Impact of a Value-based Formulary on Medication Utilization, Health Services Utilization, and Expenditures.

Yeung K1, Basu A, Hansen RN, Watkins JB, Sullivan SD.

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Abstract

BACKGROUND:

Value-based benefit design has been suggested as an effective approach to managing the high cost of pharmaceuticals in health insurance markets. Premera Blue Cross, a large regional health plan, implemented a value-based formulary (VBF) for pharmaceuticals in 2010 that explicitly used cost-effectiveness analysis (CEA) to inform medication copayments.

OBJECTIVE OF THE STUDY:

The objective of the study was to determine the impact of the VBF.

DESIGN:

Interrupted time series of employer-sponsored plans from 2006 to 2013.

SUBJECTS:

Intervention group: 5235 beneficiaries exposed to the VBF.

CONTROL GROUP:

11,171 beneficiaries in plans without any changes in pharmacy benefits.

INTERVENTION:

The VBF-assigned medications with lower value (estimated by CEA) to higher copayment tiers and assigned medications with higher value to lower copayment tiers.

MEASURES:

Primary outcome was medication expenditures from member, health plan, and member plus health plan perspectives. Secondary outcomes were medication utilization, emergency department visits, hospitalizations, office visits, and nonmedication expenditures.

RESULTS:

In the intervention group after VBF implementation, member medication expenditures increased by $2 per member per month (PMPM) [95% confidence interval (CI), $1-$3] or 9%, whereas health plan medication expenditures decreased by $10 PMPM (CI, $18-$2) or 16%, resulting in a net decrease of $8 PMPM (CI, $15-$2) or 10%, which translates to a net savings of $1.1 million. Utilization of medications moved into lower copayment tiers increased by 1.95 days' supply (CI, 1.29-2.62) or 17%. Total medication utilization, health services utilization, and nonmedication expenditures did not change.

CONCLUSIONS:

Cost-sharing informed by CEA reduced overall medication expenditures without negatively impacting medication utilization, health services utilization, or nonmedication expenditures.