Patient charges for medicines and their impact on access
Know the reasons for charging patients for (part of) their prescribed medicines
Define the different types of co-payments for medicines
Understand the effect of patient charges on uptake of medicines
Differentiate between essential and less essential medicines, and the differing effect of charges on them
Define patient groups that are likely to be most susceptible/vulnerable to the impact of medication cost
Describe strategies patients use to manage or reduce medication cost
Describe strategies healthcare professionals, especially pharmacists, can use to help patients cope with medication cost sharing issues
Introduction
Healthcare expenditure has been rising steadily over the past decades, and with the ever evolving advent of new technologies and treatments, this trend is likely to continue. In the developed world, payment for health care is usually covered by third-party payment systems to which the population (or members) contributes in the form of regular insurance premiums or taxes. However, paying for health care and medicines through such third-party providers removes the price barrier to consumption, as healthcare services become – or rather appear – free to the patient on access. Getting patients to contribute something when accessing health care, is seen as the reintroduction of such a price barrier, with the aim of deterring unnecessary access and medicines use, and thus reducing potential waste. Such contributions or payments borne by patients are commonly referred to as cost sharing, as they make a contribution to the actual cost of treatment. Besides creating a cost barrier to (unnecessary) demand, cost sharing also creates another form of revenue to the healthcare provider.
Cost sharing can be levied on some or all types of health care. In some countries, patients have to pay when visiting a doctor. In the UK, for example, patients have to contribute considerably towards dental and optical care, but visits to family doctors and hospitals are free. One particular form of cost sharing that is relatively easily defined, identified and implemented, is on prescribed medicines. The impact of this cost has been widely studied and is of particular interest to pharmacists, which is why it is the focus of this chapter.
Types of cost sharing arrangements
Essentially, there are three types of cost sharing for medicines, i.e. the cost the patient has to pay themselves, out-of-pocket, in order to obtain prescribed medication. These are:
A flat rate fixed fee, commonly called a prescription charge, is payable per item on a prescription or per prescription (containing one or more items). Flat rate prescription charges are independent of actual drug cost and exist in Austria and the UK. They are used in combination with other forms of cost sharing in Finland, Germany and Iceland.
Percentage co-payment (also termed ‘co-insurance’) is probably the most common form of cost sharing and is based on a percentage payment of actual drug cost. The percentage amount that is payable by the patient can vary depending on the type of medicine and the seriousness of the underlying pathology. In France, for example, patients have to pay 35% of actual cost towards medicines that are classed as being of major therapeutic value, but have to contribute 65% for those where therapeutic value is judged as moderate or low. Certain drugs treating conditions that are considered as ‘not usually of a serious nature’ may need to be paid in full (100%). A number of other European countries (including Belgium, Finland, Iceland, Luxembourg, Portugal, Spain) have similar graded percentage co-payments.
In a deductible system, a patient has to pay 100% of the cost of their prescribed medication up to a set amount (the deductible), after which the cost is subsidized. This system is often combined with a percentage co-payment or prescription charge once the deductible has been reached.
Protection mechanisms and exemptions
In many countries, cost sharing arrangements are accompanied by mechanisms to protect vulnerable groups against undue or excessive expenses for drugs. Such protection mechanisms can take the form of reduced (i.e. subsidized) payments, exemptions, caps on expenditure or complementary insurance to cover all or part of out-of-pocket cost sharing. These protection mechanisms may be available to all (e.g. complementary insurance) or apply to particular types of drugs, e.g. essential drugs treating chronic or life-threatening conditions. They may also apply to particular groups in the population, who can access prescribed drugs at a reduced or no cost (i.e. exempt). Criteria that usually define vulnerable groups and qualify for exemption or subsidy include:
Clinical conditions – commonly those defined as chronic or life-threatening and requiring essential medication, usually implemented as a list of qualifying conditions or drugs. (In the UK, for example, patients requiring medication for type I or type II diabetes are exempt.)
Level of income – where people on low incomes are protected against undue expense.
Age – children are exempt in Austria, France, Germany, Italy, the Netherlands and the UK; older people are exempt or have reduced cost sharing arrangements in Austria, Italy, Japan, Portugal, Spain, the UK and Iceland. (Note: definitions for ‘children’ and ‘older people’ differ in the different countries, the latter being linked to retirement in some.)
