Relphbenefitadvisors.com

Reducing Patient Drug Acquisition Costs Can Abstract
lion per year,1 and health insurance expen- Concerned about rising prevalence and costs of ditures for the individual with diabetes are diabetes among its employees, Pitney Bowes Inc triple those of the average consumer.2 From recently revamped its drug benefit design to syner- the US employers’ perspective, the burden of gize with ongoing efforts in its disease management diabetes extends even further to include the and patient education programs. Specifically, based $40-billion annual cost for indirect expendi- on a predictive model showing that low medication tures because of disability, work loss, and adherence was linked to subsequent increases in premature mortality.1,3,4 In fact, disease- healthcare costs in patients with diabetes, the com- pany shifted all diabetes drugs and devices from tier account for about one third of the total cost 2 or 3 formulary status to tier 1. The rationale wasthat reducing patient out-of-pocket costs would elim- inate financial barriers to preventive care, and there- Fortunately, investing in aggressive dia- by increase adherence, reduce costly complications, betes control not only improves blood glucose and slow the overall rate of rising healthcare costs.
levels but reduces medical complications and This single change in pharmaceutical benefit design costs6-8 and may also boost productivity and immediately made critical brand-name drugs avail- lower absenteeism.3,9,10 Although optimized able to most Pitney Bowes employees and their cov- use of medications is essential to improved ered dependents for 10% coinsurance, the same diabetes control,9 the trend in pharmaceuti- coinsurance level as for generic drugs, versus the pre- cal benefit design has been to pass higher vious cost share of 25% to 50%. After 2 to 3 years,preliminary results in plan participants with diabetes portions of drug costs to members to slow the indicate that medication possession rates have growth of the healthcare budget. But employ- increased significantly, use of fixed-combination drugs has increased (possibly related to easier adher- ence), average total pharmacy costs have decreased with the desire to increase access to optimal by 7%, and emergency department visits have care for costly conditions like diabetes.11 If decreased by 26%. Hospital admission rates, although increasing slightly, remain below the demo- and coinsurance may become a financial bar- graphically adjusted Medstat benchmark. Overall rier to proper diabetes care. The short-term direct healthcare costs per plan participant with dia- savings may actually impede the opportunity betes decreased by 6%. In addition, the rate of for longer-term health budget savings and increase in overall per-plan-participant health costsat Pitney Bowes has slowed markedly, with net per- plan-participant costs in 2003 at about $4000 per year versus $6500 for the industry benchmark. This recent moderation in overall corporate health costs may be related to these strategic changes in drug benefit design for diabetes, asthma, and hypertension and also to ongoing enhancements in the company’s disease management and wellness programs.
(Am J Manag Care. 2005;11:S170-S176)
per-participant cost of approximately$3300 per year remained well below the Direct medical costs for diabetes and benchmark average, the double-digit increase was cause for alarm. Some of the and Prevention estimates the cost at $92 bil- companies cutting back on utilization man- Reducing Patient Drug Acquisition Costs Can Lower Diabetes Health Claims Health Insurance Portability and Account- chronic medical conditions. Perhaps relat- additional fact that more extremely high- design. About 80% of plan participants opt for cost (>$100 000) cases of end-stage long- a self-insured plan. There are 46 local and term disease were being treated. But these were only guesses about the real sources of carriers and 4 national preferred provider organizations. In all of the self-funded plans and a few of the others, the drug benefits are ny’s concerns led it to tap its own consider- able information resources to identify its true cost drivers for several long-term dis- 90% of all employees under 1 common phar- eases. After evaluating these drivers, man- maceutical plan provides a potentially pow- agement then altered its prescription drug erful single point of entry for studying—and plan in an attempt to boost plan participant for leveraging—long-term disease outcomes access to medications required for the treat- ment of key chronic conditions such as asth- are the logical solution for measuring and ma, diabetes, and hypertension. Key findings manipulating health in areas such as asth- related to diabetes are presented in this ma, cardiovascular disease, and diabetes.
report because the details of employer-initi- Although disease management is part of the ated efforts may be relevant to any health- integrated effort of long-term disease care at care manager dealing with rising costs for remain a condition for bidding on companybusiness—the presence of close to 50 sepa- The Opportunity at Pitney Bowes
rate health plan vendors precluded any easy opportunity to have an impact on diabetes care with a single employer-driven program management systems services and solutions, has 35 000 employees worldwide and a rev- duced an Internet-based health portal for enue of $5 billion per year. Within the United employees and an opt-in voluntary disease States, the company’s 23 000 employees are 58% male with an average age of 41 years and an average length of service of 8.1 years.
more long-term disease awareness and treat- Twenty-five percent of employees are locat- Connecticut tristate area, with wide dispersal helped form a broad base of a sensible bene- limiting total costs. Still, company manage- wellness, and disability strategy with data- bases providing timely feedback on each.
change health behaviors and limit costs.
