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As co-pay rises, prescription use drops

July 09, 2007|Nicole Ostrow | Bloomberg

When patients pay more for prescription medicine, they use it less, according to a new study. Researchers say this may spur more serious illnesses over time.

Consumers spend 2% to 6% less on prescription drugs for each 10% rise in their out-of-pocket costs for such things as rising deductibles, the amount paid upfront for insurance-based healthcare, said a review of 132 studies released today by the Rand Corp., a Santa Monica-based public policy institute.

Consumer outlays are rising as companies seek to hold the line on spending by raising deductibles and offering their workers co-insurance plans that split costs.

A study this year in the journal Health Affairs found consumers may spend $440.8 billion out of pocket in 2016, or 76% more than in 2006.

More study is needed to determine if such an increase will push consumers to forgo necessary treatment, researchers said.

"For patients with certain chronic illnesses, when you increase cost-sharing on the pharmacy side, you end up with more hospitalizations and more use of emergency departments," said Dana Goldman, lead author of the new study, which was published in the Journal of the American Medical Assn.

Goldman, Rand's director of health economics, said his analysis also found that certain cost-containment programs, including requiring that patients get a note from a doctor for a specific medicine, don't affect general pharmaceutical costs.

The analysis included research on prescription drug cost-saving strategies that include use of co-payments and monthly prescription limits.

The results build on a 2004 Rand finding that said doubling drug co-payments decreased use of eight classes of medicines.

The latest Rand report suggests that businesses and the U.S. government need to better understand how patients will respond to cost-saving measures before choosing new directions for healthcare spending.

"The challenge for public and private plans is to make patients more sensitive to the cost of treatment without encouraging them to forgo cost-effective care," the study authors wrote.

Prescription drug spending in the U.S. was $200.7 billion in 2005, up from $40.3 billion in 1990, according to a May report by the Kaiser Family Foundation.

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