Today's Managing Health Care Cost Number is $4.38
Source First chart shows increased use of the reference price medication (lowest cost in class). Second chart shows that average price for RETA Trust was higher at baseline, and decreased to less than Union Trust after implementation of reference pricing. Patinets paid somewhat more in cost sharing.
Yesterday's New England Journal of Medicine reports on the effectiveness of using reference based pricing to steer patients toward the most cost-effective drug in a class.
Researchers looked at prescriptions for 17,000 members of the RETA Trust (Catholic school and social service workers) who were subject to reference pricing for outpatient prescription drugs from 2013-2014, and compared changes in prescription patterns to 35,000 members of the Labor Trust, which used conventional tiers to steer pharmacy use to less costly medications. Reference pricing should be more effective- it places the patient at risk for the entire difference in price between the prescribed drug and the lowest priced drug in a class- while tiers only place patients at risk for a portion of the difference in price.
The results are clear. Reference pricing drove substantially more use of the most cost effective drugs; RETA Trust members started off using the most preferred drug in a class 2.6% less often, and at 18 months they were using the lowest priced reference drug 11.3% more often. Researchers calculated savings of $1.34 million- that calculates to savings of $4.38 per employee per month.
Reference pricing isn't easy to implement. The communications challenges are large - as most patients and most doctors have little idea the incremental price between Crestor (brand name statin, almost $300 a month) and Atorvastin (generic version of Lipitor, about $20 a month. Prices from Costco.com.) The RETA trust set up an override system to provide full coverage for any more expensive drug based on any physician note, regardless of its validity or relevance. This makes it less likely that patients who genuinely would benefit from the higher priced drugs were denied access.
Total savings here aren't huge - assuming costs per employee of about $10,000 annually, this would represent about a half percent of total medical costs. But Robinson, et al have demonstrated that this is an example where cost share changes behavior and lowers cost.
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