NCPA - National Center for Policy Analysis


September 13, 2006

Higher copayments have a small effect on usage of "specialty pharmacy" medications, which can cost as much as $10,000 monthly, according to a study published in Health Affairs.

  • Health insurers often place specialty pharmacy medications -- injectable and biological medications that target a gene or protein and often are used to treat complex chronic conditions such as anemia, cancer and multiple sclerosis -- on the "fourth tier" of prescription drug formularies and require members to pay 25 percent copays for the treatments, with maximum out-of-pocket payments of $1,000 annually. 
  • However, the study, led by Dana Goldman, chair and director for health economics at RAND, finds that higher copays for specialty pharmacy medications reduce usage by only 1 percent to 21 percent, compared with 30 percent to 50 percent for traditional treatments. 

Insurance markets work best when there is the chance of substantial loss, when that loss is sufficiently rare and uncertain, and when the presence of coverage will not alter behavior much, according to the researchers.

Consequently, specialty pharmacy medications appear to warrant greater, not less, coverage than traditional pharmaceutical agents, according to the researchers. 

"Patients are desperate for these drugs, and they're willing to pay quite a bit to try whatever is out there. Even though they're expensive, that cost is spread over a very large insurance pool, so, socially, it makes sense that we should cover them," explained Goldman.

Source: Christopher Snowbeck, "Higher copays don't deter use of needed high-cost medication," Pittsburgh Post-Gazette, September 12, 2006; based upon: Dana P. Goldman et al., "Benefit Design and Specialty Drug Use," Health Affairs, Vol. 25, No. 5, September 12, 2006.

For study text:


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