Impact of multitiered copayments on the use and cost of prescription drugs among Medicare beneficiaries.
OBJECTIVE
To assess the impact of multitiered copayments on the cost and use of prescription drugs among Medicare beneficiaries.


METHODS
Marketscan 2002 Medicare Supplemental and Coordination of Benefits database and Plan Benefit Design database.


METHODS
The study uses cross-sectional variation in copayment structures among firms with a self-insured retiree health plan to measure the impact of number of copayment tiers on total and enrollee drug payments, number of prescriptions filled, and generic substitution. The study also assesses the effect of enrollee cost sharing on the cost and use of prescription medications for the long-term treatment of chronic conditions.


METHODS
We linked plan enrollment and benefit data with medical and drug claims for 352,760 Medicare beneficiaries with employer-sponsored retiree drug coverage.


RESULTS
Medicare beneficiaries in three-tiered plans had 14.3 percent lower total drug expenditures, 14.6 percent fewer prescriptions filled, and 57.6 percent higher out-of-pocket costs than individuals in lower tiered plans. They also had fewer brand name and generic prescriptions filled, and a higher percentage of generics. The estimated price elasticity of demand for prescription drug expenditures was -0.23. Finally, for maintenance medications used for the long-term treatment of chronic conditions, members in three-tiered plans had 11.5 percent fewer prescriptions filled.


CONCLUSIONS
Higher tiered drug plans reduce overall expenditures and the number of prescriptions purchased by Medicare beneficiaries. Beneficiaries are less responsive to cost sharing incentives when using drugs to treat chronic conditions.
Gilman
Boyd H
BH
Mathematica Policy Research Inc., 955 Massachusetts Avenue, Suite 801, Cambridge, MA 02139, USA.
Kautter
John
J
D000367:Age Factors; D000368:Aged; D000369:Aged, 80 and over; D003430:Cross-Sectional Studies; D003669:Deductibles and Coinsurance / Q000191:economics*; D004363:Drug Utilization; D005260:Female; D006264:Health Benefit Plans, Employee / Q000191:economics; D006304:Health Status; D006801:Humans; D007345:Insurance Claim Review; D007356:Insurance, Pharmaceutical Services / Q000191:economics; D008297:Male; D054524:Medicare Part D; D012737:Sex Factors; D014481:United States