SUMMARY INFORM MEDICATION ADHERENCE IN THE UNITED STATES. the CDC study constituted 66.6% of the total patient population. 2

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1 INFORMATION DRIVES SOUND ANALYSIS, INSIGHT AND ACTION. IMPROVING MEDICATION ADHERENCE: A CRITICAL TASK TO IMPROVING OUTCOMES AND CONTAINING OVERALL HEALTHCARE COSTS SUMMARY Medication non-adherence is a multilayered problem that affects virtually every aspect of the health care system. While improving adherence is critical to contain healthcare costs, this task remains highly challenging to payers. Adherence is influenced by a plethora of interacting factors, and as such, there is no one-size-fits all solution to this problem. In face of the growth of the aging population and the increasing prevalence of chronic conditions, the development of targeted solutions to tackle this issue is crucial. The purpose of this paper is to offer an overview of the impact of medication nonadherence on outcomes and health care spending, to provide a sample of industry best practices to promote medication adherence, as well as to provide payers with key principles to design a robust strategy to improve medication adherence. INFORM MEDICATION ADHERENCE IN THE UNITED STATES Medication adherence remains a major concern to healthcare providers, public and private payers, and patients. Medication adherence has long since emerged as a key strategy to improving clinical outcomes and reducing healthcare expenditures, and yet, a large majority of Americans do not take their medications as prescribed or do not take their medications at all. The average rate of adherence to long-term medication therapy for chronic illness averages only 50% in developed countries. 1 This problem is exacerbated by an increased prevalence of chronic disease attributed to the aging of the population. Elderly people (65 years and older) will account for 22% of the population by The Centers for Disease Control and Prevention (CDC) estimates that between 2007 and 2010, 20.8% Americans used three or more prescription drugs during any given 30 days. The elderly population of the CDC study constituted 66.6% of the total patient population. 2 Medication non-adherence can fall into multiple categories 3 : Failure to Initiate Therapy Patients fail to initially fill a prescription, and 20% to 30% of prescriptions are never filled. Medication discontinuation The rate of adherence to maintenance medications drops significantly after the first six months of therapy. Dose Self-Adjustment Taking more or less of a medication than prescribed. Inappropriate Drug Administration Taking a dose at the wrong time. The rates of medication adherence vary across the different chronic disease states. A study reported adherence rates ranging from 34% to 51% across four chronic conditions in elderly patients congestive heart failure, dyslipidemia, hypertension, and diabetes. 4 Average estimates of antiretrovirals non-adherence in the United States range from 50% to 70%. 5 Such suboptimal rates of adherence can greatly diminish the potential for long-term clinical success, and result in unnecessary disease progression, disease complications, unnecessary emergency room visits and hospitalizations, and a lower quality of life. The association between poor medication adherence and poor patient outcomes is clearly established. In the case of diabetes, studies have shown that every percentage point reduction in glycosylated hemoglobin (A1C) is associated with a 40%