For example, cost data are available on all Specifically, they wanted to get ahead of the cost curve by quickly shifting more plan par- expenditures. Also available for scrutiny are ticipants with expensive long-term diseases In this situation, the drug benefit design suggested itself as a logical tool for employ- information, and selected survey results. All potential value of this common denominator data are available in aggregated, deidentified of employee health became even more strik- ing after the company’s health benefits man- agers realized, as discussed next, that low linked directly to next-year per-patient costs database are 2 quite different experiences.
As described next, this stark evidence of The Predictive Model:
nonadherence as a cost driver led to ques- What Causes High-cost Claims?
Shortly after the 13% cost surge of 2000, cost sharing, price elasticity, and drug acces- sibility in the Pitney Bowes prescription caused plan participants to migrate from“normal-cost” ($400-$700 per year) to “high- Redesigning the Pharmacy Benefits
cost” status (>$10 000 per year). A consulting for Diabetes
The drug plan at Pitney Bowes is not dis- (recently acquired by LifeMasters Supported similar from that used by many other large SelfCare, Inc) worked with Pitney Bowes to develop a hybrid artificial intelligence pro- Regular Rx Plan and the “buy-up” Extra Rx gram that defined the end point in question— Plan with a slightly lower coinsurance and in this case, the transition to high costs—and copays, and an annual out-of-pocket maxi- then identified the population-level variables mum of $500 (Table 1). About 1 of every 4
associated with that end point. The program was unique in the way that it scoured the plan is built on a traditional 3-tier formulary database for any employee variable linked to but has several consumer-centric elements, increased costs—not just the preconceived including limited prior authorization (only 6 variables such as age, concomitant disease, or drugs require it, all because of safety con- hemoglobin A1C level. Notably, the predictive cerns) and no policies calling for mandatory model also considered the total cost of care generics, step therapy, or therapeutic substi- for employees, including not only direct med- tution. Overall, the plan achieves a 75%/25% ical costs, such as medical claims, pharmacy, cost sharing with employees and is consid- and behavioral health, but also indirect costs ered to be performing well in terms of stan- related to absenteeism and disability. The database and cost assumptions for the pre- 11% rate of mail service prescriptions, an dictive modeling were set up and are still overall 48% generic drug utilization, and a generic drug fill efficiency rate of 91%.
relationship between long-term conditions for participants with diabetes, asthma, or and future high total healthcare costs. A key actionable finding was that illness burden brand-name medications at the tier 1 rates and costs were driven by a lack of pharma- (eg, 10% coinsurance) and thus reducing a ceutical adherence. In diabetes, those plan potential barrier to care for long-term dis- participants with 9 or fewer 30-day prescrip- ease (Figure 1). These changes were initi-
tion fills for their diabetic medications were ated despite the inevitable financial loss most likely to transition into the high-cost group. In other words, the patients with dia- betes who were refilling their insulin and oral medications only two thirds of the time or less were likely to become the costliest.
Similar findings were identified for asthma eliminate a potential reason that employees and hypertension. Again, lack of adherence to treatment has been known for decades to contribute to diabetes complications.12,13 But reading about nonadherence in a dry journal Reducing Patient Drug Acquisition Costs Can Lower Diabetes Health Claims Table 1. Overview of Pitney Bowes Prescription Drug Plan Design
Coinsurance or Copayment Amount
Deductibles
Coinsurance Limit
Retail
Regular Rx plan
Mail service
Regular Rx plan
Rx indicates prescription; HMO, health maintenance organization.
Note: Members in the HMO plans were provided prescription drug coverage through the HMO plan (ie, drugs carved in). However, in2003, members in the HMO plans no longer had prescription drug coverage through the HMO plan (ie, drugs carved out). In 2001, therewere 656 members in 42 different HMO plan options who had a condition of interest—more than 40% of the total eligible populationwere included in the study.
