1. Stephen Soumerai, Sc.D. Professor Department of Ambulatory Care and Prevention Harvard Medical School and Harvard Pilgrim Health Care Designing Pharmacy Benefits to Improve Quality and Contain Costs

2. Evolution of Prescription Drug Benefits Designs Non-selective “blunt” tools can have unintended consequences, reduce clinical effectiveness, and increase total costs Non-selective “blunt” tools can have unintended consequences, reduce clinical effectiveness, and increase total costs u Caps on number of prescriptions u Non-selective cost sharing u Triplicate prescriptions

3. Evolution of Prescription Drug Benefits Designs (cont’d) Initial studies suggest that selective “sharp” tools that recognize relative effectiveness of drugs within a class can reduce inappropriate use and promote least-costly alternatives Initial studies suggest that selective “sharp” tools that recognize relative effectiveness of drugs within a class can reduce inappropriate use and promote least-costly alternatives u Reference pricing u Tiered copayments u Evidence-based preferred drug lists and formularies

4. Unintended effects of non- selective cost-sharing policies Reduces use of clinically important medicines (e.g., insulin, cardiac meds) Reduces use of clinically important medicines (e.g., insulin, cardiac meds) Increases use of institutional services Increases use of institutional services – Nursing homes and hospitals (elderly) – Day hospital and acute care (patients with schizophrenia.) May increase total health care costs May increase total health care costs – Mental health cost offsets 17 x drug savings

5. Time Series of Constant-Size Rxs per Continuously Eligible Patient per Month among Multiple Drug Recipients (N=860) and Other Outpatients (N=8002) Source: Soumerai et al, N Engl J Med 1987; 317: 550-6

6. Cap-induced Changes in Essential Drugs: “Droppers” vs. “Maintainers” 0 1 2 3 4 STANDARD DOSES PER ELIGIBLE PERSON BASELINE3 DRUG CAP$1 COPAY JUL ‘81JUL ‘82JUL ‘80 DOSES REDUCED DOSES MAINTAINED Source: Soumerai et al, N Engl J Med 1994; 331: 650-5

7. Effects of Prescription Cap on Nursing Home Admissions 80% 85% 90% 95% 100% BaselineCapAfter Cap % outside nursing home New Jersey New Hampshire Source: Soumerai et al, N Engl J Med 1991; 325: 1072-7

8. Effect of Cap on Emergency Mental Health Services BaselineCapAfter Cap Source: Soumerai et al, N Engl J Med 1994; 331: 650-5

9. Changes in Use of Essential Drugs With Change in Cost Sharing Source: Tamblyn R et al, JAMA 2001; 285: 421-429

10. Effect of a $0.50 per Rx Copayment on Medication Use by Medicaid Recipients in South Carolina Source: Nelson, Reeder & Dickson. Med Care Aug. 1984 p. 724

11. Impact of Triplicate Prescription Program (TPP) on Benzodiazepine (BZ) Prescribing New Jersey New York (-54.8%) Triplicate Policy Source: Ross-Degnan et al (submitted)

12. Impact of TPP on Use of BZ Indicated for Seizure and Panic Disorder Triplicate Policy New JerseyNew York Source: Ross-Degnan et al (submitted)

13. Reduction in BZ Use Among Patients with Seizure Disorder NY Study Cohort NJ Control Cohort Source: Simoni-Wastila et al (submitted)