How drug cost-sharing affects treatment compliance: Canadian evidence

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1 How drug cost-sharing affects treatment compliance: Canadian evidence Antoine Lefaivre Richard Lavoie By Antoine Lefaivre and Richard Lavoie Antoine Lefaivre oversees the development of TELUS Health Analytics business through the exploitation of private drug plan and pharmacy claims data, clinical and consumer databases. Prior to joining TELUS, he was Vice President Strategy and Business Development at McKesson Canada. Richard Lavoie is a senior economist and special advisor to TELUS Health. He has more than 12 years of experience in healthcare industry consulting, providing advice to pharmaceutical firms, insurers and governments Cost-sharing in the form of deductibles and coinsurances is typically used by drug plan sponsors to curb their drug bills. The theory is that by having patients bear some of the cost, plans can drive purchasing behaviour toward therapies that offer the most benefit at a lower cost. The danger is that shifting cost onto patients can lead to people not taking their full medication treatment which can adversely affect their health outcome. This, in turn, may lead to greater use of other health services and a drop in employee productivity. With this in mind, it s important to consider the evidence to determine whether cost-sharing leads to lower treatment adherence. To dig deeper into the evidence, TELUS Health Analytics used real-world data to evaluate how cost-sharing affects treatment compliance in the diabetes care setting. Through its Health Benefits Management (HBM) division, TELUS adjudicates private drug plan claims for approximately 10 million Canadians, providing a large database of actual drug utilization for a working age population and dependents. The plan design information used in the adjudication process can be linked to the actual claims experience and the cost-sharing parameters that apply to each patient. Plan cost-sharing at a glance Patients were classified as being affected by diabetes if they had claimed either oral anti-glycemic agents (OAGs) or insulin. There were 244,000 such patients in 2011, of whom 205,000 were using OAGs and 67,000 were using insulin. They were segmented based on the coinsurance and deductible levels in their plan design, as seen in figures 1 and 2. It is interesting to observe that a full 36 per cent of diabetic patients had no coinsurance or deductible applied on diabetes drugs. For the 26 per cent of patients who did have a deductible, it was relatively low, either an annual deductible under $100 or a deductible per claim under $6. This highlights the fact that a large portion of plan sponsors are not applying cost-containment measures to curb drug costs. About 40 per cent of diabetic patients had a coinsurance above 10 per cent (most frequently 20 per cent). The focus of the study was to compare the adherence level of this group of diabetic patients (83,000 patients) vs. those with no coinsurance (124,000 patients). The deductible was ignored as it applies to few patients and, as seen in figure 2, it is generally low and unlikely to have an impact on patient behavior. At higher coinsurance levels, the out-of-pocket spending becomes more significant for the patient and an impact on treatment adherence could, in theory, be expected. The 20 INSIGHTS

2 Figure 1: Diabetic patients by plan coinsurance/deductible, TELUS HBM, % 50% 40% Share of Patients 30% 20% 10% 0% No Co-insurance 1-10% 11%-20% 21% Co-insurance Levels No Deduct Deduct Annual Deduct Per Claim Figure 2: Diabetic patients deductible levels, TELUS HBM, 2011 Per Claim $2-4; 6% Per Claim $4-6; 4% Per Claim $0-2; 3% Per Claim $6; 2% Annual > $100; 0% Annual < $100; 11% Volume 8 / Issue 1 21

3 data shown in Figure 3 confirms the connection between the coinsurance level and out-of-pocket spending. Most patients with a generous no coinsurance plan have out-of-pocket spending under $100 annually 1 (64 per cent), whereas a majority of those with an per cent coinsurance (77 per cent) spend more than $100, some 8 per cent even exceeding $1,000 where it becomes a heavy financial burden. Figure 3: Patient distribution by out-of-pocket spending across all drugs, 2011 Impact on treatment adherence Treatment adherence was measured as the average days of therapy (DOT) per diabetic patient per year a broad brush indicator of how well patients generally comply with their treatment. Figure 4 presents a comparison of average DOTs where the no coinsurance level is associated with a baseline value of 1.00 and that of the per cent coinsurance level is shown relative to that value. The adherence of the per cent coinsurance level goes between 0.90 of the no coinsurance level for insulin, to 0.93 for OAGs. Given the large number of patients in the database, these differences are significant and represent an average shortfall exceeding 20 days of therapy per patient per treatment per year 2. The shortfall in adherence also varies regionally and appears to be less in B.C. and the Prairies compared to other provinces. (Figure 5) In B.C., Saskatchewan and Manitoba, where universal drug plans are available, private drug plans are a source of supplementary insurance to the public programs, so that the total cost exposure of a patient with a private drug plan is relatively low in these provinces. This can lessen the impact of higher coinsurance levels on treatment adherence and suggests that provincial pharmaceutical policies can influence patients behaviour in the private sector. The data presented above point to an adherence shortfall of approximately 10 per cent (the difference in DOTs between the no coinsurance and per cent coinsurance levels). While this spread appears to be fairly low, it is important to understand that it might also be affected by other plan design parameters which may lessen the patient s out-of-pocket spending, such as spousal or provincial drug plan coordination-of-benefits, or lowering or capping the coinsurance above a certain drug spend. Plan sponsor coinsurance policies affect the pattern of out-ofpocket spending but the correlation between the two is not linear. (figure 6) The large majority of patients without coinsurance 3 (80 per cent) have out-of-pocket below $250 annually and virtually none had out-of-pocket spending exceeding $1,000. For the per cent coinsurance level, a large proportion of patients had higher out-of-pocket spending but a clear stop occurs at the $1,000-$1,999 level with very few patients (1 per cent) exceeding that threshold. The data suggests that drug plan design parameters have the ability to limit a patient s financial burden beyond a certain level this may lessen the effect of higher coinsurance on treatment adherence. 1 It is possible for patients with no coinsurance for diabetes drugs to have out-of-pocket spending in other categories of drugs or for other reasons (e.g. deductible, refusing generics substitution, exceeding plan limits, non-covered drugs/devices, etc.). 2 Based on an average DOT per patient per drug of approx. 200 annually, reflecting that some patients initiate and some stop therapy throughout the year. 3 Note that the study reports the base coinsurance applying to diabetes products and that other cost-sharing mechanisms can be present, such as a deductible or a higher coinsurance applying to specific products in managed drug formularies. 22 INSIGHTS

