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Impact of Cost Sharing on Specialty Drug Utilization and Outcomes: A Review of the Evidence and Future Directions
Jalpa A. Doshi, PhD; Pengxiang Li, PhD; Vrushabh P. Ladage, BS; Amy R. Pettit, PhD; and Erin A. Taylor, PhD, MSPH
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Value of Primary Care Diabetes Management: Long-Term Cost Impacts
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Aparna Higgins, MA; German Veselovskiy, MPP; and Jill Schinkel, MS
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Impact of Cost Sharing on Specialty Drug Utilization and Outcomes: A Review of the Evidence and Future Directions

Jalpa A. Doshi, PhD; Pengxiang Li, PhD; Vrushabh P. Ladage, BS; Amy R. Pettit, PhD; and Erin A. Taylor, PhD, MSPH
The authors review published evidence regarding associations between high cost sharing for specialty pharmaceuticals indicated for rheumatoid arthritis, multiple sclerosis, and cancer, and their utilization.
In addition to summarizing the evidence, our review identified a number of important limitations in the existing literature that have implications for future research and policy:

Cross-sectional versus longitudinal study designs. The majority of available studies were cross-sectional, meaning they could not account for unmeasured differences between patients across plans. Thus, differences in characteristics that may be correlated with specialty drug use may have biased estimates of the effects of cost sharing. Although randomized designs are rarely feasible, there is a critical need for more quasi-experimental research studies using longitudinal data to evaluate outcomes before and after a specialty drug cost-sharing change, relative to a contemporaneous control group.   

UM policies and other specialty drug management approaches. None of the cost-sharing studies in our review considered the confounding, interactive, and/or individual effect of UM policies on specialty drug use. Specialty drugs covered under the pharmacy benefit are increasingly subject to more stringent UM tools, such as prior authorization, quantity limits, and, more recently, step therapy.5 If plans that required lower cost sharing were more likely to use UM tools as a substitute to help manage specialty drug costs, then the results from cross-sectional studies would underestimate the true effect of specialty drug cost sharing. Alternatively, if the plans that require higher cost sharing also use UM tools to further control costs, then the results from cross-sectional studies would potentially overestimate the true effect of cost sharing. Similar issues are pervasive if cost-sharing studies do not account for the presence or absence of other specialty drug management approaches, such as clinical care management, use of specialty pharmacies, and clinical pathway programs.5 Understanding the individual and interactive effect of all these approaches on specialty drug use and outcomes is crucial for payers who are using them, or considering them, as a substitute or complement to higher cost sharing.  

Specialty tier level or extremely high cost sharing. All but 2 studies in our review focused exclusively on private or employer-sponsored insurance data from 2009 or earlier, when lower cost sharing was more typical21; no studies examined the impact of a specialty tier benefit design.15 As a result, the generalizability of findings is limited. Over 90% of Medicare Part D plans now have a specialty tier wherein cost sharing ranges from 25% to 33%.36 Similarly, a recent analysis of exchange formularies found that approximately 60% of the Silver- and Bronze-level health insurance exchange plans offered in 19 states also contain specialty tiers with coinsurance.8 By 2013, almost one-fourth of workers with employer-sponsored coverage also faced a specialty tier.7 This highlights the need for future research to examine the effects of the higher cost-sharing levels common in today’s marketplace. In the meantime, it may be appropriate to establish policies that provide additional protection for patients against extremely high cost sharing for specialty drugs. This is of particular concern under Medicare Part D, where beneficiaries who do not qualify for low-income subsidies will need to spend up to $4850 out of pocket in 2016 before catastrophic coverage kicks in.37 Similarly, the widespread use of high deductibles coupled with high OOP maximums under exchange plans also raises concern for the health and/or financial well-being of patients with serious chronic conditions.38

Coinsurance vs co-payments. Evidence is limited as to how the nature of cost sharing (ie, fixed co-payments vs coinsurance) may influence the impact it has on patient decision making and behavior. In addition to the Part D and exchange plans discussed above, almost half of the 1 in 4 employees facing the fourth (specialty) tier in 2013 were subject to coinsurance, and the average rate was reported to be 32%, whereas average co-payments in the same tier were $80 for employees facing fixed OOP cost arrangements.7 Such coinsurance arrangements mean that patients not only pay a larger percentage of the cost of specialty medications, but they also face additional uncertainty in their OOP spending, which could change in conjunction with fluctuations in the price of the specialty drug and/or changes in drug treatment. Indeed, the one study in our review that explicitly examined the effect of requiring coinsurance versus co-payments for specialty drugs22 did find a differential impact of fixed co-payments and coinsurance; there was no relationship between monthly average co-payment levels and adherence to specialty drugs indicated for MS, whereas patients facing coinsurance showed decreased adherence as coinsurance levels increased. Furthermore, patients with coinsurance arrangements showed lower adherence independent of the coinsurance amount paid by the patient.

