Formularies and Cost Sharing Issues for Medicare Part D Haiden Huskamp, Ph.D. October 8, 2004 Funding for research presented provided by the Robert Wood Johnson Foundation’s HCFO program, NIMH and AHRQ Three-Tier Formularies Basic Structure: Tier 1: generic drugs (e.g., $5) Tier 2: preferred brand-name drugs (e.g., $15) Tier 3: non-preferred brand-name drugs (e.g., $30) Primary Goals Make patients and their doctors more sensitive to the relative costs of different treatments Increase bargaining power with pharmaceutical manufacturers Questions Reduction in plan spending? Increased costs for patients? Clinical outcomes: change or stop medications? Formulary Changes Employer A Pre: $7 Post: $8/$15/$30 Employer B Pre: $6/$12 Post: $6/$12/$24 Formulary Content Drug Class ACE Inhibitors PPIs Statins Tier 1 Tier 2 Tier 3 Accupril Capoten Lotensin Prinivil Aceon Altace Mavik Monopril Univasc Vasotec Zestril None Nexium (after 11/01) Prilosec Aciphex Nexium (before 11/01) Prevacid Protonix lovastatin Baycol (after 10/00) Lipitor Pravachol Zocor Baycol (before 10/00) Lescol Mevacor captopril enalapril maleate Study Population EMPLOYER B EMPLOYER A Mostly hourly workers 3-Tier Group: 55,567 Comparison Group: 55,951 Mostly salaried workers 3-Tier Group: 11,653 Comparison Group: 27,051 Analyses Models of how formulary changes affected: Probability of use Amount spent by plan, patient, and total Stay, switch or stop medications Large Copay Increase Slowed Growth in ACE Use for Employer A 0.025 0.02 0.015 0.01 0.005 Month 31 28 25 22 19 16 13 10 7 4 0 1 # users / # enrollees 0.03 Comparison Intervention Limited Copay Increase Had No Effect on ACE Use for Employer B 0.035 0.03 0.025 0.02 0.015 0.01 0.005 Month 31 28 25 22 19 16 13 10 7 4 0 1 # users / # enrollees 0.04 Comparison Intervention Large Cost-Shift for Employer A Only Employer B Employer A ACE Inhibitors PPIs Statins Plan Spending 58% 15% 14% Enrollee Spending 142% 148% 118% ACE Inhibitors PPIs Statins Plan Spending 5% 2% 0 (NS) Enrollee Spending 7% 5% 0 (NS) Tier 3 Users More Likely to Change to Lower Tier Employer B Employer A 49 50% 49 50% 41 42 40% 40% 35 30% 30% 20% 17 10% 20% 18 15 10% 8 4 2 1 0% 0% ACE Proton-Pump Inhibitor Intervention Statin Comparison ACE Proton-Pump Inhibitor Statin Employer A Tier 3 Users More Likely to Discontinue Employer A 40% 32 30% 21 19 20% 16 11 10% 6 0% ACE Proton-Pump Inhibitor Intervention Statin Comparison Research Conclusions Substantial copay increases by A led to: Slower growth in use Shifting of costs onto patients Greater likelihood of changing or discontinuing medications More moderate changes had more modest effects Important MMA Provisions Category/class definition, tier assignment and copayment levels important for access and out-of-pocket burden Formulary reconsideration process could facilitate or impede access Secretary’s role in monitoring plan design is key Formulary Structure and Content Could Affect Access Under Part D Category Class Recommended Subdivision Antidepressants Reuptake Inhibitors MAOIs SSRIs SNRIs Other TCAs Formulary Structure and Content Could Affect Access Under Part D Example A Example B Example C Antidepressants Antidepressants Antidepressants SSRIs SSRIs Reuptake Inhibitors Tier 1($10) generic Prozac generic Paxil generic Prozac generic Paxil TCAs Tier 2 ($25) Celexa Zoloft ----------- ---------- Tier 3 ($50) Lexapro Celexa ---------- brand Prozac brand Paxil Zoloft Lexapro All SSRIs (e.g., Celexa) All SNRIs Category Class Nonformulary brand Prozac brand Paxil