Adoption of Cost Effectiveness-Driven Value-Based Formularies in Private Health Insurance from 2010 to 2013

Elizabeth D. Brouwer (), Anirban Basu and Kai Yeung
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Elizabeth D. Brouwer: University of Washington, Comparative Health Outcomes, Policy, and Economics (CHOICE) Institute
Anirban Basu: University of Washington, Comparative Health Outcomes, Policy, and Economics (CHOICE) Institute
Kai Yeung: Kaiser Permanente Washington Health Research Institute

PharmacoEconomics, 2019, vol. 37, issue 10, No 7, 1287-1300

Abstract: Abstract Background and Objective It is unclear whether private insurance benefit designs align with the most widely used ex-US definition of value, the incremental cost-effectiveness ratio (ICER). A large Pacific Northwest private insurance plan explicitly implemented a tiered formulary based on cost-effectiveness estimates of individual drugs in 2010, resulting in cost savings to the plan without negatively affecting patient health service utilization. Given the pressures of rising costs, we investigate whether employer-based private health insurance plans have adopted value-based cost-sharing approaches that are in line with cost-effectiveness estimates. Methods At the drug level, we identified five drug tier designations (0–4) that are tied to increasing ICER ranges in a large claims dataset from 2010 to 2013. We used a random effects model to evaluate whether out-of-pocket (OOP) cost levels and trends were associated with drug value designation, controlling for generic status and list price, and whether the associations varied by insurance plan type and insurance market concentration, as measured by the Herfindahl-Hirschman Index (HHI). We also estimated the weighted mean cost effectiveness of the drug claims in the sample by year and generic status using the formulary’s cost-effectiveness value ranges. Results The 2010 volume weighted mean OOP cost for a 30-day supply of drugs in tiers 0 through 4 were $US6.87, $US22.62, $US62.22, $US57.36, and $US59.85, respectively (2013 US dollars). OOP costs for cost-saving and preventive drugs (tier 0) decreased 5% annually from 2010 to 2013 (p

Date: 2019
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DOI: 10.1007/s40273-019-00821-5

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