Impact of formulary management and step therapy for non-sedating antihistamines on prescription drug utilisation and costs

Summary

Non-sedating antihistamines (NSAs) make up a high-volume, high-cost drug category in most health plans. A pre-post retrospective cohort study design was used to assess the effects of different pharmacy benefit strategies on utilisation and costs of NSAs. The cohort with formulary change plus step therapy programme experienced close to a 35% decrease in NSA utilisation and per member per month (PMPM) total costs (p<0.0001). The cohorts with either a NSA step therapy programme or a formulary change experienced 26.56% (p<0.0001) and 9.85% (p=0.1955) reduction in NSA utilisation and a 24.59% (p<0.0001) and 7.69% (p=0.3042) decrease in PMPM total costs, respectively. The control cohort that maintained the preferred status of prescription NSAs with no step therapy programme had an increase both in NSA utilisation (1.25%; p=0.8285) and PMPM total costs (3.26%; p=0.4245). In comparison with the control cohort, the NSA formulary plus step therapy programme was estimated to have resulted in PMPM total cost savings of $0.56 (p<0.0001). The NSA formulary plus step therapy programme led to cost savings by controlling the utilisation of and expenditures for prescription NSAs.

Keywords: :

• non-sedating antihistamines
• step therapy
• formulary
• pharmacy benefit management

Introduction

Prescription drug expenditures continue to rise faster than any other expenditure in the medical service sector1. The rising prescription costs have left health plans looking for strategies to control their prescription drug spending. Managed care organisations (MCOs) are increasingly adopting strategies such as three-tier formularies and step therapy requirements to contain costs and to improve patient care. Three-tier pharmacy benefit design charges consumers the lowest co-payments for generic drugs, higher co-payments for formulary brand drugs and the highest co-payments for non-preferred brand name drugs2,3. Step therapy requires the utilisation of an efficacious first-line agent before alternative therapies are covered under the prescription benefit plan. It allows medications that meet established guidelines and/or have a generic alternative to be used as the first-line agent before second-line agents are authorised.

Allergic rhinitis (AR) is the sixth most common chronic disease in the US4. Approximately 40 million Americans experience significant symptoms of AR at some point each year4–6. Non-sedating antihistamines (NSAs) are highly used to control allergy symptoms due to conditions including seasonal allergies and urticaria7. One such medication, loratadine, which had the largest market share for prescription NSAs in 2002, was approved for over-the-counter (OTC) status by the US Food and Drug Administration (FDA) in November 20028. OTC loratadine is the same strength and dosage as loratadine, which was previously available only by prescription.

Because of the comparable efficacy of NSAs9, many health insurers, including MCOs, have changed their formularies after OTC loratadine became available. These plans are typically eliminating coverage of all NSAs or placing them all on the highest tier. A national pharmacy benefit manager (PBM) initiated an OTC loratadine step care programme to encourage the use of OTC NSAs as first-line treatment before the prescription NSAs fexofenadine, loratadine, desloratadine and cetirizine are used. This OTC loratadine step care programme will first require a trial of OTC loratadine. Claims for second-line NSA prescriptions will be rejected unless evidence exists in the patient's prescription profile or medical history to confirm that the first-line OTC loratadine has been tried without success. Patients who have a documented failure, hypersensitivity or adverse event to loratadine can receive approval for prescription NSAs or NSA combination medications, including generic medications, through a clinical prior authorisation programme.

Previous research has assessed the costs and benefits of loratadine prescription-to-OTC transitions from different perspectives, using empirical data and simulation modeling10–14. Using a simulation model to assess the cost effectiveness of the prescription-to-OTC switch of loratadine from the societal perspective in the US, Sullivan et al demonstrated that the availability of NSA OTC was associated with annual savings of $4 billion, or $100 per AR sufferer, and 135,061 time-discounted quality-adjusted life-years (QALYs)11. Sullivan and Nichol also conducted a cost-effectiveness analysis of different NSA benefit policies in response to the OTC availability of loratadine from a plan perspective. They found that providing limited coverage for OTC loratadine while retaining second-tier prescription benefits for NSAs was the optimal policy for a willingness to pay below $26,200 per QALY for all payers12. These two studies were based on simulation models under many assumptions, because actual estimates were not available in these studies. It is important to examine the actual effect of implementing different pharmacy benefit management strategies on prescription drug utilisation and costs using empirical data. Only one study in the literature examined the effect of the prescription-to-OTC switch of loratadine using empirical data, but this study only evaluated three pharmacy benefit strategies and did not calculate the cost savings10.

Very few studies have used empirical data to assess the effects of pharmacy benefit management strategies on utilisation and costs of NSAs, and to calculate the possible cost savings for health plans and members. Such information could help third-party payers manage NSA utilisation and costs within a managed care environment. Using prescription records from a pharmacy claims database maintained by a large national PBM, the objective of this study was to evaluate the impact of formulary management and step care clinical programmes on utilisation and costs of NSA prescriptions.