Caps on co-payments
Only a few countries (e.g. New Zealand and Sweden) have reduced medication co-payments for high users, but many have some form of cap or ceiling, sometimes also referred to as out-of-pocket maximums. They define the maximum amount a patient should be asked to cost share. Caps can either apply per prescription or be annual ceilings. Caps per prescription exist, for example in Taiwan. Annual caps are probably more common and can either apply to the whole of the population (e.g. Norway, Sweden and Switzerland) or only to certain groups, such as the chronically ill (e.g. Denmark, Finland and Germany). Some countries also have systems where medication co-payments are tax deductible (e.g. Portugal).
Complementary insurance
Complementary insurance covering the cost of prescription co-payments is another form of protection mechanism; patients who have bought this type of insurance do not have to cost share or, if they are asked to pay an amount out-of-pocket, are subsequently reimbursed. Complementary insurance is widespread in France (mutuelle) but can also be found in a number of other countries. In England, a so-called pre-payment certificate (PPC) exists, which can be bought to cover the cost of any prescription charges over a 3- or 12-month period, thus providing a cap through advance payment. The problem with complementary insurance and PPCs is that they only alleviate the financial burden for those who can afford to purchase this cover, and those who can predict in advance that they are likely to benefit (so not ideal for episodic conditions, such as asthma).
Impact of cost sharing on drug use and health outcomes
Impact on drug consumption
A large body of international literature exists showing that cost sharing reduces access to health services in general (where cost sharing applies), and use of prescribed medication in particular. This is, of course, one of the aims of having such a policy in place, whereby patients respond to cost sharing by assessing whether a visit to their doctor, and the use of prescribed medication in particular, are seen as important enough to warrant the relevant out-of-pocket payment. For unnecessary visits or self-limiting conditions that patients may be able to treat themselves (e.g. either through self-care or the use of self-medication remedies), avoiding the use of formal healthcare may be the most appropriate action. This will save cost to the patient, as no cost sharing is incurred, or possibly a reduced amount is paid if OTC remedies are purchased. It further reduces resource use by the health service itself (third party payment), which is an aim of a cost sharing policy.
Differential effect on essential and less essential medication
Cost sharing should only affect patient demand that may not be entirely clinically necessary, so should only affect the use of less essential medication. The latter is defined as medication that provides symptomatic relief without having an affect on any underlying disease process (see Table 26.1 for a more detailed definition). Indeed, the negative effect of cost sharing on drug utilization has been found to be more pronounced for less essential drugs, but it does also reduce the use of essential medication (Austvoll-Dahlgren et al. 2008). As the terminology suggests, essential drugs are those whose withdrawal would have important effects on morbidity and mortality, and thus a cost-related reduction in essential medication is likely to have a negative effect on health outcomes.
Table 26.1
Definitions of essential and less essential medications (Tamblyn et al. 2001)
| Drug category | Definition | Drugs included in categories |
| Essential drugs | ‘Medications that prevent deterioration in health or prolong life and would not likely be prescribed in the absence of a definitive diagnosis’ | Insulin, anticoagulants, angiotensin converting enzyme inhibitors, lipid-reducing medication, antihypertensives, furosemide, β-blockers, antiarrhythmics, aspirin, antivirals, thyroid medication, neuroleptics, antidepressants, anticonvulsants, antiparkinson drugs, prednisone, β-agonists, inhaled steroids, ciclosporin |
| Less essential drugs | ‘Medications that may provide relief of symptoms but will likely have no effect on the underlying disease process’ |
Effect on health outcomes
Even though there are not as many studies that show that a cost-related reduction in the use of essential medicines impacts negatively on health outcomes, convincing large-scale evidence does exist. Tamblyn and colleagues (2001) used interrupted time series analysis to examine the effect of the Quebec drug policy reform, where a 25% co-payment and income linked caps were introduced. Using a random sample of 93 950 elderly persons and 55 333 adult welfare recipients, the authors showed that the use of essential drugs decreased by 9.12% and 14.42% in the two groups; and the use of less essential drugs decreased by 15.14% and 22.39%, respectively. The authors further demonstrated an increase in emergency department visits and serious adverse events (defined as hospitalization, nursing home admission or mortality) in association with the decrease of essential drugs use, but not in association with the reduction in less essential drugs. They thus established a causal link between the reduction in drug use in response to cost sharing and a negative effect on health outcomes.
