1. Medstat MercuryMD Micromedex PDR Solucient THOMSON HEALTHCARE Prescription Drug Cost-Sharing Among Commercially-Insured Children and Adults with Chronic Illness Teresa B. Gibson, PhD Thomson Healthcare, Ann Arbor, MI

2. THOMSON HEALTHCARE 2 ©2007 Thomson Healthcare. All rights reserved. Background Children represent over one-quarter of nonelderly enrollees in private health plans in the US. (Medical Expenditure Panel Survey, 2005) Children are dependent upon parents (or legal guardians) to mediate the health care delivery system on their behalf –Child is principal (P), parent is agent (A) –This interaction differs from many principal-agent (P-A) interactions: The Principal is largely incapable of managing/supervising the Agent The Agent is assigned to the Principal by law/custom/birth The P-A contract is implicit, since legal minors cannot sign or negotiate contracts –Contract is not between child and parent, but parent and state –Parents have an “implicit promise” to behave in the interests of the child (Becker and Murphy, 1988; Munro, 2001)

3. THOMSON HEALTHCARE 3 ©2007 Thomson Healthcare. All rights reserved. Background (continued) Information asymmetry in health care –Parent/Provider: Parents seek help from physician agents to help determine a course of treatment –Parent/Child: Children must communicate symptoms to parents

4. THOMSON HEALTHCARE 4 ©2007 Thomson Healthcare. All rights reserved. Cost-Sharing Adults and children in the same employer-based health plan typically face the same levels of cost-sharing (e.g., copayments, coinsurance) Most cost-sharing studies have focused on the price-responsiveness of adults. –Few studies include children or report results separately for children. –Little evidence regarding price-responsiveness and chronic illness in children Price elasticity for medical services is different for children and adults (Newhouse 1981) –Children: price inelastic response for inpatient services, price elastic response for outpatient services –Adults: price elastic response for both inpatient and outpatient services Price elastic demand for antibiotics among children and adults (Foxman 1987) Adoption of a 3-tier formulary from a 1-tier formulary medications in children resulted in a decline in the rate of adoption of ADHD medications but few changes in utilization for existing users (Huskamp 2005)

5. THOMSON HEALTHCARE 5 ©2007 Thomson Healthcare. All rights reserved. Study Aims To examine the effects of higher levels of prescription drug cost- sharing on children with chronic illness –Analyze price-responsiveness for a single, common chronic illness, persistent asthma, affecting both children and adults –Is price important when providing health care to children with a common chronic illness?

6. THOMSON HEALTHCARE 6 ©2007 Thomson Healthcare. All rights reserved. Data Source 2001 through 2003 MarketScan Commercial Claims and Encounters database –Representing the health care experience of enrollees in employer- sponsored health plans in the US

7. THOMSON HEALTHCARE 7 ©2007 Thomson Healthcare. All rights reserved. Study Sample Patients with Persistent Asthma age 5-54 years Met HEDIS denominator criteria for persistent asthma (493.xx) in index year (2001 or 2002) –Based on: inpatient use, ED use, outpatient use and/or asthma prescription drug use Continuously enrolled at least 24 months Index year/measurement year combinations (2001/2002 or 2002/2003

8. THOMSON HEALTHCARE 8 ©2007 Thomson Healthcare. All rights reserved. Study Sample 56,381 adults (18-54 years) 22,985 children (5-17 years) - Children and adults were enrolled in the same set of employer-based health plans -22.9% of children and 27.5% of adults appear in both years

9. THOMSON HEALTHCARE 9 ©2007 Thomson Healthcare. All rights reserved. Measures 1.Any asthma drug use (1=yes, 0=no) –At least one prescription in the measurement year (2002 or 2003) if identified as having asthma in prior year 2.Count of asthma prescriptions (in 30-day equivalents) in 2002 or 2003 3.Count of prescriptions conditional on use (in 30-day equivalents) in 2002 or 2003

10. THOMSON HEALTHCARE 10 ©2007 Thomson Healthcare. All rights reserved. Explanatory Variables Patient Cost-Sharing –Asthma drug cost sharing amount (US$ 2003 per 30-day supply) –Office Visit cost sharing amount (US$ 2003 per visit) Sociodemographic - Age, Female, US Census Region, Median Household Income (by ZIP code via Census information), salaried/hourly Health Plan Type – (e.g., HMO, PPO, POS, Comprehensive) Pulmonologist visit (prior 12 months) Disease Prevalence/Comorbidity (prior 12 months) –Charleson Comorbidity Index –Stage of Asthma (Disease Staging) –Sinus infection, otitis media, migrane, bronchitis –Anxiety, SSRI use, Depression Time (index year 2001)

