Pharmacy cost controls reduce access
An unintended consequence of the many steps states are taking to control the cost of prescription drugs in their Medicaid programs is a reduction in access to medications for Medicaid recipients. That’s the finding of a study by Peter Cunningham, a senior health researcher for the Center for Studying Health System Change reported in the May/June issue of Health Affairs.
"It’s not that they are deliberately trying to keep people from drugs they need," Mr. Cunningham tells State Health Watch.
"To be fair, most state Medicaid directors want to cut wasteful and inefficient use of prescription drugs, but the rules and regulations they rely on can create more bureaucratic obstacles. And while there are always ways around the obstacles, a lower income population may not know how to get around the system," he adds.
To contain costs, almost all states have implemented one or more strategies aimed at managing prescription drug use or curtailing wasteful and ineffective use, Mr. Cunningham reports.
Cost-sharing, through a copayment, is one of the oldest and most prevalent forms of utilization management, he says, but there are a variety of other methods being used, including prior authorization, preferred drug lists, dispensing limits, mandatory use of generics, and step therapy.
Many states also have tried to contain costs by reducing their reimbursement to pharmacies, negotiating supplemental rebates with manufacturers, and monitoring high-cost users and prescribers of drugs.
The percentage of states using three or more of these control strategies has increased greatly, from about one-third of states in 2000 to about 90% in 2003.
Impact not known
According to Mr. Cunningham, his research was needed because despite the near universal implementation of one or more pharmacy cost-containment strategies, virtually nothing is known about their effect on drug costs, use, and access. Earlier research from the 1970s and 1980s focused on the effects of copayments on Medicaid prescription drug use and spending.
Findings from those studies showed that even a copayment as small as 50 cents per prescription would reduce prescription drug use and spending across a broad range of therapeutic categories, including those covering medications considered to be essential.
"Inferring the effects of recent cost-containment policies on prescription drug use and access from this previous research is questionable," Mr. Cunningham says, "given the rapid increase in the development of new medications, use, and spending since many of the studies were conducted. And since more states have now implemented more than one cost-containment policy, it is increasingly difficult to attribute effects on use and access to any specific policy."
He used data from 2000-2001 and 2003 Community Tracking Study telephone household surveys to compare the extent of prescription drug access problems for adult Medicaid enrollees with the access problems of adults who have other types of insurance coverage or who have no health insurance.
Mr. Cunningham also examined the effects of cost-containment policies and other factors on prescription drug access among adult Medicaid beneficiaries and the effect of the increase in states’ cost-containment policies on changes in access between 2000-2001 and 2003.
The research found that compared with all U.S. adults, Medicare enrollees are somewhat younger, much poorer, more likely to be members of a racial/ethnic minority, and likely to have less favorable health overall and a much higher prevalence of chronic conditions. Lower incomes and high rates of health problems are particularly high-risk factors for problems with affording prescription drugs, Mr. Cunningham says.
Access problems reported
More than one-fifth of adult Medicaid enrollees reported that in 2003, they did not get prescription drugs because of cost. He says the extent of access problems for Medicaid enrollees was more similar to that of people who typically have no prescription drug coverage, including Medicare enrollees with no supplemental coverage and uninsured people.
Those with private insurance, including Medicare enrollees with supplemental private insurance, have by far the lowest rate of drug access problems, Mr. Cunningham continues.
"The high level of access problems for Medicaid enrollees is somewhat surprising given that all states include prescription drug coverage in their Medicaid programs, and cost sharing is lower than in most private insurance plans," Mr. Cunningham reports.
"High levels of access problems reflect, in large part, Medicaid enrollees’ much lower incomes and higher prevalence of chronic conditions, factors that are strongly related to increased access problems," he points out.
According to Mr. Cunningham, when estimates are adjusted to control for income, health status, and other factors, rates of prescription drug access problems for Medicaid enrollees are much lower and comparable with those of people with private insurance coverage.
A large and growing percentage of Medicaid enrollees live in states that have implemented various cost-containment policies, the research showed. And even more important is a dramatic increase in the percentage of Medicaid enrollees who live in states with four or five cost-containment policies, up from about 16% in 2000-2001 to 62% in 2003. By contrast, the percentage of enrollees who live in states with two cost-containment policies or fewer decreased from about 34% in 2000-2001 to 7% in 2003.
Prior authorization limits access
Prior authorization as a cost-control strategy increased probability of access problems by 20 percentage points, while requiring use of generic substitutes increased the probability by eight percentage points. Copayments, dispensing limits, or step therapy requirements had no statistically significant effect on access.
Mr. Cunningham says the degree of effect of any individual policy is difficult to interpret since most states have implemented more than one policy, and there is some intercorrelation between the factors and the measures of prescription drug access.
"Since some form of prior authorization is used in most states," he adds, "the large effects observed for this policy may be more indicative of the uniqueness of the small number of states that do not have such requirements. States without prior authorization tend to have very few cost-containment policies of any type, and therefore prescription drug access problems would be expected to be much lower," adds Mr. Cunningham.
"Nevertheless, case studies of states’ prior authorization programs have observed that these programs can lead to bureaucratic and communication problems among enrollees, providers, and pharmaceutical benefit management firms under contract to the state, which in turn, can lead to delays and other problems with prescription drug access," he notes.
Mr. Cunningham says it may be surprising that mandatory generic requirements would lead to higher reports of access problems since they don’t imply a cost to the enrollee.
He says it is possible that some physicians continue to prescribe brand-name drugs when generics are required because they are unaware of the policy or believe that a brand name is more efficacious than its generic substitute.
Also, some enrollees may specifically request brand-name drugs, meaning they would potentially have to pay the full cost if a generic were available.
That copayments, dispensing limits, and step therapy did not have independent effects on prescription drug access may be because they are correlated with prior authorization and mandatory generic policies, the report says, or because such policies affect relatively few people and both the sample of Medicaid enrollees and the measure of access are too broad to observe those policies’ effects.
Cost controls hurting access
Mr. Cunningham concludes that from the perspective of Medicaid enrollees, states’ efforts to contain the rising cost of prescription drugs are having negative effects on their access to those drugs.
Although it was not possible in this study to distinguish between essential and nonessential medications, he notes that earlier research on the effects of copayments and prior authorization showed negative effects on use of prescription drugs across a wide range of therapeutic categories, including those considered essential. That the access problems are particularly high for people with chronic conditions, which includes a disproportionately high number of Medicaid enrollees, also suggests at least some unmet need for essential medications, he says.
Effects not prove
Mr. Cunningham predicts continued, if not increased, drug cost-containment policies in response to increasing drug costs and strained state budgets, and says that rolling back such policies is probably unrealistic given the magnitude of Medicaid spending on state budgets, especially when most private insurance plans are trying to contain costs through greater enrollee cost-sharing, preferred drug lists, and incentives to use generics.
He tells State Health Watch he thinks the message his research has for state policy-makers is that cost containment is a real issue but there hasn’t been enough evaluation to learn the effect of any particular step on access to needed drugs.
"Drug cost-containment efforts have proliferated over the last five or 10 years without any indication of their effect on access," Mr. Cunningham adds. "This should be a red flag that it’s time to stop, take a deep breath, and see what we’re really doing."
[Contact Mr. Cunningham at (202) 484-5261 or e-mail him at [email protected].]
An unintended consequence of the many steps states are taking to control the cost of prescription drugs in their Medicaid programs is a reduction in access to medications for Medicaid recipients.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content