New Study Probes Stakeholder Attitudes on Ethics and Fairness of Cost-Sharing to Steer Appropriate Medication Use

(Washington, DC, February 8, 2017)–Patients who have the same condition sometimes pay different out-of-pocket costs for their medications, but when is this differential fair? Payers, patients, employers and researchers identified five principles for when it is less acceptable for patients with the same condition to have different costs, according to a new study published in the Journal of Managed Care & Specialty Pharmacy.

When patients have out-of-pocket costs through copays or coinsurance, payers are able to better manage costs and encourage more efficient use of health care resources. However, cost-sharing mechanisms are typically based on the cost of the medication, not whether the treatment is medically appropriate for the patient. This structure can lead to intended and unintended impacts on adherence, costs and health outcomes.

Patients with the same or similar condition may need different treatment options due to their genetic characteristics, comorbidities, socioeconomic factors or disease severity; therefore, patients may have medications on different formulary tiers and varying out-of-pocket expenses. The circumstances under which patients respond to treatment often vary. One patient may have a successful response to a lower-cost treatment, while another may need a more expensive treatment with a higher out-of-pocket cost for the same condition due to biology or genetics. 

To examine the issue, the National Pharmaceutical Council (NPC) convened an expert roundtable. Researchers initiated the discussion with a review of white papers addressing ethical, actuarial and legal issues and perspectives of representatives from patient, payer and employer communities. 

“We sought perspectives from the expert roundtable to help determine when it is acceptable to have variations in the costs patients with the same condition face,” said Jennifer Graff, PharmD, Vice President of Comparative Effectiveness Research at NPC. “These discussions are important in achieving the fundamental goal of cost-sharing strategies–aligning costs to the most appropriate medical care.”

The panel reviewed four case studies to determine how to optimally distribute the financial burden across patients, all plan members or employers, and how to address existing barriers to align out-of-pocket costs with medically appropriate treatments. The cases included use of step therapy for rheumatoid arthritis, treatment based on diagnostic test results for cystic fibrosis, patient preference for a treatment due to potential side-effects among patients with fibromyalgia, and patient preference for the route or frequency of administration for an osteoporosis treatment.

Panelists determined the following five guiding principles that detail when it is less acceptable for patients to have different out-of-pocket costs for the same or similar conditions:

1. “Try and Fail” is important: If the initial lower-cost therapy is unsuccessful, patients should have access to higher-cost therapy and lower out-of-pocket costs. This is also known as “reward the good soldier.”
2. Benefits are certain and significant: If there is high confidence the health benefits of a treatment are significant, then financial barriers should be lowered.
3. Costs must align with benefits: If the treatment costs are balanced with better effectiveness and safety, then cost sharing should be lower.
4. Don’t penalize patients for “bad luck”: If patients need higher-cost treatment based on their biology or genetics, then cost-sharing should be reduced.
5. Lower, but do not eliminate differences in out-of-pocket costs: Cost-sharing differences incentivize trying lower-cost treatments first, but big jumps in costs for patients should be avoided.

“It can be challenging for employers to manage health care costs when their employees require higher-cost treatments,” Cheryl Larson, Vice President of the Midwest Business Group on Health. “Employers are seeking evidence-based approaches to support or justify their health care costs. These principles create useful parameters for employers to consider as they select health benefits and make investments to ensure they maintain a healthy, satisfied and productive workforce.”

With the health care industry moving from volume- to value-based care, the fairness and incentive to follow appropriate care pathways while keeping out-of-pocket costs low is taking center stage.

“For stakeholders involved in benefit design to succeed in incentivizing the right care, a one-size-fits-all approach won’t deliver that,” said Helen Sherman, PharmD, Chief Pharmacy Officer at Solid Benefit Guidance. “The panelists agreed that cost-sharing is appropriate in the right situations, but when a treatment is proven and medically necessary, a patient’s bad luck is not one of them. The solutions outlined in this paper deliver smart guardrails that, if applied, can help improve the care plans provide and patients receive.”

This study provides a broader look at the issues addressed in the NPC-supported white paper, “Exploring 'Dynamic' Cost-Sharing Models in Value-Based Insurance Design.”

About the National Pharmaceutical Council
The National Pharmaceutical Council is a health policy research organization dedicated to the advancement of good evidence and science, and to fostering an environment in the United States that supports medical innovation. Founded in 1953 and supported by the nation's major research-based pharmaceutical companies, NPC focuses on research development, information dissemination and education on the critical issues of evidence, innovation and the value of medicines for patients. For more information, visit www.npcnow.org and follow NPC on Twitter @npcnow.