11. THOMSON HEALTHCARE 11 ©2007 Thomson Healthcare. All rights reserved. Multivariate Analysis P(Any use it |x it ) = F(  0 +  1 sociodemographic it +  2 plan it +  3 provider ip +  4 severity ip +  5 comorbidity ip +  6 cost-sharing it ) –Panel data logit model for any asthma drug use P(Number of Rx it |x it ) = G(  0 +  1 sociodemographic it +  2 plan it +  3 provider it +  4 severity ip +  5 comorbidity ip +  6 cost-sharing it ) –Panel data poisson model for counts of prescription drugs where i is patient, t is measurement year, p is index year panel data

12. THOMSON HEALTHCARE 12 ©2007 Thomson Healthcare. All rights reserved. Results: Selected Characteristics ChildrenAdults Characteristicn= 22,985n= 56,381 Age (y) 10.7  3.746.3  9.4 Charlson Index 0.52  0.540.68  0.97 Copayment Asthma Copayment ($/30 day supply) $9.6  4.3 $9.4  4.7 Measures Any asthma drug76.6%78.0% Count of asthma drugs 4.0  4.64.9  5.5 Count of asthma prescriptions conditional on use 5.4  4.66.6  5.4

13. THOMSON HEALTHCARE 13 ©2007 Thomson Healthcare. All rights reserved. Results – Any Asthma Drug Selected Effects Adults n=56,381 Children n=22,958 Copayment-0.019*** (0.004) 0.001 (0.006) Age0.024*** (0.002) -0.088*** (0.006) Pulmonologist Visit (last 12 months) 0.397*** (0.054) 0.544*** (0.172) Household Income 0.008*** (0.001) 0.008*** (0.001) Effects of a $10 increase in Copayment *** *** p<.01

14. THOMSON HEALTHCARE 14 ©2007 Thomson Healthcare. All rights reserved. Results – Number of Asthma Prescriptions Selected Effects Adults n=56,381 Children n=22,958 Copayment-0.008*** (0.001) 0.002 (0.002) Age0.011*** (0.001) -0.040*** (0.002) Pulmonologist Visit (last 12 months) 0.08*** (0.011) 0.136*** (0.040) Household Income 0.001*** (0.000) 0.002*** (0.001) Effects of a $10 increase in Copayment *** *** p<.01

15. THOMSON HEALTHCARE 15 ©2007 Thomson Healthcare. All rights reserved. Results – Number of Prescriptions, Conditional on Use Selected Effects Adults n=42,763 Children n=22,958 Copayment-0.004*** (0.001) 0.002 (0.001) Age0.007*** (0.000) -0.002*** (0.002) Pulmonologist Visit (last 12 months) 0.086*** (0.010) 0.114*** (0.035) Household Income -.0001 (0.000) 0.001* (0.001) Effects of a $10 increase in Copayment *** *** p<.01, * p<.05

16. THOMSON HEALTHCARE 16 ©2007 Thomson Healthcare. All rights reserved. Other Results Family Dyads –Adults (parents) with asthma who had children with asthma (n=2,644) had were less price sensitive than adults without asthmatic children for each of the three measures: any use, number of prescriptions contingent on use, number of prescriptions Adults and children with asthma in both years –Patients appearing in both years (adults, n=21,423 ; children n=7,187) had a less elastic price response than the full sample Income –Price effects did not vary by income. Children residing in lower income areas (< $38K) had the same inelastic response as children residing in higher income areas (> $64K)

17. THOMSON HEALTHCARE 17 ©2007 Thomson Healthcare. All rights reserved. Limitations Measure prescription fills, not actual consumption patterns Persistent asthma criteria –Meeting the asthma criteria for 2 years may improve ability to select patients most likely to have asthma-related utilization (Mosen 2005, Weiss 2006) Sensitivity analysis requiring 2 years of asthma revealed no difference in results –Criteria based upon utilization, not pulmonary function Continuously-enrolled population with employer-sponsored insurance –Higher income

18. THOMSON HEALTHCARE 18 ©2007 Thomson Healthcare. All rights reserved. Conclusions Commercially-insured parents in employer-sponsored health plans may err on the side of caution by providing medications to their chronically-ill children Higher copayments for children with asthma may not affect the utilization of prescription drugs, as parents may seek to act in the best interests of their children. Prescription drug copayments may not impede care for chronically-ill children but may create a financial burden for families

19. THOMSON HEALTHCARE 19 ©2007 Thomson Healthcare. All rights reserved. Other Considerations For child asthmatics, demand is inelastic. Is Q’ optimal? Demand for Asthma Prescriptions Q* Q’ Price per Prescription Quantity Of Prescriptions Copay1 Copay2 D

20. THOMSON HEALTHCARE 20 ©2007 Thomson Healthcare. All rights reserved. Other Considerations “Even altruistic parents have to consider the trade-off between their consumption and the human capital of children” (Becker and Murphy, 1988, p. 5) The loss in buying power may introduce principal-agent conflicts within the family –Choices between medications and other goods –Trade-off between the welfare of the child and the welfare of the parent –Particularly important for lower income families (Munro 2001) Are higher user fees (e.g, higher copayments) the most effective way to manage consumption of maintenance medications in chronically-ill children?