By Gene Emery

Thursday, December 4, 2003

BOSTON (Reuters) - Health insurance plans that encourage Americans to use less expensive drugs may actually discourage some people from taking important medications altogether, researchers reported on Wednesday.

The researchers found that when patients were forced to pay more for their medications under "three-tiered" prescription drug plans, they were more likely to stop taking the drugs -- including needed ones for chronic illnesses like heart disease.

In one of the first studies to show how workers treated for chronic illnesses react to changes in their prescription drug plans, lead author Haiden Huskamp and her colleagues found higher co-payments saved the insurance company money, but often cost patients a lot more.

Co-payments are out-of-pocket costs that consumers must pay in addition to their health care premiums. Huskamp, of Harvard Medical School, said sizable co-payment increases could have "worrisome effects."

Nearly two thirds of U.S. workers with health insurance -- the rate is as high as 80 percent in some parts of the country -- are now covered by three-tiered prescription drug plans, designed to steer patients to lower-priced medicines.

Under the plans, generic drugs require the lowest co-payment, "approved" prescription drugs require a higher co-pay, and consumers must pay even more for medications not on the approved list.

The unidentified company in the study that dramatically revised its prescription program started charging $8 for each generic prescription, $15 for "approved" brand-name drugs and $30 for unapproved medicine. Previously, the co-payment for all prescriptions was $7.

People forced to switch to the new system were nearly three times more likely to stop taking their ACE inhibitors for blood pressure than workers in a different company who continued to pay $7 for prescription drugs not on the approved list.

Twice as many stopped taking their cholesterol-lowering drugs and the number who gave up their medicine to relieve excess stomach acid also rose significantly.

Insurance companies often get special deals on drugs that make it to their "approved" lists, also known as formularies. How much insurance companies make from those deals and how much of the savings is passed on to consumers "remain highly guarded industry secrets," said Cindy Parks Thomas in a commentary in The New England Journal of Medicine, where the study was published.

Thomas, of Brandeis University in Waltham, Massachusetts, said such programs "may create a particular burden for persons with lower incomes or chronic diseases."

At a second company that switched to a three-tier system but kept co-payments lower, far fewer workers stopped taking their medications. In addition, the savings to the insurance company and cost to consumers were far less dramatic.

Under that plan, consumers were charged $6 for generic drugs and $12 for any brand-name medicine. After the switch to a three-tier system, patients were charged a $24 co-payment for unapproved drugs.

SOURCE: The New England Journal of Medicine, December 4, 2003.