Effects of a consumer driven health plan on pharmaceutical spending and utilization.
OBJECTIVE
To compare pharmaceutical spending and utilization in a consumer driven health plan (CDHP) with a three-tier pharmacy benefit design, and to examine whether the CDHP creates incentives to reduce pharmaceutical spending and utilization for chronically ill patients, generic or brand name drugs, and mail-order drugs.


METHODS
Retrospective insurance claims analysis from a large employer that introduced a CDHP in 2001 in addition to a point of service (POS) plan and a preferred provider organization (PPO), both of which used a three-tier pharmacy benefit.


METHODS
Difference-in-differences regression models were estimated for drug spending and utilization. Control variables included the employee's income, age, and gender, number of covered lives per contract, election of flexible spending account, health status, concurrent health shock, cohort, and time trend. Results. CDHP pharmaceutical expenditures were lower than those in the POS cohort in 1 year without differences in the use of brand name drugs. We find limited evidence of less drug consumption by CDHP enrollees with chronic illnesses, and some evidence of less generic drug use and more mail-order drug use among CDHP members.


CONCLUSIONS
The CDHP is cost-neutral or cost-saving to both the employer and the employee compared with three-tier benefits with no differences in brand name drug use.
Parente
Stephen T
ST
Department of Finance, Director, Medical Industry Leadership Institute, Carlson School of Management, University of Minnesota, 321 19th Avenue South, Room 3-122, Minneapolis, MN, USA.
Feldman
Roger
R
Chen
Song
S
D000328:Adult; D000367:Age Factors; D002908:Chronic Disease / Q000188:drug therapy; D017047:Cost Sharing / Q000191:economics; D004363:Drug Utilization / Q000191:economics*; D016568:Drugs, Generic / Q000191:economics; D005252:Fees, Pharmaceutical / Q000706:statistics & numerical data*; D005260:Female; D006264:Health Benefit Plans, Employee / Q000145:classification* / Q000191:economics*; D005102:Health Expenditures / Q000706:statistics & numerical data; D006801:Humans; D007182:Income / Q000706:statistics & numerical data; D007345:Insurance Claim Review / Q000706:statistics & numerical data; D008297:Male; D020402:Medical Savings Accounts / Q000191:economics; D011177:Postal Service / Q000191:economics; D012189:Retrospective Studies; D012737:Sex Factors
D016568:Drugs, Generic