Prescription Drug Demand for Therapeutic Prescription Drug Demand for Therapeutic Substitutes: Do Copayments and Insurer Substitutes: Do Copayments and Insurer

Non-Price Rationing Influence Patient Non-Price Rationing Influence Patient Utilization?Utilization?

Dominick EspositoDominick Esposito

AcademyHealth Annual Research MeetingAcademyHealth Annual Research MeetingSan Diego, CASan Diego, CAJune 6, 2004June 6, 2004

Research Objectives

Do differential copayments influence Do differential copayments influence demand for therapeutically equivalent demand for therapeutically equivalent prescription drugs?prescription drugs?

Does insurance type have an independent Does insurance type have an independent effect on drug choice?effect on drug choice?

What are the implications for Medicare What are the implications for Medicare Part D prescription drug insurance?Part D prescription drug insurance?

Research Design

Drug class of interest: the StatinsDrug class of interest: the Statins MarketScan commercial claims (1997-1998)MarketScan commercial claims (1997-1998)– Commercial health plan enrollees (33 U.S. plans)Commercial health plan enrollees (33 U.S. plans)– MonotherapyMonotherapy

Multinomial logit specificationMultinomial logit specification– Demographics: Age, gender, regionDemographics: Age, gender, region– Medical: ComorbiditiesMedical: Comorbidities– Economic: Copayments, insurer typeEconomic: Copayments, insurer type

Sample Size: 44,709Sample Size: 44,709 Gender: 59% (Male)Gender: 59% (Male) Mean Age: 54Mean Age: 54 Health Plan TypeHealth Plan Type

– Indemnity: 37%Indemnity: 37%– HMO: 9%HMO: 9%– PPO: 27%PPO: 27%– POS: 27%POS: 27%

Statin Usage:Statin Usage:– Lescol: 6%Lescol: 6%– Lipitor: 36%Lipitor: 36%– Mevacor: 6%Mevacor: 6%– Pravachol: 17%Pravachol: 17%– Zocor: 35%Zocor: 35%

Health StatusHealth Status– CHD: 77%CHD: 77%– Hypertension: 31.5%Hypertension: 31.5%– Diabetes: 13%Diabetes: 13%

Sample Statistics

Magnitude of Copayment Differences

0

24

6

810

12

>$5 $5 to $2 $2 to $1 $1 to $0.50 < $0.50Copayment Difference Range

Num

ber

of H

ealth

Pla

ns

Principal Findings

Differential copayments influence Differential copayments influence individual drug choiceindividual drug choice

Insurer type influences drug choiceInsurer type influences drug choice– Market share in HMOs is 30% lower for Lipitor Market share in HMOs is 30% lower for Lipitor

and 20% higher for Zocorand 20% higher for Zocor Demographic and health status factors Demographic and health status factors

provide clinically interesting comparisonsprovide clinically interesting comparisons– Diabetes and Lipitor utilizationDiabetes and Lipitor utilization

Interpreting Results on CopaymentsImpact of a 20% Change in Copayment of Lipitor

Impact of a 20% Change in Copayment of Zocor

General Implications

Bargaining between insurers and drug Bargaining between insurers and drug manufacturersmanufacturers

Differential copayments can shift market Differential copayments can shift market share for a prescription drug within a share for a prescription drug within a health plan or goup of plans (negotiating health plan or goup of plans (negotiating tool)tool)

Policy Implications

Prescription drug plans under Medicare Part D Prescription drug plans under Medicare Part D could utilize differential copayments to could utilize differential copayments to decrease drug costsdecrease drug costs

Number of options available to beneficiaries Number of options available to beneficiaries could impact costs to Medicarecould impact costs to Medicare