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Study: How Out-of-Pocket Caps Affect Payer Policy


Investigators set out to learn whether the imposition of out-of-pocket spending caps on specialty drugs would unleash a wave of drug spending and prompt payer policy change.

A study of caps placed on out-of-pocket (OOP) costs for specialty drugs demonstrated that the caps did not lead to an increase in health care spending except for patients at the highest tier (95th percentile) of spending, investigators wrote.

They concluded that this showed that the caps were doing what they were supposed to do: protect the patients most vulnerable to high OOP costs without leading to across-the-board health care spending increases.

The study included records for 27,161 patients, from 2011 to 2016, covered by 3 national payers. Among patients in the 95th percentile of spending on specialty drugs, OOP costs were $351 lower per user per month, which represented a decrease of 32% in spending, investigators said.

Investigators noted that not enough is known about the effects of caps on patient costs, and they sought to remedy this deficit via their study. They noted that specialty drugs such as antiviral agents for hepatitis C and biologic agents for multiple sclerosis or rheumatoid arthritis are highly effective but spending for these agents is disproportionate to that for other drugs.

By the Numbers

“Over the past decade, health-plan spending for such treatments increased from an estimated 26% of total drug spending to 49%, while the treatments remained below 2.5% of total prescriptions dispensed,” they wrote.

Meanwhile, the use of high cost-sharing drug tiers among employer sponsored health plans has risen from 11% to 51%, with a simultaneous increase in the disparity in OOP spending between specialty drug users and nonspecialtiy drug users, “becoming 3 times as large as that in an earlier 10-year period,” the authors wrote.

In just the past 2 years, at least 21 states and the federal government have introduced legislation to control OOP patient costs for prescription drugs, and 11 states have introduced laws targeting specialty drug spending. Of the latter group, Delaware, Louisiana, and Maryland passed legislation and imposed caps on OOP for commercial health plans at $150 per 30-day supply of specialty medication, the authors wrote.

Investigators said their concern was that they would find that caps would lead to increased health plan spending followed by increases in insurance premiums and reduced insurance affordability for all enrollees. This did not happen.

However, investigators evaluated outcomes 1 to 3 years after the cap policies were implemented. They noted it’s possible there will be a delayed impact on payer policy: “Subsequent effects may include health plans restricting the use of specialty drugs, through more stringent prior authorizations or higher deductibles, or manufacturers increasing drug prices because of reduced out-of-pocket costs.”

“The caps were not associated with changes in out-of-pocket spending for specialty-drug users at the lower spending quantiles, in mean out-of-pocket spending, or in overall specialty-drug utilization (which increased only in Delaware),” they wrote.

They observed that there was a larger change in spending for individuals with hepatitis C than for patients with other conditions, suggesting that caps “may be more effective at protecting against very high out-of-pocket prices incurred over a shorter duration.”

Overall, they said their study findings indicate that caps may be “well aligned” with the fundamental principals of using health insurance to mitigate the impact of high individual costs for health care.

“Insurance functions best when it provides coverage for treatments that are high cost, that are for rare conditions, and that patients value (eg, treatments for which changes in OOP prices do not substantially alter utilization behavior),” they wrote.

With specialty drug costs becoming a larger and larger influence on health budgets, it’s inevitable that policies, such as OOP caps, will evolve to manage this spending, the authors concluded. “It would be useful to evaluate these caps in the longer term, as well as spending caps of other types and magnitudes, to inform the balance of individual and population financial burdens of these important medicines.”


Yeung K, Barthold D, Dusetzina SB, Basu A. Patient and plan spending after state specialty-drug out-of-pocket spending caps. NEJM. 2020;383:558-566. doi:10.1056/NEJMsa1910366

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