Furthermore, a number of literature reviews exist on the impact of prescription medicine fees on drug and health service use, as well as health status. They conclude that cost sharing leads to a decrease in essential drug use and a decline in health status in vulnerable populations (Austvoll-Dahlgren et al. 2008, Lexchin & Grootendorst 2004, Rice & Matsuoka 2004).
Negative effect on healthcare use and resources
If cost-related reduction in the use of essential medication leads to worse health outcomes, this will invariably lead to an increased use of healthcare services (such as increased numbers of visits, increased hospital admission and additional treatment and medication). This, in turn, will have an effect on resource use, as all such increased health service use will need to be funded. It is thus important to note that any savings in drug spend (due to a reduction in drug use because of cost sharing) may be offset by cost increases in other healthcare areas. However, very few studies exist that have demonstrated such a link. Soumerai and colleagues (1994) assessed the effect of a Medicaid imposed cap, allowing a maximum of three prescriptions a month, on 268 permanently disabled, non-institutionalized patients with schizophrenia. They demonstrated a decrease in the use of essential mental health drugs and a concomitant increase in the use of acute mental health services among low-income patients. They estimated that the average increase in mental healthcare costs per patient during the cap exceeded the savings in drug costs to Medicaid by a factor of 17. From a societal perspective, this runs counter to the aim of any cost sharing policy.
Effect of cost sharing on different population groups
Besides having differing effects on essential versus less essential drugs, cost sharing can also affect different groups in the population to differing extents. The elderly, people with disabilities (including mental health problems), those taking medication for chronic conditions and people on low incomes, are particularly vulnerable and susceptible. Essentially, these are the groups that are most likely to have high morbidity and high use of essential medication, while being least likely to be able to afford cost sharing. To protect them, many countries have exemptions and other protection mechanisms in place.
Impact of cost sharing on patients and healthcare professionals
The preceding sections have provided insight into the fact that medication cost sharing reduces drug utilization, and that certain groups of patients are more vulnerable or susceptible to this effect, particularly those on low incomes or regular medicine users. However, these studies provide little detail on how drug utilization is reduced, i.e. how individual patients cope with the cost of their medication. Rather than relying on the analysis of large insurance reimbursement or claims databases that provided much of the above evidence, studies that employed methodologies involving direct contact with patients have explored this. In-depth interviews and focus groups have provided some of the depth and detail on how patients cope with medication cost, and questionnaire surveys have allowed quantification of this information (Cox et al. 2001, Cox & Henderson 2002, Safran et al. 2005, Schafheutle et al. 2002, 2004, 2009).
Effect of cost sharing on patients – coping strategies
From these studies, we know that patients respond to cost sharing in complex ways. Furthermore, there are many factors that can impact on whether patients decide to adhere to their medication, and cost is just one of them. Indeed, medication cost is often not an overriding factor when patients decide whether to adhere to their prescribed medication regimen or not, but it can be at least a mediator. If patients perceive their condition as serious and the prescribed treatment as one providing an important health benefit, cost is less likely to have an effect. On the other hand, if a condition is judged to be less serious, and where treatment may be mainly symptomatic rather than curative, cost is more likely to impact. The actual amount of cost sharing is also important, and the higher it is the more likely it is to impact on patients’ management behaviour (called ‘price elasticity’). Patients’ ‘affordability factors’ are also important, where patients on lower incomes and with competing demands on the resources they have available are more likely to be affected by cost sharing than patients on higher incomes, without affordability issues.
When cost sharing does affect patients’ management behaviour, patients respond by using a variety and combination of strategies, which all aim to either make the cost manageable or reduce it. Their use is strongly influenced by patients’ income and affordability, where people on below average incomes are significantly more likely to use these cost reduction strategies than those on above average incomes (Schafheutle et al. 2004).