2 reduction in the risk of microvascular complications such as kidney diseases, eye diseases, and peripheral neuropathies. 6 Medication non-adherence results in 30% to 50% of treatment failures and causes 125,000 avoidable deaths annually. 7 Diabetes and heart disease patients that are non-adherent have significantly higher mortality rates (12.1%) than similar patients who were adherent (6.7%). 8 Furthermore, non-adherence to statins in the year after hospitalization for myocardial infarction was associated with a 12% to 25% increased relative hazard for mortality. 9 Medication non-adherence is associated with a heavy financial burden. Poor medication adherence generates higher health care costs ($177 - $289 billion annually 10 ) driven by increased rates of hospital admissions, readmissions and emergency room visits. In the United States, 10% of all hospitalizations and 33% of hospital admissions from medication-related causes result from medication non-adherence. 11,12 Importantly, encouraging sick individuals to comply with their medication regimen may result in increased pharmacy costs, which are offset by a considerable reduction of medical costs attributed to fewer breakdowns. Roebuck and colleagues demonstrated a clear association between higher medication adherence rates among chronically ill patients from employer groups and decreased total health care resource use and costs using CVS Caremark claims data. 13 This study revealed that increasing medication adherence rate among patients suffering diabetes or chronic heart failure resulted in $3,757 or $7,823 in annual average cost-savings per patient, respectively. Esposito and colleagues showed that Medicaid beneficiaries with congestive heart failure that adhere to their treatment were less likely to be hospitalized and visit the emergency department, and utilized less health care resources (hospitalizations, emergency department visits, length of hospital stay) than non-adherent beneficiaries. Total healthcare costs were $5,910 (23%) less per year for adherent beneficiaries compared with non-adherent beneficiaries. 14 Pharmaceutical companies are also hugely affected by medication nonadherence and lose an estimated $188 billion annually in revenues from this. 15 MAJOR BARRIERS TO MEDICATION ADHERENCE Medication non-adherence can be attributed to a variety of factors. The World Health Organization (WHO) delineated five categories of factors influencing medication adherence 16, examples for each of these categories are detailed in Table 1. Often times, medication adherence is influenced by a combination of interacting factors, which varies across patient populations and individuals. As a result, it is virtually impossible to break down all the barriers to adherence. Nevertheless, some barriers may be easier to target than others to improve medication adherence. A large body of studies has demonstrated a significant relationship between increased patient cost sharing, and decreased medication adherence. Overall, a $10 change in patient cost sharing (copay) would result in a 3.8% drop in adherence. 17 Colombi and colleagues have shown that patients paying high copayments (over $20 per month) displayed the lowest rate of adherence (64% and 55% for patients 65 and <65 years old, respectively) to oral diabetes medications when compared to the low copayment group ($0 to $9 per month). 18

3 Table 1: Reasons for Medication Non-Adherence FACTORS INFLUENCING MEDICATION ADHERENCE PATIENT CONDITION THERAPY HEALTH SYSTEM SOCIO-ECONOMIC EXAMPLES Physical impairments (e.g., vision problems, impaired dexterity), cognitive impairment, psychological/ behavioral disorders Asymptomatic, chronic disease, mental health disorders Complexity of regimen, side effects Poor quality of provider-patient relationship, poor communication, lack of access to healthcare, lack of continuity of care Low literacy, higher medication costs, poor social supportof continuity of care In addition, health care providers are instrumental in promoting medication adherence through enhanced communication. A meta-analysis of studies assessing the link between physician communication and patient adherence to treatment revealed that there is a 19% higher risk of non-adherence among patients whose physician communicates poorly than among patients whose physician communicates well. 19 CMS STAR RATINGS AND THE IMPACT OF ADHERENCE MEASURES Improving medication adherence is critical to patients, health care providers, and health plans. Medicarecontracted health plans are evaluated annually by CMS through the Five-Star quality ratings system to measure their performance. Medicare-contracted health plans are given a star rating (1 to 5 stars) one star representing low performance, and five stars representing excellent performance. 20 Medicare Advantage sponsors (MAPD) are rated on up to 36 quality and performance measures, while standalone Part D plans (PDP) are rated on up to 16 measures. Three of these measures deal directly with medication adherence, including: Medication Adherence for Diabetes Medications: This measure is defined as the percent of Medicare Part D beneficiaries 18 years or older who adhere to their prescribed drug therapy across four classes of oral diabetes medications: biguanides, sulfonylureas, thiazolidinediones, and DiPeptidyl Peptidase IV (DPP4) Inhibitors. Medication Adherence for Hypertension: This measure is defined as the percent of Medicare Part D beneficiaries 18 years or older who adhere to their prescribed drug therapy for renin angiotensin system (RAS) antagonists, which include angiotensin converting enzyme inhibitor (ACEI), angiotensin receptor blocker (ARB), or direct renin inhibitor medications. Medication Adherence for Cholesterol: This measure is defined as the percent of Medicare Part D beneficiaries 18 years or older that adhere to their prescribed drug therapy for statin cholesterol medications. For the 2015 Five-Star Ratings, CMS is considering making the following changes to the medication adherence measures 21 :

