The Recession Is Causing More People To Abandon Prescriptions

In Detroit, where automakers have been struggling to sell cars, more people are failing to pick up prescriptions at their pharmacies. The same is true in Florida, where home foreclosures outpaced most other states, and in North Carolina, which is suffering an 11.8 percent unemployment rate that remains higher than the national average.

Across the country, similar patterns are seen. A recent survey finds that patients with commercial health coverage are increasingly abandoning their prescriptions.

Last year, the rate at which new prescriptions were submitted to pharmacies but not picked up was 6.3 percent, a 24 percent increase over 2008, when the rate was 5.1 percent, according to Wolters Kluwer Pharma Solutions, a market reseach firm that conducted the survey. The abandonment rate for refills also rose to 2.6 percent from 2.4 percent.

Significantly, the abandonment rate for new prescriptions for brand-name medications reached 8.6 percent last year, up 23 percent from the prior year, and 68 percent higher than in 2006. The rate climbed throughout the year from 8.2 percent in the first quarter of 2009 to 9.3 percent at the end of the year.

Put another way, 85.6 percent of prescriptions were actually dispensed to patients last year, compared with 86.3 percent in 2008.

At the same time, co-payments rose only about $5 a year from 2006 to 2009 - at the end of 2009, the average co-pay was $31.65. By comparison, however, the average co-pay for generics was virtually unchanged at $8.47 during the same period. Meanwhile, 66 percent of prescriptions filled last year - or 2.6 billion - were for lower-cost generics, compared with 60 percent in 2008 and 50 percent in 2005, underscoring ongoing consumer price sensitivity to brand-name medications.

In general, prescription abandonment has often been traced to patient fears over side effects or, in the case of refills, patients who decide a medication failed to alleviate a problem. One factor also contributing to the sharp increase of late is the growing number of low-cost generic programs heavily promoted by such retailers as Wal-Mart.

The popularity of these programs also reflects a more insidious reason that some patients are eschewing prescriptions altogether - the ongoing recession.

The economy, in fact, is clearly the culprit, according to Mark Spiers, CEO at Wolters Kluwer Pharma Solutions. "This trend shows that, in difficult economic times, what was once an acceptable co-pay may not be acceptable anymore," he says. "The patient has become a more important stakeholder in that final decision at the cash register in the pharmacy."

Chronic Disease Rates Are Particularly Concerning

For now, the long-term implications are unclear, but the trend is worrisome, especially given that the near-term economic outlook appears unsettled. "I do think the rate is going to increase," says Ed Pezalla, national medical director and chief clinical officer at Aetna Pharmacy Management. "And without some kind of intervention, we will see it climb and, while it will eventually plateau, it will take some time for that to happen. Unfortunately, unemployment remains a huge issue."

Consequently, an abandonment rate that remains high for the foreseeable future may eventually pressure third-party payers to alter the design of their benefit plans in order to reduce co-pays to a level that is perceived as more affordable. It's not just that the rate stubbornly continues to climb -pharma companies, in their efforts to be more efficient, are zeroing in on issues that didn't previously bother them when they were in an easy-growth era.

At the same time, insurers are looking for ways to demonstrate to employer-clients that they have innovative programs and are sensitive to members' pocketbooks and long-term health concerns.

This is especially true if more prescriptions are abandoned for drugs used to treat chronic illnesses. The reasoning, of course, is that patients who fail to take medications as prescribed run the risk of developing worsening health, which will cost insurers more money. By contrast, patients who choose to combat acute illnesses such as the flu without filling a prescription may likely heal on their own and not cost third-party payers a dime.

"From the standpoint of a pharmacy benefit manager or any third-party payer, it's very important to consider which types of drugs are being abandoned," said Tom Gallucci, an analyst at Lazard Capital Markets. "If it's something related to the flu or other transient illnesses, there's less motivation for them to do much about it, but if we're talking chronic illnesses, that may be something to be more concerned about."

The numbers suggest there is, indeed, reason for concern. The abandonment rates for medications used to treat several chronic ailments, such as diabetes, anti-infectives, thyroid conditions and high cholesterol, climbed last year compared with 2008.

As a group, the rate at which prescriptions were abandoned for drugs used to treat ulcers was the highest - reaching nearly 8 percent. And among leading brands, the abandonment rate for specific medications used to treat allergies topped the chart. Among them was Proair HFA (7.3 percent), Advair Diskus (6 percent) and Singulair (4.8 percent).

The implication is that brand-name drug makers are at a disadvantage, especially given that insurers and pharmacy benefit managers will continue to aggressively push the use of lower-cost generics for treating chronic conditions. But the assumption that generics will remain unaffected by the sour economy appears not to be true.

As it turns out, abandonment rates are rising for some generic therapeutic categories as well.

For example, the abandonment rate for simvastatin rose 22 percent from 2006 to 2009. And the rate for glyburide-metformin tablets jumped 70 percent during the same period. For allergy medicines, such as Nasonex and Veramyst , the increase was 42 percent over the three-year period. One possible explanation for such increases, according to Spiers, would be affordable over-the-counter alternatives.

Brand-Name Medications Bear The Brunt

Nonetheless, brand-name medications are expected to bear the brunt. "The abandonment rate issue is emerging. We're seeing the same kind of problem, but especially with branded drugs and less so, overall, on the generic side," said Peter Juhn, president of Medco Health Solutions' Therapeutic Resource Centers. "But in general, I'm just not sure that patients understand the risks that they run."

Pharma and insurance companies could try to mitigate the problem with tactics such as offering more coupons directly to consumers or lowering co-pays. Gallucci calls this a "drastic action," but believes brand-name drug makers would be warranted to do so if economic conditions fail to improve fast enough. "Given higher abandonment rates among brands," he wrote in a recent report, "we wonder if manufacturers might benefit from increased rebating or couponing in an effort to complete the sale."

But depending upon the client, lowering co-pays can mean opening up agreements for benefit design. Medco, for instance, has started discussions with some drug makers, but Juhn acknowledges that the process is complicated.

Of course, lowering co-pays is not a new idea. A growing number of employers have been lowering co-pays for medicines used to treat chronic diseases and dropping Tier One co-pays for well-proven generic medicines. "The economics are simple and make it easy to predict - high co-pays are associated with abandonment," says Troyen Brennan, executive VP and chief medical officer at CVS/Caremark, which is developing algorithims to identify these rates.

Among new claims in which the co-pay is less than $10, the abandonment rate is 5 percent. But when a co-pay is $31 to $40, the abandonment rate climbs to 10 percent. When a co-pay exceeds $100, the abandonment rate is 25 percent. For refills with co-pays costing more than $100, the abandonment rate is about 7 percent.

There are also geographic differences. The average co-pay in Chicago may be $40, while the average is $30 in Dallas, but the Windy City has a lower abandonment rate due to the vagaries of regional economies. That's because some plans may have traditionally charged certain co-pays in areas where income was higher.

"So the market gets conditioned to pay that amount. There are definitely socio-demographic factors at work," Brennan says. "But we do see co-pays rising for some chronic meds. So at the end of the day, this is an area where the interests of the pharmaceutical company and the third-party payer could be aligned if the payer really wants a specific outcome for a patient."

- Ed Silverman ( ¹ [email protected] )