HKS Authors

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Objective: To examine the impact of incentive formularies on prescription drug utilization and spending after introduction of new pharmacy benefit designs for proton pump inhibitors (PPIs), statins, and angiotensin-converting enzyme (ACE) inhibitors. Study Design: Pre/post comparison study with concurrent control cohort of continuously enrolled patients from a single large health plan. Methods: Overall, health plan, and out-of-pocket spending, adherence, and formulary adherence data for PPIs, statins, and ACE inhibitors were assembled using administrative data from the health plan for the year before and the year after introduction of new pharmacy benefi t designs. Results: From 1.25 million continuously enrolled commercial health plan members, we selected 7 unique pharmacy benefit structures with just over 600,000 members, and analyzed 9 different benefit changes. For statins, changing from a single-tier or 2-tier to a 3-tier incentive formulary was associated with decreased overall spending of 5% or less. Plan spending decreased 12% to 15%, but this was largely offset by increases in out-of-pocket spending by between 28% and almost 300%. Findings for PPIs and ACE inhibitors were similar. Discontinuation rates among persistent users independent of copayment changes ranged from an average of 17% for statins to 25% for PPIs, but the copayment changes increased the discontinuation rate only for statins (2% higher, P .05, uncorrected for multiple comparisons). Conclusion: A switch to incentive formulary arrangements with higher copayment levels generally led to modestly lower total drug costs. We did not fully replicate previous findings of increased rates of discontinuation for those on chronic medications.


Landon, Bruce E., Meredith B. Rosenthal, Sharon-Lise T. Normand, Claire Spettell, Adam Lessler, Howard R. Underwood, and Joseph P. Newhouse. "Incentive Formularies: Spending and Utilization for 3 Common Drug Classes." American Journal of Pharmacy Benefits 3.3 (May-June 2011): 152-169.