Additional research is critically needed to better understand the ramifications of the increasing use of coinsurance arrangements on specialty medication initiation, adherence, and outcomes. In the meantime, it may be worthwhile for insurers requiring coinsurance to consider coupling coinsurance rates with other approaches, such as reasonable OOP maximums per specialty prescription fill, to protect patients from uncertain and very high OOP costs. Employers may also be able to consider income-based cost sharing or other OOP maximums for specialty medications.

Specialty drug substitution across benefit types. Some conditions, including RA, have multiple agents within the same specialty drug class that are covered by different benefit types (medical vs pharmacy) based on their mode of administration. High specialty tier cost sharing under the pharmacy benefit may result in patients substituting with specialty drugs under the medical benefit if OOP costs are lower (as is often the case with Medicare, where supplemental insurance held by the beneficiary may cover the medical benefit coinsurance). None of the reviewed studies examined such substitution, and this remains an area for further research. There is also an emerging trend among payers to consolidate specialty drugs under one benefit (by either covering all drugs under the pharmacy benefit regardless of mode of administration or moving all specialty drugs into a single specialty drug benefit with consistent levels of cost sharing, UM tools, and care management policies).5 As this trend continues, it will be even more important to monitor the impact of cost sharing on access to specialty drugs.

Additional utilization, spending, and health outcomes. Studies that reported lower specialty drug initiation rates for patients facing higher cost sharing did not examine treatment history in a way that would reveal whether patients may have delayed specialty drug initiation by perhaps first substituting less expensive, less optimal treatments; attempting to enroll in patient assistance programs; or otherwise opting to defer treatment. Hence, it is essential for future studies to examine such delays and also any associated disease progression, particularly for conditions such as cancer, wherein negative consequences of delayed treatment can be substantial.

Furthermore, it is surprising that only 1 study examined specialty drug spending in addition to drug utilization outcomes, despite the fact that controlling spending is a goal of cost sharing.29 No studies in our review reported the effect of specialty drug cost sharing on health outcomes or nondrug medical service use and expenditures. Studies that examine drug utilization outcomes in isolation are unable to detect any broader impact of cost-sharing policies on health outcomes and total spending. Because many specialty drugs are indicated for serious, chronic, complex, or life-threatening conditions, lower utilization of these agents in the face of higher cost sharing could have adverse short- and/or long-term health consequences and may lead to increases in the use of other medical services and spending. From a policy perspective, consideration should be given to whether value-based insurance design approaches may offer more optimal strategies for facilitating drug access to high-value specialty medications.39 Such an approach may be particularly sensible for employers who are also invested in broader outcomes, such as reducing the absenteeism and lost productivity that are associated with poor medication adherence.40

Evidence to date generally indicates reductions in specialty drug utilization associated with higher cost sharing, with effects varying by type of disease and specialty drug use outcome. We have identified several gaps in the evidence base that, if addressed, would help inform future specialty drug cost-sharing policies. It may be appropriate in the interim to establish policies that provide additional protection for patients against aggressive cost-sharing policies for specialty drugs. As payers continue to experiment and implement dramatic changes in specialty drug benefit design in the coming years, there is an urgent need for methodologically rigorous research to comprehensively evaluate whether and how such specialty drug cost-sharing arrangements cause patients to forego, delay, or decrease adherence to specialty drugs, and whether that results in poor health outcomes and total higher costs associated with treatment failure, progression of disease, and the need for more aggressive treatment down the road.

Author Affiliations: Division of General Internal Medicine, Perelman School of Medicine (JAD, PL, VPL), Leonard Davis Institute of Health Economics (JAD, PL), Center for Public Health Initiatives (ARP), University of Pennsylvania, Philadelphia, PA; RAND Corporation (EAT), Santa Monica, CA.

Source of Funding: Pharmaceutical Research and Manufacturers of America (PhRMA), Washington, DC, and Pfizer Inc, New York, NY.

Author Disclosures: Dr Doshi has served as a consultant or advisory board member for Alkermes Inc, Boehringer Ingelheim, Forest Laboratories, Ironwood Pharmaceuticals, Merck & Co Inc, and Shire; has received grants in the past from Amgen Inc, Pfizer Inc, Humana Inc, PhRMA, and the National Pharmaceutical Council; and has a spouse who owns stock in Merck & Co Inc and Pfizer Inc. Dr Pettit has received consulting fees from Alkermes Inc. The remaining authors 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 (JAD, PL, VPL); acquisition of data (JAD, PL, VPL); analysis and interpretation of data (JAD, PL, VPL, ARP, EAT); drafting of the manuscript (JAD, PL, VPL, ARP, EAT); critical revision of the manuscript for important intellectual content (JAD, PL, VPL, ARP, EAT); statistical analysis (JAD, PL); obtaining funding (JAD); administrative, technical, or logistic support (JAD, VPL); and supervision (JAD, VPL).

Address correspondence to: Jalpa A. Doshi, PhD, Associate Professor of Medicine, Director, Economic Evaluations Unit, Center for Evidence-based Practice, Director, Value-based Insurance Design Initiatives, Center for Health Incentives and Behavioral Economics, University of Pennsylvania, 1223 Blockley Hall, Philadelphia, PA 19104. E-mail:

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