New evidence about positive three-tier co-pay performance presented at Express Scripts 2000 Outcomes Conference

June 27, 2000

Researcher first to study and report on prescription drug benefit tool

ST. LOUIS, June 28, 2000 -- Researcher Brenda Motheral, PhD, told participants of the fourth annual Express Scripts (NASD: ESRX) Outcomes Conference, held in St. Louis, that recent data indicates three-tier co-pay prescription programs have enjoyed a great deal of success since their inception two years ago.

Motheral, the author of numerous articles in the area of outcomes research, claims database methodology and managed care, conducted the first study within the healthcare industry that documents how implementation of a three-tier prescription co-pay plan affects pharmaceutical and medical utilization and expenditures, continuation with chronic medications and the percent of enrollees affected.

She told conference participants that the relatively new co-pay structure can significantly lower payers' trend in pharmaceutical expenditures, and members are not showing evidence of medication noncompliance, as was expected by some industry experts when the three-tier medication co-pay structure was initiated three years ago.

Motheral and co-investigator, Kathi Fairman, studied two comparable preferred provider organization (PPO) groups located in the same state. The plans had nearly identical demographic profiles in terms of age, gender and incidence of chronic illness.

Group one instituted a three-tier co-pay plan in 1998, changing from a two-tier plan with a $7/$12 co-pay structure to a co-pay structure of $8/$15/$25, depending on the tier level. For the year preceding implementation, drugs that were placed on tier three (brand name/non-formulary) constituted 14 percent of prescription claims.

Group two, the control group, maintained its $7/$12 two-tier structure for the duration of the study.

The study substantiated the claim that a three-tier structure can significantly lower plan sponsors' trend in pharmaceutical expenditures. "Costs were lowered primarily through cost-shifting, with members assuming a greater percentage of the cost of the drugs they consume," said Motheral. Secondarily, plan sponsors realized savings through reduced pharmaceutical utilization and use of lower cost therapeutic alternatives.

Members showed no ill effect from the switch from two-tier to three-tier co-pay structure either. Much skepticism about the three-tier co-pay structure has resulted from concern that it would encourage medication noncompliance and lead to increased medical costs. To the contrary, according to Motheral, no significant differences in medical costs were seen between the two-tier and three-tier plans.

Across commonly used therapy classes, medication continuation among adults was similar in the one-year follow-up period for the two plans studied by Motheral and Fairman. Only one class of drugs, antihypertensives, showed a statistically significant but small difference in continuation rates.

Comparison of mean emergency room visits for the six months before and after implementation showed no difference between the plans either. Inpatient hospitalizations over the same period remained unchanged.

"We wanted to determine whether moving to a three-tier co-pay structure would trigger unintended consequences," said Motheral. "The data show that it did not, at least in the short run."

Motheral says how much a plan sponsor can expect to save with a three-tier co-pay structure varies. "The magnitude of savings will vary, depending on co-pay amounts at the time of the change, co-pay amounts assigned to each of the three tiers, market share of preferred drugs, and the approach to selection of tier-three drugs," she said. This study was supported in part by The Agency for Healthcare Research and Quality.

Synopses of other presentations from the Express Scripts 2000 Outcomes Conference

(Archived audio web-casts of select presentations will be available at shortly after the conclusion of the Outcomes Conference.)

The 1999 Drug Trend Report, Fred Teitelbaum, PhD, Vice President, Outcomes Research and Cost Management, Express Scripts

In this summary of Express Scripts' 1999 Drug Trend Report, participants learned about the newest findings related to drug utilization and costs ñ all derived from objective analyses of pharmacy claims data. A copy of the 1999 Drug Trend Report was provided to participants.

Future Developments In Drug Discovery, William Peck, MD, Executive Vice Chancellor For Medical Affairs, Washington University School Of Medicine

Express Scripts Outcomes Conference participants received an insightful and unique look at the future of pharmacy from one of the nation's most knowledgeable spokespersons on the Human Genome Project. Dr. Peck, who supports and oversees Washington University's human genome initiatives, discussed how drug discovery works and explored the most promising areas of drug development expected to emerge from genomic research over the next five years, including key therapy classes, technological advances and new delivery systems.

