The True Costs of Health Plan Specialty Tiers
August 1, 2013
By David Charles, MD and Mary Ann Chapman, PhD
An important but rarely asked question is whether it costs more to fill prescriptions for needed medications than to fail to fill these prescriptions. Last year the Congressional Budget Office (CBO) released a memo entitled Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services. Not surprisingly, this analysis found that people respond to changes in cost sharing for prescription drugs by changing their use of them. That is, the use of prescription drugs increases in response to price reductions and falls in response to price increases, and this is true across all populations (elderly, nonelderly, privately, and publicly insured).
The CBO memo concludes what common sense tell us— that prescription drugs can reduce overall healthcare costs. When patients get the medications they need, they require fewer physician visits, use fewer emergency medical services, and experience better quality of life. In fact, the CBO projected that a 1% increase in the number of prescriptions filled and taken as prescribed could reduce Medicare’s spending by approximately $35 billion. This memo marks an important step for the CBO in that the positive impact of therapy compliance is included in their health cost estimates. However, when it comes to the classification of certain medications in a “specialty tier” in public and private health plans, the common sense findings of the CBO are ignored, thereby contributing to higher healthcare costs.Cost Sharing