Free prescription drugs boost usage, cut costs

WASHINGTON—A major U.S. hospitality industry employer has found that giving free prescription drugs to certain employees who have chronic but manageable health conditions can save money as well as improve health care outcomes.

This was the preliminary conclusion of a university-led study testing the concept of "patient-specific value-based insurance design" on employees of Bethesda, Md.-based Marriott International Inc.

Marriott decided to participate in the experiment after its disease management program nurses discovered that the affordability of maintenance medication was an issue for some plan members with chronic conditions, said Jill Berger, Marriott's vp of health and welfare.

Although the data is still being analyzed, "we do expect to see a decrease in adverse events as well as a decrease in health care trend," said Ms. Berger, who released the initial findings at the National Business Group on Health's Business Health Agenda 2007 conference held March 14-16 in Washington.

Patient-specific value-based insurance design involves identifying patients who would benefit most from a particular drug but are not taking the medication because of cost, and then removing that barrier by either reducing or eliminating copayments.

It contrasts with disease management, which may identify patients in need of certain drugs but does little or nothing to remove financial barriers that may prevent patients from accessing those drugs, said Dr. A. Mark Fendrick, a professor of internal medicine and co-director of the Center for Value-Based Insurance Design at the University of Michigan in Ann Arbor.

"One-size-fits-all" cost-sharing, such as percentage-based coinsurance for prescription drugs, can lead to reductions in both essential and nonessential care, he said. "It is no secret that if you make people pay more for something, they will buy less of it."

Conversely, "people who pay zero for drugs will take them more often than if they have to pay $50 a month for them," Dr. Fendrick said.

This hypothesis was proven correct by the research involving Marriott employees, he said.

The study, which began in 2005, was conducted by University of Michigan and Harvard University researchers and administered by ActiveHealth Management Inc., a New York-based disease management and clinical decision support firm. It has developed the technology to identify patients who need specific prescription drugs but are not receiving them.

The technology allows ActiveHealth to use clinical data to identify plan members with a particular condition, compare their treatment with evidence-based medical guidelines and then notify the provider if the two do not match up, said Lonny Reisman, ActiveHealth's chief executive officer.

In situations where the patient is not taking a drug because of its cost, ActiveHealth works with the pharmacy benefit manager to provide discounts to make the drug more affordable for the patient, Mr. Reisman said.

"We selectively reduce copayments for drugs that these patients should be taking but aren't," he said. "It's manipulation of plan design based on the physiology of the member."

In Marriott's case, the PBM was instructed to eliminate generic copayments and halve copays for brand-name drugs used to treat diabetes, asthma and heart disease.

"We started with these conditions because there is documented evidence that if you can get your folks compliant with the drugs, it will improve their health and lead to reductions in hospital stays and emergency room visits," Ms. Berger said.

Marriott's experience was compared with a control group composed form another ActiveHealth client that was not using patient-specific value-based benefit design.

Although researchers are still measuring the financial and clinical outcomes of the experiment, "as we implement this technology, we are finding these strategies are creating a positive difference in trend," Ms. Berger said.

Moreover, employees are saving money, too, she said.

Members' out-of-pocket costs for targeted brand-name drugs decreased 27% while control group members' costs increased 4%. In addition, members' out-of-pocket costs for generic drugs fell 65%, while control group members' costs fell only 1%.

Perhaps most importantly, the preliminary analysis shows that adherence to recommended drug regimens increased for plan members compared with the control group, Ms. Berger said.

"We don't know the answer to the Marriott experiment yet," said Dr. Fendrick. "But if you're looking to save money in the short term...find those patients who are most likely to have bad things happen to them who are not taking the interventions or drugs that are very good at preventing those things from happening."