Brand-Name and Generic Prescription Drug Use After Adoption of a Full-Replacement, Consumer-Directed Health Plan With a Health Savings Account

The body of research on how consumer-directed health plans (CDHPs) affect the use and costs of health care services -- while still relatively small -- is growing. In recent work, the Employee Benefit Research Institute has examined these relationships using panel data from a large employer that implemented a full-replacement CDHP with a health savings account (HSA). Among other salient results, it was found that adoption of the HSA plan reduced both the number of prescriptions filled and overall pharmacy costs over a four-year follow-up period. A closer examination revealed that the reduction in prescription utilization also involved a decreased use of maintenance medications for chronic disease, and a worsening of adherence. This paper looks at the effects of the HSA plan on the absolute and relative use of brand-name and generic drugs. It was expected that patients were more likely to choose a generic over a brand-name drug under the terms of the newly imposed HSA plan. In the context of prescription-drug utilization, it is thought that the higher patient cost-sharing of CDHPs encourages enrollees to choose less expensive generics over brand names if they view those medications as equivalents or comparatively effective alternatives. In this analysis, evidence is mixed that this is the case. A full-replacement HSA plan was associated with a 4.7 percentage-point rise in the generic-drug dispensing rate (GDR) after one year, and settled 3.4 percentage points higher after four years. The GDR for maintenance medications experienced a similar effect, while for nonmaintenance conditions the GDR rose by 4.1 percentage points after one year, but was just 1.7 percentage points higher after four years. At the end of the four-year follow-up period, GDR was greater by 4.5 percentage points for hypertension, 15.4 percentage points for dyslipidemia, and 7.8 percentage points for asthma/COPD. No significant effects were detected for diabetes GDR, but the measure for depression was lower by 8.4 percentage points after 2010. GDR increases were due to individuals discontinuing use of brand-name drugs without substituting generic therapy. After one year under the full-replacement HSA plan, 0.43 fewer generic and 0.95 less brand-name prescriptions were filled, on average. The PDF for the above title, published in the March 2014 issue of EBRI Notes, also contains the fulltext of another March 2014 EBRI Notes article abstracted on SSRN: "How Would Defined Contribution Participants React to Lifetime Income Illustrations? Evidence from the 2014 Retirement Confidence Survey."