In order to cope with cost sharing, patients may decide to:
Not have their medication dispensed at all
Take less of their medication to make it last longer
Delay having their prescription dispensed until they have money available
Borrow money to pay for their prescription
Prioritize, i.e. get only some items dispensed if more than one has been prescribed.
In some cases, patients may also decide not to go to the doctor to avoid getting a prescription that would then need to be paid for; a strategy that will be particularly prominent in systems where cost sharing also exists for physician visits.
Patients in all types of cost sharing systems use many of the above strategies, as they reduce patients’ out-of-pocket expense for prescription medicines, regardless of the type of cost sharing that is in place. However, some strategies are only used in certain systems, as their effectiveness in terms of cost reduction depends on the particular type of cost sharing system. A UK specific strategy, for example, would be to buy a pre-payment certificate, while the specific French strategy is to buy the complementary insurance ‘mutuelle’. Strategies that are specific to patients who pay a proportional co-payment are to:
Shop around at different pharmacies which may offer different discounts
Purchase their prescribed medication cheaper in another country (e.g. Mexico if from USA)
Apply to a pharmaceutical company’s Prescription Drug Patient Assistance Program (USA).
Asking for cheaper generic drugs instead of more expensive brands is also a strategy likely to be used in countries with proportional co-payments.
Self-medication strategies
Patients may also respond to high medication cost sharing for prescribed medicines by opting to access cheaper OTC remedies, if they are available. This approach is only likely to work in systems with a flat prescription charge, where the cost of the charge is generally higher than the cost of many OTC products (such as in the UK). Buying OTC products will also be a strategy in countries where (some or all) OTC products are not prescribable (blacklisted) or are not covered (i.e. paid for) by the healthcare system (such as France, Germany and the Netherlands).
It is further interesting to note that patients are price sensitive when making self-medication choices. Especially if they experience affordability issues, patients consider the price of different OTC products and may choose a cheaper alternative. Conversely, in some cases, paying a prescription charge works out cheaper than buying one of the more expensive OTC products, which may make some patients more likely to visit the doctor rather than self-medicate. (This may be different in countries where patients have to pay out-of-pocket when they visit a doctor.)
Involving the prescriber
Prescribers also have a number of options available to them which allow them to, in effect, prescribe in a way that gives patients best ‘value for money’. The types of strategies they can use, again, depend on the cost sharing system within which they operate. In a flat fee charge system (e.g. Austria, Germany or the UK), they can, for example, issue a prescription for a longer supply or a larger pack size, as this allows patients to obtain a larger supply for the same fixed charge. UK and German doctors may issue a private prescription for low cost drugs whose actual price is less than the flat fee prescription charge. In a proportional co-payment system, physicians can issue prescriptions for cheaper generic rather than branded items.
Physicians may try to prescribe more ‘effectively’ by issuing fewer items, provided this does not compromise the clinical effectiveness of their treatment. They may also prescribe a drug that may be more likely to be effective straight off and not require several attempts at finding a suitable drug, each requiring a further charge (one example being a prescription for a proton pump inhibitor for those that pay, rather than an H2 antagonist, in the management of dyspepsia). UK doctors have further mentioned issuing samples that have been left by pharmaceutical industry representatives (thus avoiding any patient charge) (Weiss et al. 2001). Doctors also have a role to play in recommending money-saving options, such as the availability of pre-payment certificates (UK) or complementary insurance or suggesting cheaper OTC alternatives.
For prescribing doctors to be likely to use strategies that will help patients to afford their medication, doctors need to be aware that patients pay and that they do, in fact, experience affordability issues. However, patients are generally reluctant or embarrassed to raise issues of cost and affordability with their doctor, as they consider this to be their own problem rather than that of their doctor, whose role they see as choosing the clinically most appropriate treatment. Nevertheless, if cost sharing impacts negatively on patients’ adherence to prescribed regimens, this can undermine their effectiveness, particularly if the medicines in questions are essential. In order for doctors to be able to find the best treatment for their patients, they need to know whether their patients adhere to their medication, and if not, why not.
