar measure to MPR-proportion of days covered

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  1. Prescription Copay Waivers Plus Educational Mailings for Asthma Improve Compliance—Causality or Correlation? « Rx Outcomes Adviser

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