4 Addition of two diabetes medication classes meglitinides and incretin mimetic agents. Increasing four-star thresholds as follows: Medication Adherence for Diabetes Medications: 78% (MAPD) and 79% (PDP) Medication Adherence for Hypertension: 79% (MAPD) and 81% (PDP) Medication Adherence for Cholesterol: 74% (MAPD) and 76% (PDP) Reducing the weights of each for these three measures from 3 (outcome measure) to 1.5 (access measure). Considering the impact of medication adherence measures on the overall Five-Star Ratings, improving medication adherence rates among chronically ill Medicare beneficiaries is critical to insurance companies. Since the enactment of the Patient Protection and Affordable Care Act (PPACA), insurers have looked to Medicare Advantage as an area to increase enrollment as employer-sponsored insurance coverage has eroded. According to a 2013 study conducted by CMS, consumers are significantly more likely to choose a health plan with a higher Five-Star rating than one with fewer stars. 22 In 2014, over 50% of all Medicare Advantage enrollees are enrolled in health plans with four or more stars, in comparison to 37% in 2013, and 24% in Additionally, Medicare beneficiaries can enroll in a five-star health plan at any time during the year. CMS also uses Five-Star Ratings to determine Medicare Advantage quality bonus payments established by the PPACA. In this process, health plans submit annual bids to CMS on a county-cost basis. If this bid goes below the county benchmark (average bid), the health plan receives a rebate; which is a percentage share of the difference between bid and benchmark. Star rating bonuses are applied as an increase to the benchmark. Changes to the Five-Star rating program enhance the pressure on health plans to achieve higher levels of performance. In 2015, bonuses will only be applied to health plans with ratings of four stars or above (5% bonus). The bonus will be doubled in certain qualifying counties based on demographic data. Beginning 2015, CMS can terminate Low Performer health plans that commonly include plans that historically had 2.5 star ratings or less for multiple years. 24 TRANSFORM TYPICAL STRATEGIES IMPLEMENTED BY PAYERS TO IMPROVE MEDICATION ADHERENCE: BEST PRACTICES Medication adherence is a multifaceted problem that cannot be addressed with a one-size fits all solution. The development of strategies aimed at improving prescription medication adherence requires (1) a deep understanding of the target population clinical needs, behaviors and barriers to adherence, (2) the tools and resources to monitor patients adherence behavior and clinical outcomes, and (3) a collaborative platform among payers, health care providers, pharmacists and patients. Employers, health plans and other stakeholders have implemented various programs to encourage better adherence to maintenance medications. Elements of those programs that are considered best practices by CMS and the Academy of Managed Care Pharmacy (AMCP) are presented below: 1. Enhance Patient Education and Engagement Educational interventions are based on the

5 premise that patients who understand their disease, their treatment and the negative impact of non-adherence will be more informed and more likely to comply. Knowledge can be imparted by 25 : Addressing patient preferences, limitations and priorities Educating on condition and purpose of medication Keeping the health care team informed (physicians, nurses, and pharmacists) Involving patient and family or caregiver if appropriate in the care process Advising patient on how to cope with medication costs Providing all prescription instructions clearly in writing and verbally Following up and reinforcing all discussions often, especially for low-literacy patients Patients behavior is critical to medication adherence. Methods to shape, remind and reward desired behaviors include: Teaching patient skill building Using reminder methods such as pillboxes, calendars, packaging changes and refill reminder phone calls Using incentives or rewards as positive reinforcement (e.g., small gifts) The combination of educational and behavioral interventions has proven effective in improving adherence rate among African-American patients under at least one hypertensive medication 26. Two thirds of patients had uncontrolled hypertension. The intervention group received culturally tailored hypertension self-management workbooks, a behavioral contract, bimonthly telephone calls as well as small gifts. The results of the study showed that after 12 months, the medication adherence was higher in the intervention group (42%) vs. the control group (35%) who received education material only. 2. Utilize Medication Reconciliation and Medication Therapy Management (MTM) Completion of activities listed below requires intervention of a patient s prescriber and pharmacist and enhanced communication between them. Counseling at the pharmacy by the pharmacist Conducting comprehensive medication review (CMR) Reducing the number of medications or Medication Consolidation Simplifying the treatment regimen Synchronizing prescriptions: aligns fills for all chronic medication prescriptions so they can be refilled at the same time. 3. Reduce Cost Barrier Multiple approaches can be utilized to address the cost barrier to medication adherence, most of which rely on improving benefit design (value-based insurance design). For example: Member Cost-Sharing Design Reducing or waiving cost sharing for certain therapy classes of medications. Multiple studies 27 demonstrated a significant relationship between increased patient cost sharing, and decreased medication adherence. Overall, a $10 change in patient cost sharing (copay) would result in a 3.8% drop in adherence. 28 Promotion and Optimization of 90-day Prescriptions Mail order or 90-day

