Patient Engagement

For Pharmacy Benefits, Is Greater Choice Always Better?

Article · March 8, 2016

In health care, Americans demand choice. Insurers must strike a balance between respecting that demand and encouraging their members to opt for the most cost-effective care. That challenge is especially tough when designing pharmacy benefits — heavy direct-to-consumer advertising is driving up demand, and costs are rising at unsustainable rates. Nearly all payers use tiered drug formularies to move patients toward the most cost-effective drugs while still offering broad choice to people who are willing to pay.

A growing body of research shows that pharmacy-benefit design influences whether patients with chronic medical conditions start and adhere to their essential medication regimens — which, of course, affects the long-term value of those prescriptions. The bottom line for benefits managers and payers: Not all pharmacy-benefit choices are created equal.

Let Patients Choose the Access Channel

Patients have strong preferences about how they get their medications. When enrolled in a pharmacy benefit that offered a 90-day supply of prescriptions via mail service or a retail pharmacy (with no difference in out-of-pocket costs), each mode of access was selected by about half of patients in a large retrospective study. And evidence shows that giving patients such flexibility improves their rates of adherence to essential therapies.

In one study, comparing patients in a mandatory mail-order plan with patients who could choose to fill their prescriptions at either mail or retail pharmacies (with the same copay), the 90-day adherence rate was 30% better for the patients who had a choice. Results are similar specifically for adherence to specialty medications: Patients who could choose between a specialty mail-order pharmacy and a retail pharmacy, rather than being limited only to the mail-order option, had a 17.5% higher rate of filling a second prescription and an 11.4% higher rate of overall adherence.

Should Patients Choose the Medication, Too?

In a national survey, more than 70% of Americans indicated that generic medications are as effective as, cost less, and offer better value than branded medications. However, although 56% of the survey respondents believed that more people should use generics, only 38% preferred to take generics themselves. This apparent inconsistency may explain why patients choose options that are more expensive, both for the payer and for their own wallets, without a clear clinical rationale.

In tiered benefit plans, which charge higher copays for name-brand medications, prescribing those medications leads to higher costs and poorer health. For instance, prescriptions for name-brand drugs are three to four times more likely to be abandoned right at the pharmacy when patients experience “sticker shock” and then leave without the drug in hand. And if patients or physicians request that a branded medication be “dispensed as written,” with no option to substitute a generic, patients are 37% more likely to fail to fill the initial script, and more than twice as likely not to fill subsequent prescriptions. In addition, patients with chronic conditions (e.g., hypertension, diabetes, hypercholesterolemia) had significantly higher adherence rates to generic drugs than to nonpreferred brand-name drugs (59% vs. 52%). Among patients with heart disease, choosing a generic led to better adherence and fewer adverse clinical outcomes.

In short, when broad choice of medications allows patients to select higher-cost therapies, clinical outcomes suffer — because patients are less likely to actually bring the medications home and take them as prescribed.

Narrower Can Mean Better

In a consumer-centric environment, pharmacy benefits range widely, in terms of coverage generosity and medication choice. Payers often hesitate to narrow choice within an existing plan, fearing disruptions in patients’ current therapies. But a recent study offers evidence to the contrary.

It compared three benefit plans that retained current medication-choice levels with three (otherwise identical) plans that limited the coverage of branded medications when equivalent generics were available, bolstered by outreach and education for patients and providers about the narrowed benefit. Compared with the unchanged plans, the narrowed-formulary plans showed a 1.3% one-time absolute increase in discontinuation rates that was offset by a 1.5% downstream improvement in adherence, accompanied by a substantial reduction in medication costs ($20 per utilizer per month) and a 4.2% increase in dispensing of generic medications.

This evidence underscores that it is possible for payers and benefits managers to narrow formularies and reduce total costs without compromising care.

How to Optimize Choice

Choice appeals to patients as a general principle. However, in some areas, choice can foster complexity that leads patients to act against their long-term self-interest. With respect to pharmacy benefits, offering a choice of access channel (e.g., mail, retail, specialty pharmacy) increases patients’ adherence to chronic medications. However, greater choice in selecting the medications themselves may drive up costs and adversely affect clinical outcomes.

To improve the health of the populations they serve while lowering the total cost of care, payers and benefits managers should design plans that encourage patients to pursue healthful behaviors, including adherence to chronic medications. Here are three basic rules to follow:

  1. Promote convenience. Let patients choose where and how they access their chronic medications, and communicate clearly with them about what those choices are.
  2. Minimize unnecessary complexity. Limit choice of medications that cost more than, and offer no clinical benefit over, substitutes. Having too many options may encourage patients to make irrational choices that drive up costs and adversely affect their health.
  3. Support patients in their decision making. Provide patient-centric education and real-time support to promote transparency so that patients can optimize the choices that are available to them within their benefits.

By following these three basic principles, payers and pharmacy-benefits managers can reduce unnecessary costs, promote medication adherence, and improve patients’ health outcomes.

 

Disclosure: Dr. Shrank is employed by CVS Health, which owns CVS/Caremark, a pharmacy-benefits manager.

New Call for Submissions ­to NEJM Catalyst

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From Patient Engagement
Steps for Deploying Nudge Unit in Health Care

Nudge Units to Improve the Delivery of Health Care

Key information and important choices are constantly being presented in health care. Yet often the frames or default options used are selected without attention to strategic goals.

Example Cost of Custom-Built PRO Collection Platform

The Cost of Patient-Reported Outcomes in Medicine

Implementation of routine PRO collection is paramount to measuring and maximizing value in health care.

Mentoring, Education, and Engagement: An Employee Training Technique to Improve Patient Experience and Employee Satisfaction

How open communication and one-to-one mentoring generated team spirit and a learning environment.

Face-to-Face Group Sessions Are the Most Useful Mode of Communication in Health Social Networks

Survey Snapshot: Patient Networks Are Important for Outcomes

NEJM Catalyst Insights Council members overwhelmingly agree that social networks can impact chronic diseases and healthy behaviors, but time commitment and funding prevent their prevalence.

Consumerism in Health Care

Will personalized interventions transform how we improve an individual’s health? A frequent-flier expert believes that it will.

Chronic Disease Management and Healthy Behavior Promotion Are the Best Uses of Health Social Networks

Patient Engagement Survey: Social Networks to Improve Patient Health

Social networks — both face-to-face and virtual — have been shown to positively impact behaviors such as weight loss and smoking cessation. Is the health care industry ready to more widely leverage this mechanism for increasing healthy behaviors among patients?

Patient Inducements — High Graft or High Value?

Can health care be more like Uber and Lyft?

Consumer Engagement: New Tools and Capabilities for Health System Marketing

Novant Health is using research and data analytics to identify and engage new consumers, develop more relevant products and services, and support its mission and brand promise.

The Patient as Consumer and the Measurement of Bedside Manner

Many physicians do not believe patient satisfaction is a legitimate pursuit. Yet they must meet consumers of health care where they are — on Internet ratings sites.

Halpern02_clip_still: A/B Testing Health Behavior Interventions

A/B Testing Health Behavior

Health care can’t implement changes overnight like Silicon Valley, but we can still learn from their version of treatment and control.

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

Topics

Patients As Customers

97 Articles

Nudge Units to Improve the Delivery…

Key information and important choices are constantly being presented in health care. Yet often the…

Patient-Centered Care

194 Articles

Nudge Units to Improve the Delivery…

Key information and important choices are constantly being presented in health care. Yet often the…

Patient Incentives

57 Articles

Nudge Units to Improve the Delivery…

Key information and important choices are constantly being presented in health care. Yet often the…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now