provides descriptive statistics for all variables used in the analysis. The sample of prescription drug plans was predominantly from the Midwest (33 percent) and South (32 percent), was overwhelmingly employer sponsored (93 versus 7 percent health plans), and largely had three-tier benefit designs (69 versus 31 percent two tier). Although 50 percent of two-tier plans used retail coinsurance rates to determine member retail OOP costs, 80 percent of three-tier clients had flat retail copayments. Among three-tier clients, the average retail OOP costs for generic, preferred brand, and nonpreferred brand prescriptions at retail were $8.79, $22.78, and $36.75, respectively. Two-tier plans had lower mean retail generic OOP costs ($7.25) and only slightly higher retail brand OOP costs ($23.33) than three-tier retail preferred brand OOP costs. Average mail–retail OOP cost ratios ranged from 1.78 to 2.12, and mail service was mandatory for maintenance medications in 17 percent of plans. Finally, 33 percent of plans had a patient type retail DAW penalty; however, retail MAB, retail MOOP, and retail deductible were far less common pharmacy benefit design elements.
Also presented in are mean values for the six prescription utilization measures. Plan members consumed 3.54 prescriptions per quarter, 52 percent of which were generic and 65 percent dispensed at retail pharmacies. Throughout the study period, GDR steadily rose from 47 to 58 percent as a result of both declining brand utilization (1.94–1.54 rxs per member per quarter) and inclining generic utilization (1.71–2.07 rxs per member per quarter). Finally, although MDR increased from 31 percent in Q1/2005 to 35 percent in Q4/2007, the trend over the 3-year period was not linear. Appendix Table S1
provides these time-specific results for the dependent variables.
and present selected coefficients from linear fixed effects models of generic utilization, brand utilization, and GDR (), as well as retail utilization, mail utilization, and MDR (). The complete output from the models is provided in Appendix Tables S2 and S3
. Although the estimated coefficients for the dichotomous benefit design variables can be readily interpreted as marginal effects, evaluating the results for the continuous measures is not as straightforward. Because retail OOP costs and mail–retail OOP cost ratios entered the equations as both first-order and squared regressors, their effects are by definition nonlinear. To assist in interpretation, presents predicted values for the dependent variables where the OOP costs measures are set equal to their 10th, 50th, and 90th percentiles (one at a time), while all other regressors are held constant at their means. Also included in this table is a column representing the predicted number of all rxs PMPQ (i.e., generic rxs+brand rxs; retail rxs+mail rxs).
Linear Fixed Effects Models of Generic and Brand Prescription Drug Utilization† (N=1,074)
Linear Fixed Effects Models of Retail and Mail Prescription Drug Utilization† (N=1,074)
Predicted Prescription Drug Utilization by Selected Values of Member Cost-Sharing Variables
Several noteworthy results emerged for the member cost-sharing variables. First, relative to retail brand OOP costs, retail generic OOP costs had a small marginal effect on GDR. For example, plans with retail generic OOP costs at the 10th percentile ($4.35 for two tier, $4.54 for three tier) were predicted to have GDRs within 0.007 of plans with retail generic OOP costs at the 90th percentile ($11.28 for two tier, $13.61 for three tier). The slight decrease in GDR among two-tier plans was largely associated with a significant increase in the number of brand rxs PMPQ, while the lower GDR in three-tier designs was primarily the result of a significant decline in absolute generic utilization. Utilization of generics is perhaps more responsive to generic OOP costs in three-tier plans because brand versions of generic drugs usually have nonpreferred formulary status with higher cost sharing.
The results for retail brand OOP costs are more compelling. Among two-tier plans, retail brand OOP cost was positively and significantly related to GDR. A change in this patient OOP cost from $10.00 (10th percentile) to $34.16 (90th percentile) would translate into a GDR increase of 0.035 through a reduction in brand utilization from 2.076 to 1.689. This decline in brand use is not offset by an increase in generic use; therefore, overall utilization decreases by 8.9 percent. In three-tier plans where brands are split into preferred and nonpreferred categories, an increase in the retail preferred brand OOP cost from $15.00 (10th percentile) to $30.73 (90th percentile) would be associated with a 0.011 increase in GDR on both lower generic and brand utilization. Raising the retail nonpreferred brand OOP cost from $22.02 to $50.00 would lead to an incline in GDR of 0.020. In this case, the increase in GDR would come from decreasing brand utilization (−7.2 percent) and increasing generic utilization (+2.9 percent). This result suggests that some generic substitution takes place in response to higher retail nonpreferred brand OOP costs (i.e., often multisource brands with generic equivalents), but switching to alternative, nonequivalent generics may be less common.
Besides substituting between generics and brands, individuals can also respond to cost-share changes by altering their prescription delivery channel. As expected, most model results indicate that as retail OOP costs increase, retail utilization decreases yet does not necessarily shift to mail service. For example, in two-tier plans, a higher retail generic OOP cost prompts a reduction in the retail generic utilization rate, an increase in mail generic use, and consequently a substantial incline in MDR. Among three-tier plan sponsors, however, the drop in retail fills is not accompanied by a lift in mail order prescriptions. Similarly, raising the retail brand OOP cost in a two-tier design, likely results in treatment discontinuation, since both the number of brand and retail rxs PMPQ decline without comparable increases in either the number of generics or mail prescriptions filled PMPQ.
In theory, mail–retail OOP cost ratios should have significant impacts on the absolute and relative use of retail and mail delivery options. Ratios equal to or greater than three would pose no financial incentive for the member to fill at mail versus retail. On the other hand, ratios <3 would suggest individuals might receive 90 days of medication supply for less—on a per-day basis—at mail than at retail. Findings are mixed, however, for these variables. Mail utilization is largely unchanged or slightly higher when the mail–retail generic OOP cost ratio is raised from the 10th to the 90th percentile. Conversely, for brands where the magnitude of cost savings can be dramatic for the member, the relative OOP cost for mail compared with retail had a greater effect. For example, an increase in the mail–retail preferred brand OOP cost ratio from 1.03 to 2.35 would be associated with a decline in the mail utilization rate from 1.545 to 1.314 rxs PMPQ or −15 percent. Only a portion of this reduced mail volume appears to “return” to retail fulfillment, resulting in a decline in the overall utilization rate.
In addition to cost sharing, the multivariate models also controlled for other pharmacy benefit design elements. Several results are worth noting. First, across the board, having a retail deductible was associated with significantly lower prescription drug utilization, approximately 0.276 fewer rxs PMPQ. Second, unexpectedly, having a retail MAB led to a significant increase in the use of mail service and, therefore, overall utilization. Third, retail DAW penalties were significantly related to lower rates of retail use, higher rates of mail use, and MDRs larger by >4 percentage points. Finally, mandatory mail was quite effective at shifting retail prescriptions (−0.268 PMPQ) to mail (+0.287 PMPQ), resulting in an almost 9 percentage point increase in MDR.