Employers Try Cutting Diabetes Drug Copays
Several large employers and employer coalitions are finding that it may be a worthwhile gamble to reduce or eliminate copayments for medications that control diabetes or treat comorbid conditions.
Pitney Bowes, for instance, reduced copays for diabetes drugs, as well as for asthma drugs, in 2001. The company realized first-year savings of about $1 million, according to an article published online in the Jan. 30 issue of Health Affairs.
Diabetes is a fat target. Some 20 million Americans have the condition, leading to $132 billion in medical costs, disability, and lost productivity, according to the University of Michigan, one of the employers that recently launched a reduced-copay program. However, only about half of diabetes patients stick to their prescribed medication regimens, which can include as many as a dozen therapies. Out-of-pocket costs for those medications add up, and this may deter patients from adhering to their treatment plans, according to the university.
These reduced copay programs are in stark contrast to a trend toward shifting costs onto workers. Copays for pharmaceuticals in particular have grown in the last decade. Making consumers shoulder more of the cost has helped bring down prescription drug spending from double-digit growth rates. Overall drug spending is expected to rise from $201 billion in 2005 to $214 billion in 2006—a 6.5% increase, according to Centers for Medicare and Medicaid Services analysts.
But overall health spending continues to grow, and will increase at least 7% annually over the next 10 years, according to CMS data.
And, higher copays can backfire. “When cost sharing is too large in relation to a consumer's resources, the result is either serious financial strain or reduced access to care,” according to an analysis issued in February by Ha Tu and Paul Ginsburg of the Center for Studying Health System Change. The authors also found that these benefit structures “do not distinguish between services that are considered extremely important, such as testing, insulin, and physician visits to manage diabetes, and services that are more elective, such as knee surgery to play recreational sports.”
It seems counterproductive to erect hurdles that might prevent patients from accessing proven effective therapies for diabetes, Dr. William Herman said in an interview. Dr. Herman is medical director of M-Care, an HMO participating in the University of Michigan's 2-year pilot program for employees that aims to determine if reducing the cost of diabetes drugs will encourage more patients to stick to their treatment regimens and also cut overall health costs.
“If these copayments are interfering with desired processes of care and adversely affecting health outcomes, then this is not something we want in our benefit design,” said Dr. Herman.
Employees began enrolling in the Michigan program in July 2006. If they already were receiving an oral antidiabetic agent or insulin, they were automatically signed up. About 2,100 of those covered by university health plans are participating, out of a total worker and dependent population of 60,000, said Dr. Herman.
Under the program, enrollees can get free yearly eye exams and they pay nothing for generics (compared with $7 normally), $7 for preferred brands (instead of $14), and $18 for nonpreferred brands (instead of $24). These copays also apply to other drugs taken by diabetes patients, including β-blockers, calcium channel blockers, lipid-lowering agents, antihypertensives, and antidepressants.
Two-thirds of the prescriptions are generics, almost a third are in the preferred tier, and very few are in the nonpreferred tier, Dr. Herman said.
University workers belong to a variety of health plans, but they all receive their prescriptions through a single pharmacy benefit manager. That will allow for easier tracking of medication uptake and compliance, said Dr. Herman. Through its HMO, the university also will be able to compare medication compliance and health outcomes between diabetic workers and diabetes patients who aren't employees, he said.
So far, the program is costing the university about $30,000 a month, Dr. Herman said. That's how much patients are not spending. There are no data yet on changes in hemoglobin A1c levels, lipid levels, or medication uptake. If there are positive changes, the university is likely to stick with the reduced and waived copays, said Dr. Herman. The school also has looked at making similar reductions for other chronic diseases.
The Michigan program is unique in that patients do not have to enroll in a disease management program. Other employers have coupled reduced or waived copays with coaching from pharmacists.
That model was pioneered by employers in Asheville, N.C., and the North Carolina Center for Pharmaceutical Care. The program began in 1997 with 47 employer-participants. By 2003, those employers were reporting improved A1c levels, a 50% reduction in average annual sick leave, and overall medical costs 58% below the expected level (J. Am. Pharm. Assoc. Wash. 2003;43:173–84). Employers saved $1,600–$3,300 per worker because of fewer emergency department visits and fewer diabetes-related hospitalizations, according to the American Pharmacists Association Foundation.
