Preferred Pharmacy Networks and Drug Costs

Selective contracting is an increasingly popular tool for reducing health care costs, but any savings must be weighed against consumer surplus losses from restricted access. Recently, many prescription drug plans (PDPs) utilize preferred pharmacy networks to reduce drug prices. Our results suggest that Medicare Part D plans with preferred pharmacy networks pay lower retail drug prices, while subsidized enrollees’ insensitivity to preferred pharmacy cost-sharing discounts reduces these savings. We then estimate pharmacy demand models to quantify the costs and benefits of preferred pharmacy networks, finding that the average enrollee benefits from preferred pharmacy contracting due to reduced out-of-pocket (OOP) costs at preferred pharmacies. (JEL G22, H51, I13, I18, L65, L81)

Real-world treatment, clinical outcomes and healthcare resource utilization among persons with hemophilia A by age

Aim: Examine real-world characteristics, treatment patterns, and outcomes among treated persons with hemophilia A (PwHA) stratified by age. Patients & methods: This study utilized US claims data from 1 January 2007–31 July 2018 from the Humana Research Database. Unadjusted comparisons were conducted across PwHA (<18, 18–55, 56–89 years) enrolled in commercial or Medicare Advantage Prescription Drug plans. Results: A total of 294 PwHA were identified; 21.1% experienced ≥1 bleeding event, and 41.2 and 53.1% had evidence of arthropathy or related disorders, and pain, respectively. Along with all-cause and hemophilia-related healthcare resource utilization (HCRU), these were highest among PwHA aged 56–89 years. Conclusion: Insights into treatment, outcomes and HCRU may identify opportunities for enhanced disease management, particularly in older PwHA.

What Do Consumers Consider Before They Choose? Identification from Asymmetric Demand Responses

Consideration set models generalize discrete-choice models by relaxing the assumption that consumers consider all available options. Determining which options were considered has previously required either survey data or restrictions on how attributes impact consideration or utility. We provide an alternative route. In full-consideration models, choice probabilities satisfy a symmetry property analogous to Slutsky symmetry in continuous-choice models. This symmetry breaks down in consideration set models when changes in characteristics perturb consideration. We show that consideration probabilities are constructively identified from the resulting asymmetries. We validate our approach in a lab experiment where consideration sets are known and then apply our framework to study a “smart default” policy in Medicare Part D, wherein consumers are automatically reassigned to lower-cost prescription drug plans with the option of opting out. Full-consideration models imply such a policy will be ineffective because consumers will opt out to avoid switching costs. Allowing for inattention, we find that defaulting all consumers to lower-cost options produces negligible welfare benefits on average, but defaulting only consumers who would save at least $300 produces large benefits.

Biosimilar formulary placement in Medicare Part D prescription drug plans: A case study of infliximab

Purpose Biosimilars can generate competition and provide cost savings over reference biologics for the Medicare program and beneficiaries. The extent to which these benefits can be realized in the Medicare Part D program depends on how biosimilars and biologics are placed in the formulary. We conducted a study to examine Medicare formulary placement of the first biologic to have 2 biosimilars on the market—infliximab and its biosimilars infliximab-dyyb and infliximab-abda. Methods All standalone and Medicare Advantage (MA) prescription drug plans (PDPs) offered in Medicare Part D were examined between September 2016 (ie, at the end of the last quarter before the launch of the first infliximab biosimilar) and September 2018, at which time a second biosimilar had been on the market for about 14 months. When PDPs covered both the reference biologic and a biosimilar, we compared the cost-sharing tier and the frequency of prior authorization and step therapy requirements for each drug. Results Nearly all PDPs covered infliximab throughout the study period. By September 2018, 31.7% of MA plans and 14.9% of standalone PDPs were covering a biosimilar on the market. Nearly all plans that covered a biosimilar also covered the reference product. Most plans (98% of standalone PDPs and 89% of MA plans) had placed prior authorization restrictions on both the biologic and the biosimilar. All plans covering both products placed them in the same cost-sharing tier. No plan required step therapy for either product. Conclusion Formulary placement of infliximab biologic and biosimilars in Medicare Part D is not optimized to generate cost savings for the Medicare program and beneficiaries, whose cost sharing is often based on the drug’s list price. The Medicare program should provide incentives for PDPs to expand biosimilar coverage.