The Paradox of Choice

Providing the "right" amount of choice in pharmacy benefits can improve health outcomes and reduce costs

Icon of person confused by choices
FEATURE
April 5, 2016
Will Shrank

When it comes to health care, Americans demand choice. But with choice comes complexity. We, along with our clients, continually strive to balance member preferences with cost management, while helping to improve outcomes. In pharmacy benefits, the tension between balancing cost and member choice while ensuring healthy outcomes has reached a fever pitch.

Direct-to-consumer advertising helps drive up member demand, potentially leading to higher utilization of non-preferred products and unsustainable increases in cost without improving outcomes. However, behavioral economics research has taught us an important lesson that is directly applicable to patient behavior: people are predictably irrational.

We, at the CVS Health Research Institute, have conducted a significant amount of research assessing how choice in pharmacy benefit design affects initiation of, adherence to, and total cost of essential medication for chronic conditions. Our research clearly demonstrates that not all choice in pharmacy benefits is created equal. The lessons learned from this research can help guide how we design benefits to optimize health and reduce unnecessary health care costs.

Choice of "Channel" Can Help

Our research shows that members have strong preferences about how they access medications. Patients who had a choice between mail-order and retail pharmacies to obtain their specialty medications, with no differences in out-of-pocket costs, chose mail about half the time, with the remaining choosing retail.

With specialty connect, more patients obtain second prescriptions

In addition, we found that when members had a choice of channel, without a difference in cost-sharing, it promoted better adherence to essential therapies. In one study, we compared optimal adherence in members enrolled in a mandatory mail order design to members in Maintenance Choice, a design that allowed them to fill 90-day prescriptions at either mail or CVS Pharmacy retail locations with no difference in copay. The study showed members who were provided with more choice regarding where they fill their prescriptions were 30 percent more likely to achieve optimal adherence.

With specialty connect, more patients obtain second prescriptions
Narrow networks help improve medication possession ratio

Similarly, providing patients with more choice about where to purchase specialty medications improved adherence results. In another study, we assessed adherence in members enrolled in Specialty Connect*, a program that permits patients to obtain specialty medications from either their local retail pharmacy or a specialty pharmacy where mail order is the only delivery option. Patients received the same level of monitoring, support and clinical expertise, and had the same out-of-pocket cost regardless of whether they used the specialty or retail pharmacy. When comparing patients who had the sole option of obtaining their specialty medication by mail to those that had the option of picking up at retail or getting their medication delivered by mail, we found that the expansion of choice to retail outlets through our Specialty Connect program, led to a 17.5 percent increase in the rate of obtaining a second prescription and an 11.4 percentage point improvement in adherence.

Narrow networks help improve medication possession ratio

Patients using Specialty Connect had better adherence than patients using retail pharmacies. Interestingly, while fewer channel choices reduce adherence, narrow networks do not have an adverse impact on adherence, as long as a selective network allows better coordination of care. In fact, in a narrow network with CVS Pharmacy as its backbone, offering coordinated care across mail and retail outlets reduced costs, while also delivering modest adherence improvements.

Want to learn more about the difference between different kinds of choice? Ask Us

Choice of "Medication" Does Not Help

Americans are predictably irrational about generics. They think more people should use them but prefer not to themselves

Medication choice options are a different story. When self-reporting preferences, Americans overwhelmingly believe that generics are as effective as branded medications, cost less and offer better value.

They also believe that more Americans should use generics. However, most Americans do not prefer to use generics themselves. This apparent inconsistency likely underscores why patients choose more expensive options, both for the payor and for themselves, in the absence of a clear clinical rationale.

Americans are predictably irrational about generics. They think more people should use them but prefer not to themselves

When members in tiered benefit plans that charge higher copays for branded medications chose the more expensive branded therapy, it leads to both higher cost and worse health. Members are far more likely to abandon prescriptions written for branded medications that require higher copays at the pharmacy.

Prescriptors of prescription abandonment
Prescriptors of prescription abandonment

Use of Generics Improves Outcomes

In addition, patients are considerably less likely to fill a branded medication prescription to be "Dispensed as Written," eliminating the opportunity for generic substitution.

Among members in a tiered benefit plan who were prescribed medications for chronic conditions such as hypertension, diabetes and hypercholesterolemia, those who received generics were up to 7 percent more adherent.

In patients with heart disease, generic prescribing led to better adherence, improved clinical outcomes and a 9 percent lower rate of cardiovascular events and death.

Initiating statin therapy on generics results in 7% improvement in downstream adherence
Initiating statin therapy on generics results in 7% improvement in downstream adherence

Fewer Choices of Medication Can Produce Savings without Clinical Compromise

To meet the varying needs of our clients, we offer a broad array of benefit designs that range in coverage generosity (i.e., cost-sharing requirements) and choice of medication. While many of our clients endorse the tighter management of formularies, some are reluctant to actively narrow choice in an existing plan, citing concerns about therapeutic disruption. So we evaluated the behavior of members enrolled in selective formularies that offer limited coverage for branded medications when equivalent generics were available.

We compared member behavior and costs in three plans in which choice was narrowed with members in three identical plans in which choice remained unchanged. The formulary change was accompanied by extensive patient and provider outreach about the benefit change.

In the narrow formulary plans, modest, one-time discontinuation rates were observed that were more than offset by improvements in downstream adherence. They also were accompanied by an average cost reduction of $20 per utilizer per month (PUPM) and a 4.2 percent increased generic dispensing rate. These findings underscore the opportunity for us and our clients to implement evidence-based, more selective formularies and reduce total costs without compromising care.

Plans with selective formulary have 1.5% higher monthly adherence rates and $20 PUPM lower plan cost
Plans with selective formulary have 1.5% higher monthly adherence rates and $20 PUPM lower plan cost

Optimizing Choice in Pharmacy Benefit Design

In an increasingly consumer-driven health care economy, our clients must choose between conflicting priorities when establishing benefit designs. Choice is appealing for members but leads to complexity and, in some cases, the potential for irrationality. So what does the evidence say?

  Providing greater choice of channel (retail or mail choice) leads to improved adherence to chronic medications
  Narrower networks, combined with choice of retail or mail channel, helps lower costs and provides modest improvements in adherence
  Providing greater choice of therapy drives up utilization costs and may adversely affect clinical outcomes
Can you optimize choice for your members to drive the best results? Ask Us
FEATURE
April 5, 2016
Will Shrank

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Adherence

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All of the savings and/or trend changes discussed in this Insights Feature will vary based on a variety of factors, including things like demographics, plan design and programs adopted by the client. Client-specific modeling available upon request.

*Where allowed by law. In-store pickup is currently not available in Arkansas, Oklahoma and West Virginia. Some states require first-fill prescriptions to be transmitted directly to the dispensing specialty pharmacy. Products are dispensed by CVS Specialty and certain services are only accessed by calling CVS Specialty directly. Certain specialty medication may not qualify. Services are also available at Long’s Drugs locations.

Mail pricing at CVS retail for ERISA governed plans.

The Maintenance Choice program is available to self-funded employer clients that are subject to ERISA. Non-ERISA plans such as insured health plans, plans for city, state or government employees, and church plans need CVS Caremark Legal's approval prior to offering the Maintenance Choice program. Prices may vary between mail service and CVS Pharmacy due to dispensing factors, such as applicable local or use taxes.