The American Journal of Managed Care February 2011
Abolishing Coinsurance for Oral Antihyperglycemic Agents: Effects on Social Insurance Budgets
Estimation of the total investment cost was based on data by Liatis et al32 indicating that the mean annual cost of pharmaceuticals for patients managed with OAAs only is €352 per patient. Consequently, the increase in OAA reimbursement rate from 75% to 100% would result in a total investment cost of €26,401.30 over a 3-year period for the hypothetical cohort of 100 patients.
Therefore, the net economic benefit of the investment would be €32,429.30 per 100 patients or €324.30 per patient, reflecting an investment return rate of 122.8%. These data are summarized in Table 2.
A 1-way sensitivity analysis was conducted by calculating the investment return rate when the model variables were varied ±20% from baseline (Table 3). The analysis demonstrated that in all cases full coverage of OAAs remained profitable, with investment return rates ranging from 69% to 176.6%. Performing a threshold sensitivity analysis for predicted adherence showed that the outcomes remained favorable even for an incremental increase of 13.26% in baseline adherence. A 2-way sensitivity analysis of the variables with the greatest effect on results (ie, baseline adherence relative to sharing in the cost of complications among controlled and uncontrolled patients) revealed favorable results for all combinations of the 2 variables within the specified ±20% range (Table 4).
Patient cost sharing, especially in the case of chronic diseases, is a matter of intense debate. The present study was conducted to evaluate economic outcomes for a third-party payer that could result from abolishing coinsurance for OAAs. The study method was based on construction of a research hypothesis in the context of limited data availability from the Greek healthcare sector. A potential decrease in patient coinsurance rate translated to improved prescribed treatment adherence and to subsequent clinical and financial benefits of decreased A1C levels. This well-established relationship between A1C levels and clinical outcomes and costs10-12,14 was quantified by calculating the incremental increase in the percentage of controlled patients with diabetes in Greece and reflected the economic benefit of the intervention.
The final cost–benefit results of potentially abolishing copayments for OAA revealed that this could be beneficial for the SHI system. Specifically, the intervention translated to a 122.8% investment return rate over 3 years, a rate many times greater than the usual credit return on capital in developed economies. In monetary terms, if the system invested €264 for every patient with T2DM managed with OAAs, it could obtain a net benefit of €324.30 per patient over a 3-year period by preventing more intensive follow-up patterns and management of complications. Full-scale implementation of this policy for all 448,500 patients with diabetes managed solely with OAAs in Greece5 would require a total investment of €118,404,000 and could lead to a potential 3-year net benefit of €145,448,550.
The present study outcomes are in line with literature that documents the inverse relationship between cost sharing and treatment adherence, as well as subsequent effects on patients’ clinical status and health expenditures.23-26,33 Most of these studies investigate the consequences of increased cost sharing, whereas few approach the issue from the perspective of decreasing coinsurance rates or copayments. To our knowledge, the present study is the first to examine the effects of abolishing copayments for OAAs in a European universal coverage setting and demonstrates that the introduction of such policies in the management of chronic conditions could result in improved outcomes and economic benefits for patients and in cost savings for third-party payers.
Our study has some limitations. Because of the limited time frame of the analysis (3 years), calculations focused on the estimation of costs attributed only to short-term complications. This limitation can arguably lead to underestimation of results given that long-term diabetic complications are associated with higher morbidity and costs. In addition, the allocation of complication costs to controlled and uncontrolled patients was based on the study by Menzin et al,13 who adopted an A1C level control threshold of 8%, in contrast to the 7% threshold in existing guidelines.9 This contributes to further underestimation of the results. Moreover, Menzin et al do not report patient characteristics such as the presence of other (nondiabetic) complications or concomitant medications; therefore no assumptions could be made on these variables for our study population.
Another important issue is the cross-country transferability of elasticity estimates. In general, research on price elasticity of demand for pharmaceuticals remains scarce outside of the United States (particularly in Europe). To our knowledge, the only study on cross-country comparisons of elasticity is by Alexander et al,36 who concluded that price elasticities for a representative sample (“basket”) of prescription medications were identical in the United States, Italy, and Spain. Given that the latter 2 countries have health systems, socioeconomic indices (eg, gross domestic product per capita), and demographic characteristics comparable to those of Greece, transferability of elasticity estimates seems plausible. Nevertheless, this was further corroborated by testing the estimates with extensive sensitivity analyses.
