By Adam Gaffney, David H. Bor, David U. Himmelstein, Steffie Woolhandler, and Danny McCormick
Health Affairs, January 2020
High out-of-pocket drug spending worsens adherence and outcomes, especially for patients who are poor, chronically ill, or members of minority groups. The Veterans Health Administration (VHA) system provides drugs at minimal cost, which could reduce cost-related medication nonadherence. Using data for 2013–17 from the National Health Interview Survey, we evaluated the association of VHA coverage with such nonadherence. Although people with VHA coverage were older and in worse health and had lower incomes than those with other coverage, VHA patients had lower rates of cost-related medication nonadherence: 6.1 percent versus 10.9 percent for non-VHA patients, an adjusted 5.9-percentage-point difference. VHA coverage was associated with especially large reductions in nonadherence among people with chronic illnesses and with reduced racial/ethnic and socioeconomic disparities in nonadherence. The VHA pharmacy benefit is a model for reform to address the crisis in prescription drug affordability.
From the Discussion
VHA coverage was associated with less cost-related medication nonadherence relative to other coverage, especially for people with chronic conditions, and was also associated with smaller racial/ethnic and income-based disparities in such nonadherence.
The rising prices of prescription drugs have spawned myriad reform proposals. However, although manufacturers’ pricing affects the costs paid by insurers (and the uninsured), insurers’ decisions regarding benefit design largely determine out-of-pocket spending for people with coverage. Except for Medicaid, most insurers impose substantial drug cost sharing. In many private insurance plans, out-of-pocket medication expenses can total thousands of dollars annually, especially for patients requiring “specialty drugs” such as cancer chemotherapy or biologics. Some plans even put low-price generics (for example, metformin) into high drug tiers that carry large copays. People with Medicare Part D coverage face a $415 deductible and 25 percent coinsurance for prescription drugs until they reach a “catastrophic coverage” threshold of $5,100, at which point limited out-of-pocket spending is still required. Consequently, seniors with hepatitis C face about $5,000 in out-of-pocket spending, on average, for the direct-acting antiviral ledipasvir-sofosbuvir—far higher than the $33 charge for a three-month course in the VHA. Similarly, seniors with COPD have out-of-pocket spending for inhalers that exceeds $1,600 per year, also many times higher than the costs for veterans, who may pay multiple $11 monthly copays. Hence, our findings of lower rates of cost-related medication nonadherence among VHA enrollees is not surprising.
Despite the VHA’s relatively generous coverage, its drug spending may be lower than that of private insurers because it pays much lower prices. As do health systems in several nations, the VHA uses a unified national formulary and a mix of government regulation and bargaining with manufacturers to purchase drugs at prices lower than those paid by the US private sector and similar to prices in Australia.
As previous researchers have done,10 we identified lower income as a risk factor for cost-related medication nonadherence. We observed higher rates of cost-related nonadherence among poor versus nonpoor VHA enrollees, presumably because even small copays may reduce adherence (the VHA exempts some but not all low-income people from copays). Similarly, when Oregon imposed small copays on Medicaid enrollees in 2003, prescription drug use fell 17 percent. The extreme price-sensitivity of low-income patients underscores the potential benefits of first-dollar prescription drug coverage, as implemented in Wales.
“Drugs don’t work,” Surgeon General C. Everett Koop once remarked, “in patients who don’t take them.” Eliminating out-of-pocket spending is one of the few interventions proven to increase medication adherence. Our findings suggest that drug coverage modeled on the VHA approach, which is often cited as a model for controlling drug prices, could also improve adherence and population health and reduce health disparities.
Physicians for a National Health Program, January 6, 2020
Patients with Veterans’ health coverage less likely than other insured Americans to skip medications because of cost: Harvard Study
National study finds that Veterans Health Administration (VA) enrollees, especially those with chronic illnesses, have fewer problems paying for medications. Findings support VA pharmacy benefit as a model to make drugs universally affordable
“We face a crisis in drug affordability,” noted senior author Dr. Danny McCormick, associate professor of medicine at Harvard Medical School and a primary care physician. “High copays and deductibles are forcing patients to skip their medications — even for serious illnesses like heart disease or lung disease — putting their health, and even their life at risk. The VA shows that there is a better way.”
“Our findings have important implications for the debate about the affordability of health reform,” noted Dr. Steffie Woolhandler, distinguished professor at the City University of New York’s Hunter College and lecturer (formerly professor) in Medicine at Harvard Medical School. “Both the House and Senate Medicare-for-All bills would borrow tools from the VA to cut drug costs, including price negotiations and a formulary. These steps could allow all Americans to afford their medications without burdensome copayments or deductibles,” she added.
Dr. Adam Gaffney, a pulmonary and critical care physician at Harvard Medical School, noted that while a VA-like drug benefit model could save money, it could also improve patients’ health. “Today, we have better drugs — more ways to help our patients — than ever before. But these drugs offer no help to patients who can’t afford to take them. By reforming how we pay for prescription medications, we can improve health outcomes, while bringing our drug spending in line with that of other rich nations.”
By Don McCanne, M.D.
The Veterans Health Administration – a government program – makes prescription drugs more available at a lower total cost, thereby increasing medication adherence, resulting in an improvement in health outcomes. That is in sharp contrast to the private sector wherein medication adherence is reduced because of higher prices which results in poorer health outcomes.
The single payer model of an improved Medicare for All – a proposed government health care financing program – would make prescription drugs more accessible at a lower cost, much like the VA does, with an overall improvement in health outcomes.
No contest. So why do so many claim that we want to protect access to the private sector plans that are serving us so poorly (even if many do not realize how much better off they would be under an improved Medicare for All)? Could it be saturation with the false memes of private sector ideology? Can educating the public on the facts overcome this? We should step up our efforts and see what happens.
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