Reference-Based Drug Pricing Shifts Mix of Therapies, Lowers Prices Paid, Study Finds

Reference pricing may shift the mix of drugs dispensed from those offering the highest rebates to pharmacy benefit managers to those offering the lowest prices to employers and employees, according to a new study published Wednesday. 
Allison Inserro
February 05, 2020
Reference-based pricing benefit design for prescription drugs led to both increased use of lower-cost therapies within each therapeutic class and a drop in the prices paid by employers and cost sharing borne by employees, according to a new study published Wednesday in JAMA Network Open.

The technique may shift the mix of drugs dispensed from those offering the highest rebates to pharmacy benefit managers to those offering the lowest prices to employers and employees, according to the authors.

The use of reference-based pricing has been limited in the United States; it is more widely used in Euope. A study published last year in The American Journal of Managed Care® found that few employers have inplemented the strategy, under which patients are responsible for the cost of a drug or medical service that goes above a specified price.  

The economic evaluation examined 3.3 million drug insurance claims of employees of Catholic organizations who purchased health insurance through the Reta Trust, using a random sample of employees of public sector organizations who purchased insurance through the California Public Employees’ Retirement System (CalPERS) as a comparison group.

The Reta Trust implemented reference pricing in July 2013; CalPERS did not adopt reference pricing during the study period, which ran from July 1, 2010, to December 31, 2017. Data analysis was performed from January 1, 2019, to September 1, 2019.

During the study period, 1.2 million prescriptions were submitted by 34,319 individuals covered by Reta Trust; in the CalPERS group, 2.1 million prescriptions were submitted by 738,159 individuals.

In the first 2.5 years after implementation of reference pricing, the percentage of prescriptions made for the low-priced drug within each therapeutic class increased by 5.1 percentage points (95% CI, 1.8-8.4 percentage points), and patient cost sharing increased by 10.3% (95% CI, −1.6% to −23.6%). The difference was not statistically significant. Meanwhile, the prices paid decreased by 19.1% (95% CI, −30.2% to −6.2%) for Reta Trust patients compared with CalPERS patients.

During the subsequent 2-year postimplementation period, the percentage of prescriptions given for the low-priced drug increased an additional 6.2 percentage points (95% CI, 2.3-10.1 percentage points) and patient cost sharing decreased by 21.3% (95% CI, −31.2% to −9.9%). In addition, prices paid increased by 7.2% (95% CI, −12.6% to 31.4%) and were also not statistically significant.

Relative to the change experienced by the CalPERS patients, the share of prescriptions for lower-priced drugs increased by 6.3 percentage points (8.9% relative increase), the mean prescription drug price decreased by $9.5 (12.1% relative decrease), and the mean patient cost sharing decreased by $1.8 (4.3% relative decrease).

Reference
Robinson JC, Whaley C, Brown TT, Dhruva SS. Physician and patient adjustment to reference pricing for drugs [published online February 5, 2020]. JAMA Network Open. doi: 10.1001/jamanetworkopen.2019.20544.

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