Furthermore, our base-case analysis assumes that the resultant adherence remains stable over the study period, as in similar investigations.35 To address the possibility that this effect may not prove to be uniform over time, rigorous sensitivity analyses on baseline and predicted adherence were performed. The threshold sensitivity analysis demonstrated that a change in adherence of only 13.26% above baseline would still produce favorable results. This increase corresponds to an extremely low elasticity of 0.10, suggesting that the true response to abolishing copayments would be substantially higher and the results economically beneficial.
Finally, patient cost sharing, although important, is not the only factor influencing adherence. That other factors contribute to adherence levels has been expressed in the model by divergence of predicted adherence after full coverage (91.5%) from absolute adherence. These variables constitute an area for further investigation.
In conclusion, our study demonstrates that abolishing copayments for OAAs could generate significant economic benefits for the SHI system and for society as a whole. The results add to existing evidence supporting that cost-sharing policies do not always serve policy makers’ initial intentions because shifting cost to patients with chronic illness can produce adverse clinical and economic effects. Our sensitivity analysis corroborated the robustness of the results, suggesting that implementation of policies aimed at decreasing or abolishing copayments for OAAs could result in improved patient outcomes and in cost savings for the healthcare system.
Author Affiliations: From the Department of Health Economics (KA, AGS, VT, KM, JK), National School of Public Health, Athens, Greece.
Funding Source: The authors report no external funding for this study.
Author Disclosures: The authors (KA, AGS, VT, KM, JK) report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.
Authorship Information: Concept and design (KA, AGS, JK); analysis and interpretation of data (KA, AGS, VT, KM); drafting of the manuscript (KA, AGS, VT, KM); critical revision of the manuscript for important intellectual content (KA, AGS, VT, JK); and supervision (KA, JK).
Address correspondence to: Kostas Athanasakis, MSc, Department of Health Economics, National School of Public Health, 196 Alexandras Ave, Athens 11521, Greece. E-mail: firstname.lastname@example.org.
1. World Health Organization. Preventing Chronic Diseases: A Vital Investment. Geneva, Switzerland: World Health Organization; 2005.
2. King H, Aubert RE, Herman WH. Global burden of diabetes, 1995- 2025: prevalence, numerical estimates, and projections. Diabetes Care. 1998;21(9):1414-1431.
3. Wild S, Roglic G, Green A, Sicree R, King H. Global prevalence of diabetes: estimates for the year 2000 and projections for 2030. Diabetes Care. 2004;27(5):1047-1053.
4. Panagiotakos DB, Pitsavos C, Chrysochoou C, Stefanadis C. The epidemiology of type II diabetes mellitus in Greek adults: the Atica study. Diabet Med. 2005;22(11):1581-1588.
5. Athanasakis K, Ollandezos M, Angeli A, Gregoriou A, Geitona M, Kyriopoulos J. Estimating the direct cost of type 2 diabetes in Greece: the effects of blood glucose regulation on patient cost. Diabet Med. 2010;27(6):679-684.
6. American Diabetes Association. Economic costs of diabetes in the U.S. in 2007. Diabetes Care. 2008;31(3):1-20.
7. Jonsson B; CODE-2 Advisory Board. Revealing the cost of type II diabetes in Europe. Diabetologia. 2002;45(7):S5-S12.
8. Diabetes Control and Complications Trial Research Group. The effect of intensive treatment of diabetes on the development and the progression of long-term complications in insulin-dependent diabetes mellitus. N Engl J Med. 1993;329(14):977-986.
9. American Diabetes Association. Standards of medical care in diabetes: 2007. Diabetes Care. 2007;30(suppl 1):S4-S41.
10. Gilmer TP, O'Connor PJ, Manning WG, Rush WA. The cost to health plans of poor glycemic control. Diabetes Care. 1997;20(12):1847-1853.
11. Wagner EH, Sandhu N, Newton KM, McCulloch DK, Ramsey SD, Grothaus LC. Effect of improved glycemic control on health care costs and utilization. JAMA. 2001;285(2):182-189.
12. Caro JJ, Ward AJ, O'Brien JA. Lifetime costs of complications resulting from type 2 diabetes in the U.S. Diabetes Care. 2002;25(3): 476-481.
13. Menzin J, Langley-Hawthorne C, Friedman M, Boulanger L, Cavanaugh R. Potential short-term economic benefits of improved glycemic control: a managed care perspective. Diabetes Care. 2001;24(1): 51-55.
14. Shetty SS, Secnik K, Oglesby AK. Relationship of glycemic control to total diabetes-related costs for managed care health plan members with type 2 diabetes. J Manag Care Pharm. 2005;11(7):559-564.
