Back to Annual Meeting Page		American Public Health Association 133rd Annual Meeting & Exposition December 10-14, 2005 Philadelphia, PA

Abstract #99098

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

• describe the multi-tier formulary system used by many health insurance providers
• evaluate the costs and benefits of multi-tier formularies for pharmaceutical corporations, health insurance companies, and individual consumers
• discuss the advantages and disadvantages of this and other methods of controlling prescription drug costs

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.