Employers, insurers bet on cutting medication copays

Desperate for ways to curb soaring health-care costs, a groundswell of employers and health insurers are turning to a radically different approach: motivate patients to take not just the cheapest medicines, but the ones they need the most.

Over the past decade, health plans have sought to save money by shifting costs onto workers and encouraging them to use lower-cost generics. But the new model — which involves lowering or eliminating copayments on medications for chronic illnesses — makes better medical sense. And it may save even more money by preventing costly health crises down the road. For instance, a heart-attack patient who no longer has to pay for a costly but essential blood thinner is more likely to take it regularly — and reduce the chances of a second attack or eventual surgery.

Employers such as Marriott International Inc., Procter & Gamble Co. and Eastman Chemical Co. have now reduced or eliminated copayments for drugs for certain chronic conditions, such as heart disease. Pitney Bowes Inc., which already gives away diabetes and asthma drugs, has lowered copays this year for osteoporosis treatments, anti-seizure medications and prenatal supplements. For diabetics and heart-attack patients, it has made cholesterol-lowering statins free. And at least one major insurer, Aetna Inc., is studying whether to implement the approach with certain drugs and patients across its health plans.

Behind the about-face is mounting evidence that higher copayments may not make long-term economic sense. While they've curbed drug spending in the short run, studies show they've also discouraged some people from taking essential medicines. A 2004 Rand Corp. study of more than 80 corporate and commercial health plans, for instance, showed that chronically ill people used to taking regular drugs cut their medications by between 8 percent and 23 percent when their copays were doubled.

In rethinking copays, employers and health plans have targeted conditions like diabetes and heart disease in part because chronic illnesses are major drivers of the overall rise in health-care costs. These patients are also among the most vulnerable to costly medical complications — and, at the same time, it's relatively easy to monitor their drug regimens to help manage the illnesses.

Early experiments with providing free drugs for chronic disease have produced results — reducing costs and helping people stay out of the hospital and emergency rooms. Pitney Bowes says it now spends 19 percent less annually for each asthma patient than it did six years ago, before it eliminated those copays.