When Consumers Rule: Defined-Contribution Benefits And The Internet In Healthcare, J. Philip Lathrop, MBA, National Advisor On Managed Care, Booz-Allen & Hamilton

Participants learned about how health and pharmacy benefits are likely to change over the next decade. One of the nation's leading authorities on managed care focused on the ascending role of the consumer as he forecasted a new retail model for healthcare benefits--a shift away from the wholesale paradigm of today's pharmacy benefit toward defined-contribution plans that use e-commerce for sales, distribution and servicing. Participants also learned when and why this shift is likely to occur, and who will be the winners and losers.

Prescription Utilization Patterns In Senior Populations, Emily R. Cox, PhD, Outcomes Research Manager, Express Scripts

This timely, in-depth evaluation of prescription drug use among individuals 65 years of age and older brings new perspective to the national debate over providing a prescription benefit through Medicare. Highlights of the presentation included a comparison of utilization among enrollees of commercial plans versus Medicare + Choice plans with capped prescription benefits.

National Healthcare Policy Initiatives, Norman J. Ornstein, PhD, Resident Scholar, American Enterprise Institute for Public Policy Research

This nationally recognized analyst of politics and public policy provided participants with a clear-sighted look at major healthcare policy initiatives being advanced by the administration, Congress and the presidential candidates. Ornstein covered numerous initiatives, including national healthcare expansion, patients' bill of rights legislation and a Medicare prescription benefit. Ornstein also explained which policy proposals, in what form, he expected most likely to be enacted into law.

Legal And Privacy Issues, Jennifer G. Low, JD, Associate General Counsel, Express Scripts

Attorney Low examined some of today's most pressing legal and public policy issues, from state and federal anti-managed pharmacy initiatives to confidentiality legislation that may challenge the ability of PBMs and plans to offer quality, cost-effective benefits.

PBM Issues--The Interactive Poll

Express Scripts 2000 Outcomes Conference participants were invited to engage in responding to some of today's most pressing questions, such as "Does consumer-friendly mean no restrictions?" and "Can I play gatekeeper for information on the Internet?" Participants provided their thoughts on these and other pressing questions during the Interactive Poll.

PBM Issues--The Interactive Panel, Moderator Mary Jane England, M.D., President, Washington Business Group on Health

A prestigious panel of plan sponsors engaged in a lively and thoughtful discussion about the results of the Outcomes Conference on-site poll and discussed other relevant issues brought forth by participants. The no-holds-barred session generated great debate, innovative solutions and more questions to consider as the healthcare and pharmacy industries move forward.

The Future Of The Pharmacy Benefit, Barrett Toan, MPA, President And CEO, Express Scripts
Barrett Toan, president and CEO of the nation's largest independent PBM, provided participants with a unique look at how so many variables within the pharmacy industry can co-exist: member choice, procedural fairness, direct-to-consumer advertising, physician connectivity, new drug discoveries, lifestyle vs. life-sustaining drug medications, a Web-enabled consumer, cost-containment and quality of care. As a conclusion to the Express Scripts 2000 Outcomes Conference, Toan synthesized the dialogue of the event and suggested a practical compass for navigating the future of the pharmacy benefit landscape.
Express Scripts, Inc. is the largest independent full-service pharmacy benefit management (PBM) company in North America. Through facilities in seven states and Canada, the company serves thousands of clients including managed care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans.

Express Scripts provides fully-integrated PBM services, including network claims processing, mail-order pharmacy services, benefit design consultation, drug utilization review, formulary management, disease management, medical and drug data analysis services, medical information management services (which include development of data warehouses to combine medical claims and prescription drug claims, disease management support services and outcome assessments through the company's Health Management Services division and Practice Patterns Science, Inc. subsidiary), and informed decision counseling services through its Express Health Line SM division. The company also provides non-PBM services, including infusion therapy services through its Express Scripts Infusion Services subsidiary and distribution services through its Specialty Distribution subsidiary. Express Scripts is headquartered in St. Louis, Missouri. More information is available at

Kupper Parker Communications

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