But will it? There is ample literature to made about the relative efficacies of these support the concept that excessive copays agents, the weight of clinical evidence or cause suboptimal use of essential medica- value-based arguments supporting their use, tions.11,14,15 One recent study, for example, found that doubling the copay for diabetes any test strips that were in tier 2 or 3 (eg, drugs led to a 23% decrease in per-member per-year drug days supplied.15 The American shifted to tier 1. Although the company was Diabetes Association also warns explicitly also enhancing its diabetes disease manage- about the short-sightedness of erecting cost ment and wellness efforts in parallel with barriers to diabetes medications (see Side-
bar, “Tight Cost Controls May Be Barrier to
Diabetes Management”).12 Still, the actual
return on investment from lowered copays is
less well documented and would, anyway,
Tight Cost Controls May Be Barrier to
Diabetes Management
company to company. Thus, the polestar for “Though it can seem appropriate for controls to this effort at Pitney Bowes remains the inter- restrict perceived items of convenience in chronic nal company evidence linking low prescrip- disease management, particularly with a complex dis- tion fill rates to high subsequent costs.
order such as diabetes, it should be recognized that adherence is a major barrier to achieving targets. Any change involved moving a number of tier 2 controls should take into account the huge burden of and 3 drugs to tier 1. These included insulin intensive insulin management on patients, particularly in the management of type 1 diabetes. Protections Lantus, Novolin, and NovoLog as well as oral should ensure that patients with diabetes can comply agents such as Actos (pioglitazone), Amaryl with therapy in the widely variable circumstances encountered in daily life. These protections should Avandamet (rosiglitazone/metformin), Glu- guarantee access to an acceptable range and all classes of antidiabetic medications, equipment, and supplies.” Glucovance (glyburide/metformin), Prandin —American Diabetes Association, 200512 (repaglinide), Precose (acarbose), andStarlix (nateglinide). No judgments were Figure 1. Prescription Drug Access Benefit Design
“Traditional”
Prescription Drug Access Benefit
Prescription Drug Access Benefit
Source: Printed with permission from The Benfield Group.
example, glucometers were supplied free of charge to employees with diabetes—the truly results in the 2- to 3-year period after the novel element within this evolving integrated change have also been promising. As tracked approach was the new benefit design.
by Caremark Inc, Pitney Bowes’ pharmacybenefits manager, rates of adherence with all Results in Diabetes: Better Adherence,
medications that shifted tiers increased sig- Lower Costs
nificantly. Perhaps most important, the per- For the typical plan participant with dia- betes, the formulary change had the imme- adherence with insulins decreased by fully average cost of a 30-day fill dropping by than their previous drug costs—ie, a 10% particularly high for these individuals tak- Reducing Patient Drug Acquisition Costs Can Lower Diabetes Health Claims insulin-dependent diabetic plan partici-pants, the shift to newer brands of test strips Figure 2. Pharmacy Costs Per Active Member Per Month for
in tier 1 was associated with a doubling in the usage rate of these test strips on glu-cometers (from 28% usage to 55% usage).
Naturally, the company’s pharmacy costs for the insulin, insulin stimulators, insulin sensitizers, and test strips increased during this time. But the surprise was that although the company’s total annual pharmacy costs per covered person showed a mild increase, pharmacy costs for those with diabetes actu- ally decreased by 7%. This overall decrease in pharmacy costs for employees with diabetes was thought to result from a reduction in complications and the avoided need for other even more expensive drugs. Further detailsof this shift will be explored in a subsequent PMPM indicates per member per month.
analysis. In fact, the most recent data showthat total per-member, per-month pharmacycost increases for all participants in the increases of 12% to 15% for benchmark com- Pitney Bowes active pharmacy benefits plan panies. Especially in light of the relatively have remained relatively stable, with annual increases in the low double-digits, over the changes were implemented, this moderation past 3 years (Figure 2) despite the extra
extremely promising. Based on these prelim- medications for 3 major long-term diseases.
inary findings, the healthcare team at Pitney Medical utilization and costs for plan par- Bowes continues to track results—including between 2001 and 2003. The rate of ED vis- costs, another potential contributor to the company bottom line—and to consider sim- further distanced itself from the benchmark ilar access-driven benefit changes in addi- rate (Table 2). Although it cannot be proved
tional long-term disease categories.
in this setting, this sharp decrease in ED vis-its is likely related to improved adherencewith the oral hypoglycemia medications.
