Prescription Drug Cost-Sharing Among Commercially-Insured Children and Adults with Chronic Illness

1. Prescription Drug Cost-Sharing Among Commercially-Insured Children and Adults with Chronic Illness Teresa B. Gibson, PhD Thomson Healthcare, Ann Arbor, MI

2. Background • Children represent over one-quarter of nonelderly enrollees in private health plans in the US. (Medical Expenditure Panel Survey, 2005) • Children are dependent upon parents (or legal guardians) to mediate the health care delivery system on their behalf • Child is principal (P), parent is agent (A) • This interaction differs from many principal-agent (P-A) interactions: • The Principal is largely incapable of managing/supervising the Agent • The Agent is assigned to the Principal by law/custom/birth • The P-A contract is implicit, since legal minors cannot sign or negotiate contracts • Contract is not between child and parent, but parent and state • Parents have an “implicit promise” to behave in the interests of the child (Becker and Murphy, 1988; Munro, 2001)

3. Background (continued) • Information asymmetry in health care • Parent/Provider: Parents seek help from physician agents to help determine a course of treatment • Parent/Child: Children must communicate symptoms to parents

4. Cost-Sharing • Adults and children in the same employer-based health plan typically face the same levels of cost-sharing (e.g., copayments, coinsurance) • Most cost-sharing studies have focused on the price-responsiveness of adults. • Few studies include children or report results separately for children. • Little evidence regarding price-responsiveness and chronic illness in children • Price elasticity for medical services is different for children and adults(Newhouse 1981) • Children: price inelastic response for inpatient services, price elastic response for outpatient services • Adults: price elastic response for both inpatient and outpatient services • Price elastic demand for antibiotics among children and adults(Foxman 1987) • Adoption of a 3-tier formulary from a 1-tier formulary medications in children resulted in a decline in the rate of adoption of ADHD medications but few changes in utilization for existing users(Huskamp 2005)

5. Study Aims • To examine the effects of higher levels of prescription drug cost-sharing on children with chronic illness • Analyze price-responsiveness for a single, common chronic illness, persistent asthma, affecting both children and adults • Is price important when providing health care to children with a common chronic illness?

6. Data Source • 2001 through 2003 MarketScan Commercial Claims and Encounters database • Representing the health care experience of enrollees in employer-sponsored health plans in the US

7. Study Sample • Patients with Persistent Asthma age 5-54 years • Met HEDIS denominator criteria for persistent asthma (493.xx) in index year (2001 or 2002) • Based on: inpatient use, ED use, outpatient use and/or asthma prescription drug use • Continuously enrolled at least 24 months • Index year/measurement year combinations (2001/2002 or 2002/2003

8. Study Sample 22,985 children (5-17 years) 56,381 adults (18-54 years) • - Children and adults were enrolled in the same set of employer-based health plans • 22.9% of children and 27.5% of adults appear in both years

9. Measures • Any asthma drug use (1=yes, 0=no) • At least one prescription in the measurement year (2002 or 2003) if identified as having asthma in prior year • Count of asthma prescriptions (in 30-day equivalents) in 2002 or 2003 • Count of prescriptions conditional on use (in 30-day equivalents) in 2002 or 2003

10. Explanatory Variables • Patient Cost-Sharing • Asthma drug cost sharing amount (US$ 2003 per 30-day supply) • Office Visit cost sharing amount (US$ 2003 per visit) • Sociodemographic - Age, Female, US Census Region, Median Household Income (by ZIP code via Census information), salaried/hourly • Health Plan Type – (e.g., HMO, PPO, POS, Comprehensive) • Pulmonologist visit (prior 12 months) • Disease Prevalence/Comorbidity (prior 12 months) • Charleson Comorbidity Index • Stage of Asthma (Disease Staging) • Sinus infection, otitis media, migrane, bronchitis • Anxiety, SSRI use, Depression • Time (index year 2001)

11. Multivariate Analysis • P(Any useit|xit) = F(0 + 1sociodemographicit + 2planit + 3providerip + 4severityip + 5comorbidityip + 6 cost-sharingit) • Panel data logit model for any asthma drug use • P(Number of Rxit|xit) = G(0 + 1sociodemographicit + 2planit + 3providerit + 4severityip + 5comorbidityip + 6 cost-sharingit) • Panel data poisson model for counts of prescription drugs • where i is patient, t is measurement year, p is index year • panel data

12. Results: Selected Characteristics

13. Results – Any Asthma Drug Effects of a $10 increase in Copayment *** *** p<.01

14. Results – Number of Asthma Prescriptions Effects of a $10 increase in Copayment *** *** p<.01

15. Results – Number of Prescriptions, Conditional on Use Effects of a $10 increase in Copayment *** *** p<.01, * p<.05

16. Other Results • Family Dyads • Adults (parents) with asthma who had children with asthma (n=2,644) had were less price sensitive than adults without asthmatic children for each of the three measures: any use, number of prescriptions contingent on use, number of prescriptions • Adults and children with asthma in both years • Patients appearing in both years (adults, n=21,423 ; children n=7,187) had a less elastic price response than the full sample • Income • Price effects did not vary by income. • Children residing in lower income areas (< $38K) had the same inelastic response as children residing in higher income areas (> $64K)

17. Limitations • Measure prescription fills, not actual consumption patterns • Persistent asthma criteria • Meeting the asthma criteria for 2 years may improve ability to select patients most likely to have asthma-related utilization (Mosen 2005, Weiss 2006) • Sensitivity analysis requiring 2 years of asthma revealed no difference in results • Criteria based upon utilization, not pulmonary function • Continuously-enrolled population with employer-sponsored insurance • Higher income

18. Conclusions • Commercially-insured parents in employer-sponsored health plans may err on the side of caution by providing medications to their chronically-ill children • Higher copayments for children with asthma may not affect the utilization of prescription drugs, as parents may seek to act in the best interests of their children. • Prescription drug copayments may not impede care for chronically-ill children but may create a financial burden for families

19. Price per Prescription D Copay2 Copay1 Quantity Of Prescriptions Other Considerations Demand for Asthma Prescriptions For child asthmatics, demand is inelastic. Is Q’ optimal? Q* Q’

20. Other Considerations • “Even altruistic parents have to consider the trade-off between their consumption and the human capital of children” (Becker and Murphy, 1988, p. 5) • The loss in buying power may introduce principal-agent conflicts within the family • Choices between medications and other goods • Trade-off between the welfare of the child and the welfare of the parent • Particularly important for lower income families (Munro 2001) • Are higher user fees (e.g, higher copayments) the most effective way to manage consumption of maintenance medications in chronically-ill children?