The Cost-Response Curve

Screen Shot 2014-07-13 at 11.04.35 AM“Drugs don’t work in people who don’t take them.” C. Everett Koop, former US Surgeon General

Cost-based non-adherence, like any lack of medication adherence, leads to further complications and hospitalizations that could have been prevented. CMS appears to have recognized this when they announced that a new ACO measures on whether “providers have educated patients about the cost of medications” in the 2015 fee schedule.  Cost and quality conversations between doctors and patients are becoming a cornerstone to value-based care.

The most expensive drugs are the ones that the patient never takes.  Nearly one third of prescriptions go unfilled. When patients cannot afford a medication, and only discover the price or out-of-pocket cost at the prescription counter, it’s a big risk to long-term outcomes.

“It has been well established that a lack of affordability can drive a lack of adherence to a course of medications.  Patients who do not take their medications cost the U.S. healthcare system an estimated $300 billion in avoidable medical spending annually due to poorer health, more frequent hospitalizations and a higher risk of mortality”, according to The Center for Health Value Innovation and the Network for Health Value in Innovation.

A lack of medication adherence drives further costs for the system and suffering for patients. Estimates are that more than a third of medicine-related hospitalizations happen because people did not take medicine as directed, leading to over 125,000 deaths.

Medication non-adherence, of course, can have many reasons: side effects, difficulty in administering the drug, and others, but there is clear evidence that cost is a factor driving non-adherence. 27% of Americans did not fulfill a prescription due to financial hardship in 2012 according to a Kaiser Family Survey. As copays, deductibles and out-of-pocket expenses go up, so, likely, will non-adherence, and value-based care, and value-based benefits must understand the costs related to non-adherence.

Cost is a risk similar to the risk that a drug won’t work for some patients — the patients that can’t or choose not to pay it. Dr Koop astutely pointed out, drugs patients don’t take can’t work.

Let’s take a look at Coumadin as one example. There are still 2 million Americans taking Coumadin (warfarin) and another 2 million on other anticoagulants (blood thinners). These newer anticoagulants drugs such as Eliquis promise increased efficacy and ease of use but at a higher price. Coumadin requires a blood tests once per week to check the proper dosing, Eliquis and newer anticoagulants do not.

We may find that Eliquis and other new anti-coagulants that are easier to use can increase adherence. The best solution is to have an honest conversation about affordability, including best evidence on efficacy and ease of use. We need to understand the fdifferent motivating factors for each patient.

Let’s look at the costs, average data via

Eliquis 5 mg twice daily = 60 tabs per month = $313.05  x  12 months = $3780.60 per year

Warfarin 5 mg once daily = 30 tabs per month = $4.00 x 12 months = $48.00  (on the $4 list at most pharmacies).

Because Coumadin requires a blood test to monitor dosage, we need to add in the cost of the monitoring device and testing strips.

Roche CoaguCheck home monitoring device  = $695.15  (on   [lasts for years]

Roche CoaguCheck testing strips (48) to allow once per week testing for one year = $226.68

So, Eliquis costs $3780.60 per year.

Coumadin costs $48 (the tablets) + $695.15 (device) + $226.68 (years worth of testing strips) = $969.83 per year

So overall, Coumadin provides a savings of $2810.77 per year, factoring in the cost of blood testing.

Assuming for the time being that these drugs work equally well, will a drug that costs 3X more drive 3X higher non-adherence? Or does ease of use drive better adhererence? Certainly ease of use will be more important to some patients, price for others. These are the questions we need answer in value-based health care models. We need to know how price relates to efficacy, including the risk of non-adherence, and how price might intersect with other factors, such as side effects and ease of use.

Coumadin, for some patients, may be more difficult to use and not the right medication for a wide variety of reasons. Yet too often price is overlooked, and by the time the patient finds out the price, even if a drug is easier to use, the patient may not get the current prescription nor the next refill without a conversation ever happening.  As CMS has suggested, patients and physicians need to have the conversation about medication prices.

At RxREVU we enable those conversations on efficacy and cost of medications. We recognize that each patient is potentially a different conversation, and we’re striving to enable those conversations on the best information and evidence available.

So we need to model what the relationship is between non-adherence and price for a variety of conditions and drugs. We need to find the out-of-pocket cost-response curve of medications for different drugs and populations. The price-response curve (link) of economics similarl to the dose-response of pharmacology. We need to know when, where and for which patients price can be a risk to adherence. When the price is too high, we’ll easily be able to predict a dose, and response, of zero.

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9 replies »

  1. Great thread here.
    Remote patient monitoring:
    On being at home with the patient, and monitoring whether or not they take their meds, whether they engage with their home health/robotic ATM-nurse, whether they are using too many prn meds, check:

    also, on Eliquis simplifying matters— wait–monitoring may be needed:

    I tell my patients who are stable on warfarin, stay on warfarin.

  2. Non- adherence has many factors – motivation, patient understanding, patient training etc. One challenge has been that we don’t have insight into what a patient is doing at home. Until now. Our technology enables a smartphone to understand what it hears. Which means we can hear and understand when a Diabetic takes their insulin – or not. This deeper understanding of real patient behavior enables better adherence to medical regimens.

  3. “When the price is too high, we’ll easily be able to predict a dose, and response”

    Thanks to Leonard for sharing this article. it has always occurred to my mind how to address the problems of out-of-budget prescriptions to clients who really need some certain medication. This also links closely for those who live in third world countries where the affordability rates are relatively lower due to lack of health cover that can reimburse the prescriptions. but, really good to have this articles. I am looking forward to hearing more.

  4. I agree – an great example indeed.

    One consideration, though, that might impact the net conclusion, is WHO pays for each of the components given the complexities of our US health insurance system. Most often, the home monitoring device and test strips would end up being funded by the patient, while (if insured) the out-of-pocket for a branded drug may be a small share of the price listed above.

    Quite often the structure of our health insurance configuration does get in the way of clear fact patterns based on pure pharmacoeconomic principles. It will likely require the payors to take a more active role with patients in managing total cost of care – including differential costs based on refill persistence/adherence, or self monitoring equipment costs as in this case – to impact change.

  5. Systems economics and behavioral economics. is exactly what we need around health care. As we move from top-down to bottom-up health economy, we need to understand the behavioral economics of health better.

    There may even be an element of “experience-driven” health care tied to systems economics. When experiences are poor, much like poor software, people make very different decision in their use of the system.

    BTW, thanks to Cyndy Nayer (@cyndynayer) for helping with quotes and research on this.

    • My pleasure, Leonard. We should also factor in the costs social influences that come into play here: people may be less likely to questions the prescription of their doctor. So, we must add to the behavioral economics, and perhaps even to the health economics, the costs of fortifying the patient with the right questions and concerns for their clinician.

      • Agreed. Patients must be given the ability to manage their condition as much as possible. Sometimes that will be within the healthcare system, but usually, beyond it.

  6. An excellent primer in the “systems economics” of drug choices. I hope many professionals and students read it. What I like is that you state clearly what you know and set up the question about what you don’t know.

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