6 retail promotion has historically improved medication adherence to chronic medications. Cost-share incentives for Mail Order will incentivize adoption in membership, but aggressive campaigns are needed to significantly improve the use. Express Scripts recently partnered with Walgreens to launch the Smart90 program allowing patients to fill their prescriptions in 90-day supplies via Express Scripts home delivery pharmacy or directly at a Walgreens retail pharmacy 29. Brand-to-Generic Conversion Campaigns The therapeutic classes designated in the CMS Part D Adherence star rating categories have a great deal of generic medications available. For Statins, Hypertension and Oral Diabetes, over 90% of the patients can be successfully managed by a generic medication. These campaigns can be driven through both member and prescribing physician communication strategies. Lowering the member s out-of-pocket cost for medications will definitely decrease the financial barrier related to medication non-adherence. RECOMMENDATIONS FOR PAYERS TO IMPROVE MEDICATION ADHERENCE There are some fundamental principles that should be applied when developing a strategy to improve medication adherence. The following is a list of such principles that are easily actionable and yield a robust strategy. Understand your population It is very important to have a deep understanding of your plan s patient population, geographic and ethnic population disease burden. This will provide insight into the potential categories of medications on which to focus an adherence improvement program. Effectively analyze your data The real issues with medication adherence and the opportunities to improve outcomes exist in a plan s claims data. Effective analysis through integrated pharmacy and medical claims can help identify members with adherence issues and the overall impact on disease outcomes. For Medicare Part D plans, CMS provides adherence-related reporting, which can easily be used to develop an adherence improvement strategy. Invest in staff or external partners Improving adherence is an involved process, which requires a high-touch model of communication. To effectively improve adherence, a plan needs to provide outreach to non-adherent members, engage physicians and pharmacies related to the non-adherent members and track progress. Due to the operational needs, a plan should either hire the appropriate clinical and administrative staff internally or choose to contract with an external partner to provide these services. Engage with providers and members Communication is the most important step in improving adherence. Simply stated, members need to know that they should be adherent to medications and providers need to know which of their patients are non-adherent. Track your results There is a great deal of importance placed on postimplementation tracking of results. This will provide an essential barometer for the effectiveness of any strategy. Lack of success can facilitate adjustments to a program or potentially drive program redesign. Tracking will help drive success in the program over time.

7 CONCLUSION Although the magnitude of the health and economic burden associated with medication non-adherence has prompted many research studies into the problem, there is no simple or easily defined solution. A clear understanding of the root cause(s) is critical to the development of targeted interventions. Improving medication adherence is predicated on a collaborative platform to ensure that patients and providers are offered adequate guidance regarding therapeutic management. Payers must consider various dimensions when designing a strategy to improve adherence, but the success of a strategy relies on a deep understanding of the targeted patient population and its barriers to adherence. Importantly, healthcare providers play an integral role in medication adherence and physician engagement should always be at the core of any adherence improvement strategy. If you would like to learn more about how to design a robust strategy to improve medication adherence, Optimity Advisors has the knowledge and practical experience to guide your organization. Our Pharmacy Advisory team is comprised of a team of experts with extensive managed care pharmacy experience across the entire pharmacy value. Our advisors have built and implemented clinical programs, formulary management strategies, and Specialty Pharmacy programs for both payers and PBMs. ABOUT US Optimity Advisors is a Washington, D.C. based, specialized healthcare advisory firm that combines industry expertise and integrated solutions to help companies enhance stakeholder value, improve operations, and address performance and risk related challenges. Our company is comprised of professional advisors with deep domain expertise in strategy, clinical management, operational transformation, business intelligence, IT effectiveness and regulatory compliance. Our firm emphasizes three verbs when serving our clients. We help to Inform our clients with knowledge and expertise in order to identify and manage barriers to success and identify new opportunities for efficiency and growth. We Transform their organizations, processes, and technologies to create customer value and competitive advantages and we find ways to help our clients Outperform the industry through the bottom-line impact created by developing strategic and operational excellence.

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