4 Figure 4: Comparison of adherence by coinsurance level, Days of Therapy Index Insulin No Co-insurance OAGs 11% - 20% Co-insurance Figure 5: Comparison of adherence by region, Insulin & OAGs combined, Days of Therapy Index B.C. Prairies Ontario Quebec Atlantic No Co-insurance 11% - 20% Co-insurance Volume 8 / Issue 1 23

5 Figure 6: Diabetic patient distribution based on out-of-pocket spending across all drugs, % 35% 30% Share of Patients 25% 20% 15% 10% 5% 0% $0 $1-$99 $100-$249 $250-$499 $500-$749 $750-$999 $1,000-$1,999 $2,000 Patient Out-of-Pocket Costs Co-insurance 11% - 20% Co-insurance Propensity to fill The impact of treatment adherence might not be the only way coinsurance affects patient behavior. The likelihood that plan members will fill their prescriptions also appears to be affected. The figures reported in Table 2 indicate that 51 per cent of diabetes claimants are found at the no coinsurance level but this category represents only 32 per cent of overall TELUS HBM plan members. On the other hand, 34 per cent of diabetes claimants are found in the per cent coinsurance level, whereas this category accounts for 47 per cent of TELUS HBM plan members. These figures suggest that the diabetes claimant distribution is skewed toward lower coinsurance levels. Plan members without coinsurance are more likely to claim compared to those with a higher coinsurance level. Figure 7: Distribution of individuals by coinsurance level, INSIGHTS

6 The figures shown in Figure 7 support the idea that costsharing may affect both the plan member s treatment adherence and the propensity to fill a prescription in the first place. This trend is a serious source of concern if some patients are actually being deterred from initiating diabetes therapy the long term consequences of uncontrolled diabetes are well documented, leading to major health problems and, possibly, disability. This warrants further research to explore this propensity-to-fill phenomenon and determine its implications. Conclusion The results of this analysis confirm the negative correlation between coinsurance and treatment adherence. While many studies using U.S. data have been made, this is the first time that a Canadian equivalent has been conducted. The study has demonstrated the added dimension of analysis that is possible by linking the TELUS HBM claims dataset with its corresponding plan design data. When patients don t initiate therapy or properly follow their full course of treatment for chronic conditions like diabetes, the long-term consequences can be serious. Evolution of the disease to more advanced stages may be hastened, entailing more healthcare consumption and resulting in lower employee productivity. The adherence issue could become even more serious in coming years if Canadian employers move to more aggressive drug cost-containment measures. Supporting interventions with good judgment and sound evidence will be important to ensure that they don t become counter-productive. This study underlines the need to understand employers awareness of the impact drug plan design and costsharing measures can have on treatment adherence. There is potential to evaluate if holistic disease management programs encompassing pharmacotherapy, medical care and patient engagement and support programs can present a more promising avenue to both generate value for money and raise employee productivity. Custom Consulting Services Our work is based on sound, quantitative research, augmented by thorough and expert analysis. Our highly experienced consultants can address your unique business challenges and deliver measurable results. n Development of budget impact statements and models n Strategic advice on access and patient insurance coverage issues n Development of sales tactics and tools n Forecasting models and scenarios n Employer/payer qualitative research n Customized data analysis on coverage, plan design, insurer market shares n Consultation on public/private convergence in plan design, catastrophic coverage, high cost medicines Actionable insight plus in-depth sector expertise. Contact: healthanalytics@telus.com Volume 8 / Issue 1 25