Q &A with Niteesh Choudhry, MD, PhD
Handicapping the potential for value-based insurance design to get Americans to take their medications

The role of co-pays and cost sharing in discouraging heart attack patients from taking their drugs has been the research focus of Niteesh Choudhry, MD, PhD, Assistant Professor of Medicine at Harvard Medical School and an Associate Physician of the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital in Boston. Weeks after he published important articles on value-based design and drug adherence, Dr. Choudhry presented a paper at the Leonard Davis Institute (LDI) of Health Economics 2010-2011 Research Series. Before his presentation, he talked with Kevin Volpp, MD, PhD, for this Q &A. Dr. Volpp is Director of the Center for Health Incentives at LDI and Associate Professor at the University of Pennsylvania School of Medicine and at the Wharton School.

Q. What do you see as the economic and health consequences of nonadherence—people not taking their prescribed drugs as they should—among Americans?
A. This is a major public health problem, so it has profound implications for the health of Americans. There is a huge problem with long-term medication use. We know that on average patients take about half of their medications. It’s a little hard to quantify the actual economic and clinical impact of non adherence, although it’s widely believed to be highly significant if you look at observational data.

If we could increase medication use even marginally for highly effective medications—not for all medications but for highly effective ones—there are likely to be substantial and significant clinical and economic benefits to that.

Q. What is your sense of the actual cost of nonadherence?
A. The most widely cited figure, and it is often cited opportunistically, is $100 billion to $110 billion a year, contributing to 10% or more of hospitalizations annually. That number seems a little fanciful to me. If for example we took one disease, like cardiovascular disease, and said that direct and indirect costs were in the range of $400 billion to $500 billion a year, it seems implausible that even adherence in that one most common of diseases, which may account for 10%-15% of all health spending, would lead to $10 billion of that savings. That said, even if the impact of adherence added together across all diseases isn’t $100 billion annually, it is still likely to be very significant.

Q. It seems plausible there could be savings from having higher rates of adherence.
A. There are absolutely savings to be had. In one paper we took a simulated cohort of patients who had a heart attack and we reduced their cost sharing of essential medications as a method of improving their adherence (Health Affairs 2007; 26: 186-194) We assumed that adherence rates improved 15-20%. If you took the results of our model and nationalized them, that would result in about $1.7 billion in savings a year. If you multiply that by multiple other diseases, maybe you get into the tens of billions of dollars of savings.

Q. What is your sense of the most effective levers for improving adherence?
A. This is not a simple problem. There are multiple inputs into the nonadherence problem: patient factors, physician factors, health system factors, and the interaction of all of those.

That said, there are a few things in the literature on adherence improvement interventions that seem to have the most promise. One, reducing the complexity of treatment regimens: If you give someone a medication that they need to take four times and instead dose it at twice a day—same medication for the same indication, just dosed differently—adherence will consistently go up.

The second is about cost sharing and copayments. We now have emerging evidence that eliminating cost sharing or setting it at low levels on such medications will probably increase medication use.

Q. You recently had two papers come out in a special issue of Health Affairs about value-based insurance design (VBID). Can you tell us what VBID is?
A. VBID is part of a larger movement amongst insurers and payers and even patients that we should pay for those health services that have value. Right now how we pay for health services is usually based on cost, so that those services that are more expensive have a larger insured amount and patients pay a larger amount of their costs. In the case of drugs, branded medications are more expensive for patients and payers. VBID turns that on its head and says patients should pay the least for those services that are most effective and conversely, pay the most for those services that are least effective.

Q. The observational studies seem to indicate that for every 20 people for whom you’ve reduced copayment, you’ve improved adherence in one person roughly.
A. I agree entirely. There are opportunity costs to these dollars, and there are other things that we can do potentially that will improve health, so this in essence raises a comparative effectiveness problem. We should not go run and embrace the idea of value-based insurance design without carefully evaluating it. As much as I am a supporter of the notion of this idea of basing copayments on value, I still remain somewhat uncertain that this is definitely a good idea from the perspective of health improvement and cost reduction.

Q. It really comes down to this question of comparative effectiveness.
A. Completely. We are beginning to do some work of even just establishing the evidence base for a lot of different benefit designs. When we trained in medicine 15-20 years ago, evidence-based medicine was all the rage.

Policy making is now coming to the same sort of forefront that evidence-based medicine was at a few years ago. We now have analytic methods to evaluate policies effectively. We even have a growing evidence base of randomized trials that address policy questions. We have enough to do meta-analysis. We will be getting to the point soon that we can then make rational, evidence-based choices about what policies either reduce costs or improve health or ideally do both.

Q. Much of the potential of VBID would come if we could apply it at the other end of the spectrum.
A. There’s perhaps more fat in the system, and more overuse or unnecessary use of some services than there is the underuse of the essential ones. As a result, applying value-based insurance design to low-value services is probably where it will ultimately have its greatest impact. The problem is how do we do it? The focus of my work is the low-hanging fruit, highly effective services that are underused and for which co-pays should be lowered. While perhaps less important than low-value services from an economic perspective, there’s still this big quality opportunity from lowering co-payments for high-value ones.  

Q. I suspect there are a lot of insurers who would like to raise cost sharing for nonessential services, but most of them are afraid to do it.
A. From a purely political and optics and public relations perspective, it’s probably easier for insurer’s to say they’re going to raise cost sharing on some things rather than not provide coverage at all. The alternative is delisting services, but there’s probably going to be more objections to that idea than raising the cost-sharing bar. While this may raise issues of income inequalities, you can still have the service—you just have to pay more for it.

Q. What’s the bottom line of your research?
A. There are a lot of good ideas in health care. Value-based insurance design and improving adherence are perhaps two of them, but there still is an evidence base to be generated to prove they actually work. We as policy oriented researchers have an obligation to push that agenda forward.

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