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FOR RELEASE
Tuesday
May 18, 2004

When the amount patients pay for prescription drugs doubles, patients cut their use of common drugs for chronic diseases such as diabetes, asthma and gastric acid ailments by as much as 23 percent, according to a study issued today by RAND Corporation researchers.

According to the study in the May 19 edition of the Journal of the American Medical Association, people being treated for diabetes cut back on drugs to treat diabetes (except insulin) by 23 percent when their out-of-pocket payments doubled, while those treated for asthma cut use of drugs to treat asthma by 22 percent. People with gastric disorders cut use of related drugs by 17 percent.

“We don’t have enough information to know the full impact on people’s health, but now we know the groups that are most at risk,” said Dana Goldman, lead author of the study and director of health economics at RAND Health. “These findings show us where health problems may arise.”

RAND Health researchers found preliminary evidence that patient health suffers as patients with some chronic illnesses cut back on their medicines. For example, as the use of prescription drugs dropped, visits to hospital emergency rooms increased 17 percent and hospital stays rose by 10 percent among patients with diabetes, asthma and gastric acid diseases, according to the study.

Raising co-payments is a blunt tool for changing people’s use of prescription medicine,” Goldman said. “If we want to change the patterns of drug use so that we don’t adversely affect patients’ health, that will require more sophisticated benefit designs.”

The study was sponsored by the California HealthCare Foundation (CHCF), with additional funding from Merck & Co. and the U.S. Agency for Healthcare Research and Quality.

In a previous report, RAND researchers found that increasing co-payments for prescription drugs caused patients to reduce their use of medications and switch to lower-cost drugs. But they wanted to know whether the changes cut use of drugs that are necessary for controlling symptoms and preventing complications of common diseases.

Goldman and his colleagues studied the experiences of nearly 530,000 privately insured non-elderly adults from 1997 to 2000 who were covered by one of 52 health insurance plans provided by 30 different employers. They examined how the use of eight therapeutic classes of drugs changed when co-payments for prescription medicines doubled. Most other studies on the effects of rising drug plan co-payments have focused on elderly patients or older plan arrangements.

The drugs they studied are used to treat high blood pressure, elevated cholesterol, depression, arthritis, asthma, allergies, diabetes and gastric acid disorders, including ulcers. The drugs studied account for about half of all the drugs used by the group over the study period.

Use of all of the drugs dropped, particularly for medications where there are close over-the-counter substitutes such as antihistamines used to treat allergies and pain medicine used to treat arthritis, each of which dropped by about 45 percent.

“We see significant price sensitivity, but most people do not change their use of prescription drugs indiscriminately,” said Geoffrey Joyce, a RAND economist and the other principal investigator of the study. “Some changes may be appropriate by reducing overuse of certain medications, particularly drugs that treat symptoms rather than the underlying disease.”

Patients generally were less likely to reduce use of a drug if they were receiving ongoing care from a physician for the disorder. For example, patients who had seen a physician two or more times over the previous year for high blood pressure reduced their use of anti-hypertension drugs by just 10 percent when co-payments doubled, while their use of other drugs dropped 27 percent.

“It’s important to understand the effects that greater shifting of drug costs on patients has on their health conditions,” said Sophia Chang, M.D., M.P.H., CHCF’s Chronic Disease Care Program director. “This issue is particularly acute for patients with chronic conditions that can be effectively managed with appropriate medication use.”

Spending on outpatient prescription drugs has increased at double-digit rates for the past decade and now is the third-largest component of health care costs, after hospital care and physician services.

In an attempt to control those costs, many insurance plans have increased co-payments or adopted incentive-based programs where drugs are placed in different tiers. Co-payments depend on the tier where a drug is placed. Generics typically have the lowest co-payments, with the co-payments higher for name-brand drugs. An increasing number of plans have added a third tier by creating a list of preferred name-brand drugs.

Collaborating on the study were Jose J. Escarce, Jennifer E. Pace and Matthew D. Solomon, all of RAND; Marianne Laouri of the California HealthCare Foundation (now with Genentech); and Pamela B. Landsman and Steven M. Teutsch of Merck & Co.

The California HealthCare Foundation (CHCF), based in Oakland, is an independent philanthropy committed to improving California's health care delivery and financing systems. Visit www.chcf.org for more information.

RAND Health is the nation’s largest independent health policy research organization, with a broad research portfolio that focuses on health care quality, costs, and delivery, among other topics.

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