The role of community pharmacies
In most countries, community pharmacies are the places where patients go to have their prescriptions dispensed. This is therefore also the place where patients have to pay the amount that is due for medication cost sharing, which makes it likely that patients will raise issues of cost and affordability there. Pharmacists and their staff thus have an important role to play in response to patients’ cost and affordability issues, and the impact this may have on their decisions not to adhere to their prescribed medication regimen as intended. Pharmacists can support patients to make appropriate decisions, using some of the above mentioned patient strategies. They can, for example, raise awareness of complementary insurance programmes or pre-payment certificates (UK), recommend generic substitution or the purchase of a cheaper OTC product where available.
However, pharmacists will also be faced by patients delaying prescriptions, prioritizing certain items, i.e. getting only some dispensed, or choosing not to have any of their medication dispensed, because they cannot afford (or do not want) to pay the medication cost sharing amount that is due. In some cases, these requests will relate to essential medication where adherence is crucial to achieving full health benefit. In other words, cost-related non-adherence may lead to worse health outcomes for these patients. An example might be that a patient only wants to get his β-agonist inhaler dispensed when he also requires a steroid inhaler. Or patients may choose not to take medication for hypertension, as the effect of this medication is not immediately evident to them and any long-term benefits are intangible.
Pharmacists have an important role in advising patients about the action and benefits of their medication and the importance of adherence in order to fully achieve this benefit (see Chs 18 and 25). Nevertheless, this advice is unlikely to work for those patients who simply cannot afford to pay the cost sharing. In these cases, pharmacists may want to liaise with doctors and other members of the healthcare team to discuss options to support this patient’s treatment. Pharmacists and their staff may also be able to inform patients about the availability of income-related systems for exemptions or subsidy and how to go about applying for them.
To ensure that issues of cost and affordability are raised where necessary, pharmacists could incorporate appropriate questioning into pharmaceutical care plans, or when conducting medication use reviews. They should also ensure that they communicate any relevant information to the prescribing doctor and any other relevant healthcare professionals, so that a therapeutic plan can be discussed and agreed, which meets the patient’s clinical and other needs.
Conclusion
Cost sharing for medicines is a mechanism used in many healthcare systems with the aim of deterring unnecessary demand and thus containing healthcare and drug expenditure. Drug use is indeed reduced when cost sharing is implemented, but essential as well as less essential medicines are affected. This can have a negative impact on health outcomes, requiring additional healthcare services and treatment, leading to increased resource use.
Certain groups of patients are particularly susceptible or vulnerable to the negative impact of cost sharing, namely the elderly, people who take regular medication for chronic conditions and people on low incomes. These are, in effect, people who may experience problems affording prescribed medication, either due to regular and thus relatively large expenses for (sometimes multiple) chronic conditions or simply because they only have a limited income and thus limited resources available for payment. Many countries therefore have protective mechanisms in place which provide exemption or reduced payments. Caps and complementary insurance may also be available. The criteria that are used for such protection are usually based on clinical condition and/or need, income and age, thus aiming to protect those identified as most vulnerable.
Patients use many strategies to keep medication costs to a minimum. Some are appropriate but others jeopardize treatment with essential medicines where adherence is crucial to achieve the desired health benefit. Patients commonly do not communicate issues of cost and affordability or the strategies they use to cope with cost sharing, to their doctors. They are, however, more likely to raise these issues in community pharmacies as the places where money is exchanged when getting prescribed medication dispensed. This provides pharmacists and their staff with the important opportunity to explore cost issues and inform patients about the importance of adherence to essential medicines. They can also advise patients about options for managing cost sharing, such as exemptions and complementary insurance or PPCs. Pharmacists can also liaise with physicians and other healthcare professionals to inform and thus facilitate a jointly agreed treatment plan that takes account of cost sharing and affordability as much as possible.
Key Points
There are different types of cost sharing systems: flat fee prescription charges, proportional co-payments (co-insurance) and deductibles
These systems are in place to deter unnecessary demand and thus avoid waste
Many cost sharing programmes have protection mechanisms in place for vulnerable groups (elderly, chronically ill, low incomes)
Medication cost sharing reduces drug consumption
The reduction in drug use in response to cost sharing is more pronounced for less essential medicines than essential ones
Patients use a variety of strategies to cope with medication costs, and these depend on the types of cost sharing within their country
Healthcare professionals, including physicians and pharmacists, can advise on the importance of adherence and help with medication cost