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American Public Health Association
133rd Annual Meeting & Exposition
December 10-14, 2005
Philadelphia, PA
APHA 2005
3224.0: Monday, December 12, 2005 - 12:35 PM

Abstract #99098

Multi-tier formularies for prescription drugs: Who really benefits?

Sarah E. Boslaugh, PhD, Department of Pediatrics, Washington University School of Medicine, 660 South Euclid Avenue, Campus Box 8208, McDonnell Pediatric Research Building, St. Louis, MO 63110, 214-286-1022, boslaugh_s@kids.wustl.edu

Rapidly increasing prescription drug costs are a matter of national concern in the United States. One method used by many health insurance plans to control prescription drug costs is the adoption of a multi-tier formulary. A multi-tier formulary is simply a list of prescription drugs covered by the plan, arranged into levels or tiers; drugs in the lowest tier require the smallest co-payment from the consumer, and higher co-payments are required for drugs in higher tiers. In 2002, 57% of plans offering prescription drug coverage used multi-tier formularies, up from 28% in 2000 [Strunk & Ginsburg, 2004], and the adoption of multi-tier formularies has been credited with reducing the growth in prescription drug costs from 18.4% in 1999 to 9.1% in 2003 [Gabel et al, 2002]. Most news reports discussing multi-tier formularies have focused on their ability to control costs through encouraging consumers to reduce unnecessary utilization and switch to generic or lower-cost drugs. However in many cases the savings to insurers have been achieved primarily through shifting costs to consumers through increased co-payments. In fact, all six major studies conducted 2001-2004 on the economic impact of multi-tier formularies found significant cost-shifting to consumers, with as much as a 600% increase in out-of-pocket cost expenses [Kamal-Bahl and Briesacher, 2004]. In addition, multi-tier formularies distract attention from a simpler method used in many countries to control prescription drug costs: utilizing the market power of federal and local governments to require lower prices from pharmaceutical manufacturers.

Learning Objectives: At the conclusion of the session, attendees will be able to

Keywords: Health Insurance, Economic Analysis

Presenting author's disclosure statement:

I wish to disclose that I have NO financial interests or other relationship with the manufactures of commercial products, suppliers of commercial services or commercial supporters.

Critical Perspectives on Pharmaceutical Corporations

The 133rd Annual Meeting & Exposition (December 10-14, 2005) of APHA