A Prescription for Lower Health Costs … With No Co-Pay

by Peter J. Pitts

Alas, it’s unlikely that Washington will pass meaningful healthcare reform any time soon. Yet healthcare costs are still exploding — making quality care unaffordable for too many Americans and putting a financial burden on us all.

Surprisingly, though, there’s a smart move that health insurers can make that’ll lower costs for consumers and insurers alike, and improve patient health: Reduce co-pays on prescription drugs.

High drug prices lead many Americans to skip doses or quite prescriptions entirely. Yet prescription drug prices aren’t rising — it’s patients’ out-of-pocket costs, or co-pays. Over the past several years, insurance companies have become increasingly reluctant to foot the bill for brand-name medications.

Indeed, since 2000, co-pays have increased four times faster than prescription drug prices.

Patients respond to higher co-pays by skipping their meds more often. In 2003, researchers at Oregon University studied the effects of introducing a $2 to $3 co-pay for prescription meds among 17,000 patients. Adherence to treatment dropped by 17 percent.

Some insurers are even refusing to cover new prescription drugs. According to a study from Wolter Kluwer Health, insurers’ denial rate for brand-name meds was 10.8 percent at the end of 2008 — a 21 percent jump from the year before.

Abandoning treatment — a practice known as “non-adherence” — has serious consequences for patient health. For instance, people with hypertension that neglect their meds are over five times more likely to experience a poor clinical outcome than those that don’t. Heart disease patients are 1.5 times more likely.

It also results in higher medical costs, as patients who go off their meds often end up in the hospital. Minor conditions that might have been controlled by inexpensive meds can sometimes balloon into life-threatening illnesses that require surgery or other costly treatments.

This makes sense. After all, a daily cholesterol-lowering drug is far less expensive than emergency heart surgery.

As Congress figures out what to do next on healthcare reform, private insurers can act now to control their own costs and vastly improve medical outcomes by lowering co-pays. State lawmakers and insurance regulators, too, should look to co-pay reform to help make healthcare more affordable for average Americans.

Peter J. Pitts is President of the Center for Medicine in the Public Interest and a former FDA Associate Commissioner.

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