Table 2. Diabetes-related Utilization for Pitney Bowes
The hospitalization rate increased slightly in Plan Participants Before (2001) and After (2003) participants with diabetes, a potential result of the aging of the workforce. But note thatthis rate also remained below the demo- Compared With
Benchmark*
rived from the Medstat database. Overall, Diabetes ED Visits (per 1000 members)
the per-patient cost of care for Pitney Bowes plan participants with diabetes decreased by of care for diabetes (and for asthma, for Diabetes Hospital Admissions (per 1000 members)
which reductions were also seen) likely con- tributed to the encouraging overall trend in net per-employee medical direct costs. As shown in Figure 3, the average annual
increase in employee health cost from 2000
*Benchmark provided by Thomson Medstat.
Figure 3. Net Per-employee Healthcare Costs: Pitney Bowes
Versus Benchmark*
1. Centers for Disease Control and Prevention. National
diabetes fact sheet. Available online at: www.cdc.gov/
diabetes/pubs/estimates.htm. Accessed April 21, 2005.
2. Peele PB, Lave JR, Songer TJ. Diabetes in employer-
sponsored health insurance. Diabetes Care. 2002;25: 3. Ng YC, Jacobs P, Johnson JA. Productivity losses
associated with diabetes in the US. Diabetes Care. 4. Mayfield JA, Deb P, Whitecotton L. Work disability
and diabetes. Diabetes Care. 1999;22:1105-1109.
5. Ramsey S, Summers KH, Leong SA, Birnbaum HG,
Kemner JE, Greenberg P. Productivity and medical costs
of diabetes in a large employer population. Diabetes 6. The Diabetes Control and Complications Trial
Research Group. The effect of intensive treatment of
diabetes on the development and progression of long- term complications in insulin-dependent diabetes melli- 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 tus. N Engl J Med. 1993;329:977-986.
7. UK Prospective Diabetes Study (UKPDS) Group.
Intensive blood-glucose control with sulphonylureas or
*All values for both Pitney Bowes and the benchmark are derived from the insulin compared with conventional treatment and risk of complications in patients with type 2 diabetes
(UKPDS 33). Lancet. 1998;352:837-853.
8. Gilmer TP, O’Connor PJ, Manning WG, Rush WA.
The cost to health plans of poor glycemic control.
Diabetes Care. 1997;20:1847-1853.
9. Testa MA, Simonson DC. Health economic benefits
Conclusion
and quality of life during improved glycemic control in Sharp increases in diabetes prevalence at patients with type 2 diabetes mellitus: a randomized, con-trolled, double-blind trial. JAMA. 1998;280:1490-1496.
Pitney Bowes during the past few years— 10. Rizzo JA, Abbott TA 3rd, Pashko S. Labour produc-
tivity effects of prescribed medicines for chronically ill workers. Health Econ. 1996;5:249-265.
11. Karter AJ, Stevens MR, Herman WH, et al;
Translating Research Into Action for Diabetes Study
Group. Out-of-pocket costs and diabetes preventive serv-
ices: the Translating Research Into Action for Diabetes and as the workforce continues to age, the (TRIAD) study. Diabetes Care. 2003;26:2294-2299.
pressures on the costs of diabetes and car- 12. American Diabetes Association. Third-party reim-
bursement for diabetes care, self-management education,
diovascular care will build. As indicated and supplies. Diabetes Care. 2005;28(suppl 1):S62-S63.
13. Pladevall M, Williams LK, Potts LA, Divine G, Xi H,
Lafata JE. Clinical outcomes and adherence to medica-
tions measured by claims data in patients with diabetes.
limit overall costs for diabetes by selec- Diabetes Care. 2004;27:2800-2805. 14. Huskamp HA, Deverka PA, Epstein AM, Epstein RS,
McGuigan KA, Frank RG. The effect of incentive-based
formularies on prescription-drug utilization and spend-ing. N Engl J Med. 2003;349:2224-2232.
15. Goldman DP, Joyce GF, Escarce JJ, et al. Pharmacy
benefits and the use of drugs by the chronically ill.

Source: http://www.relphbenefitadvisors.com/rhealthcommunity/resources/bulletins/Pitney%20Bowes%20Rx.pdf