15. World Health Organization. Adherence to Long-Term Therapies: Evidence for Action. Geneva, Switzerland: World Health Organization; 2003.
16. Brown JB, Nichol GA, Glauber HS, Bakst A. Ten-year follow-up of antidiabetic drug use, nonadherence, and mortality in a defined population with type 2 diabetes mellitus. Clin Ther. 1999;21(6):1045-1057.
17. Boccuzzi SJ, Wogen J, Fox J, Sung JC, Shah AB, Kim J. Utilization of oral hypoglycemic agents in a drug-insured U.S. population. Diabetes Care. 2001;24(8):1411-1415.
18. Pugh MJ, Anderson J, Pogach LM, Berlowitz DR. Differential adoption of pharmacotherapy recommendations for type 2 diabetes by generalists and specialists. Med Care Res Rev. 2003;60(2):178-200.
19. Cramer JA. A systematic review of adherence with medications for diabetes. Diabetes Care. 2004;27(5):1218-1224.
20. Odegard PS, Gray SL. Barriers to medication adherence in poorly controlled diabetes mellitus. Diabetes Educ. 2008;34(4):692-697.
21. Gibson TB, Ozminkowski RJ, Goetzel RZ. The effects of prescription drug cost sharing: a review of the evidence. Am J Manag Care. 2005;11(11):730-740.
22. Karter AJ, Stevens MR, Herman WH, et al; Translating Research Into Action for Diabetes Study Group. Out-of-pocket costs and diabetes preventive services: the Translating Research Into Action for Diabetes (TRIAD) study. Diabetes Care. 2003;26(8):2294-2299.
23. Piette JD, Heisler M, Wagner TH. Problems paying out-of-pocket medication costs among older adults with diabetes. Diabetes Care. 2004;27(2):384-391.
24. Mahoney JJ. Reducing patient drug acquisition costs can lower diabetes health claims. Am J Manag Care. 2005;11(5)(suppl):S170-S176.
25. Colombi AM, Yu-Isenberg K, Priest J. The effects of health plan copayments on adherence to oral diabetes medication and health resource utilization. J Occup Environ Med. 2008;50(5):535-541.
26. Joyce GF, Goldman DP, Karaca-Mandic P, Zheng Y. Pharmacy benefit caps and the chronically ill. Health Aff (Millwood). 2007;26(5):1333-1344.
27. Gibson TB, Mark TL, McGuigan KA, Axelsen K, Wang S. The effects of prescription drug copayments on statin adherence. Am J Manag Care. 2006;12(9):509-517.
28. Gibson TB, Mark TL, Axelsen K, Baser O, Rublee DA, McGuigan KA. Impact of statin copayments on adherence and medical care utilization and expenditures. Am J Manag Care. 2006;12(spec no.):SP11-SP19.
29. Schectman JM, Nadkarni MM, Voss JD. The association between diabetes metabolic control and drug adherence in an indigent population. Diabetes Care. 2002;25(6):1015-1021.
30. Contoyannis P, Hurley J, Grootendorst P, Jeon SH, Tamblyn R. Estimating the price elasticity of expenditure for prescription drugs in the presence of non-linear price schedules: an illustration from Quebec, Canada. Health Econ. 2005;14(9):909-923.
31. Sherman BW, Frazee SG, Fabius RJ, Broome RA, Manfred JR, Davis JC. Impact of workplace health services on adherence to chronic medications. Am J Manag Care. 2009;15(7):e53-e59.
32. Liatis S, Thomakos P, Papaoikonomou S, et al. Trends in the management of type 2 diabetes and its prescription drug cost in Greece (1998 & 2006). Exp Clin Endocrinol Diabetes. 2009;117(9):505-510.
33. Goldman DP, Joyce GF, Escarce JJ, et al. Pharmacy benefits and the use of drugs by the chronically ill. JAMA. 2004;291(19):2344-2350.
34. Rosen AB, Hamel MB, Weinstein MC, Cutler DM, Fendrick AM, Vijan S. Cost-effectiveness of full Medicare coverage of angiotensinconverting enzyme inhibitors for beneficiaries with diabetes. Ann Intern Med. 2005;143(2):89-99.
35. Dezii CM, Kawabata H, Tran M. Effects of once-daily and twice-daily dosing on adherence with prescribed glipizide oral therapy for type 2 diabetes. South Med J. 2002;95(1):68-71.
36. Alexander DL, Flynn JE, Linkins LA. Estimates of the demand for ethical pharmaceutical drugs across countries and time. Applied Econ. 1994;26(8):821-826.