Methods

Data source and study design

A total of 24 months of de-identified prescription claims data (1st January 2004 to 31st December 2005) were obtained from a large pharmacy benefit management database. The pre and post periods were each 12 months long. A pre-post retrospective cohort study design was used to assess the impact of formulary and step therapy on NSAs. Patients were included if they were continuously eligible for prescription drug benefits during the 2-year study period.

Four study cohorts were recognised based on the different strategies that the PBM's clients implemented:

• • Step Therapy and Formulary Change Group: moved prescription NSAs to non-preferred status and implemented NSA step care programme;

• • Step Therapy Only Group: implemented NSA step care programme;

• • Formulary Change Only Group: moved prescription NSAs to non-preferred status;

• • Control Group: maintained the preferred status of prescription NSAs in the original co-payment plans with no step care.

Outcomes measures

Outcomes measured in this study were the number of NSA prescriptions dispensed per 1,000 eligible lives, the total PMPM costs (allowed charge before subtraction of member costs share) of the NSA prescription, the average PMPM cost of the NSA prescription to the plan sponsor and the average PMPM cost of the NSA prescription to the member. By using days of supply, prescriptions were normalised to a 30-day supply so any changes from 30-day retail to 90-day retail and mail prescriptions or vice versa were captured and data were comparable. The NSAs included in this study were fexofenadine, loratadine, desloratadine and cetirizine as well as their combination products with pseudoephedrine.

Analysis approach

The analysis included a comparison of the before and after changes in prescriptions, and costs for plan sponsors who instituted different NSA benefit programmes. PMPM cost savings (Y') were calculated using the formula:where Y_st0 represents the actual average PMPM costs from January 2004 to December 2004 (pre period) and Y_st1 represents the actual average post PMPM costs from January 2005 to December 2005 (post period) in the study group. R_ct is the ratio of PMPM pre and post costs in the control group. Student's t-test and χ2 test were performed to assess differences in continuous variables and categorical variables between the study groups and the control group.

Results

A total of 628,289 patients met the selection criteria and were included in the study. Table 1 shows the characteristics of the study population in each cohort. Overall, the mean ± standard deviation age was 35.54 ± 20.19 years and 48.41% were male. On average, patients filled 29.49 ± 2.86 NSA prescriptions per 1,000 eligible members per month. The average PMPM total NSA costs were $1.82 ± 0.18 in the baseline period.

Table 1. Baseline characteristics of the study population in each cohort.

Characteristic	All (N = 628,289)	Step Therapy and Formulary Change (n=3,144)	Step Therapy Only (n = 7,524)	Formulary Change Only (n=12,363)	Control (n=605,258)
Mean age (±sd) (years)	35.54 (±20.19)	27.79 (±16.73)	34.47 (±20.26)	32.54 (±18.17)	35.65 (±20.23)
Gender (% male)	48.41	54.99	50.74	40.82	48.51
Mean No. of NSA medications PMPM (±sd)	29.49 (±2.86)	24.11 (±2.97)	30.12 (±3.51)	19.18 (±3.44)	29.72 (±2.87)
Total NSA costs PMPM (±sd)	$1.82 (±0.18)	$1.48 (±0.18)	$1.83 (±0.21)	$1.17 (±0.20)	$1.84 (±0.18)

sd, standard deviation; NSA, non-sedating antihistamine; PMPM, per member per month.

Table 2 and Figure 1 show the average number of NSA prescriptions per 1,000 eligible lives per month. The average number of NSA prescriptions for the Step Therapy and Formulary Change Group decreased from 24.11 in the pre period to 15.74 in the post period, a change of 34.72% (p<0.0001). The average number of NSA prescriptions for the Step Therapy Only Group decreased from 30.12 to 22.12 (26.56%; p<0.0001). The average number of NSA prescriptions for the Formulary Change Only Group also decreased from 19.18 to 17.29, a change of 9.85% (p=0.1955). However, the average number of NSA prescriptions for the Control Group increased slightly from 29.72 to 30.09 (1.25%; p=0.8285).

Figure 1. Trends in number of NSA prescriptions per 1,000 eligible members in each cohort.

Table 2. Average number of NSAs and PMPM total, plan and member costs from the pre to the post period in each cohort.

Cohort		Pre	Post	Change (%)	p-value
Step Therapy and Formulary Change	No. of NSA prescriptions per 1,000 members per month	24.11	15.74	–34.73	<0.0001
	PMPM total costs	$1.48	$0.97	–34.46	<0.0001
	PMPM plan costs	$0.76	$0.53	–30.26	<0.0001
	PMPM member costs	$0.72	$0.44	–38.89	<0.0001
Step Therapy Only	No. of NSA prescriptions per 1,000 members per month	30.12	22.12	–26.56	<0.0001
	PMPM total costs	$1.83	$1.38	–24.59	<0.0001
	PMPM plan costs	$1.28	$0.97	–24.22	<0.0001
	PMPM member costs	$0.55	$0.40	–27.27	<0.0001
Formulary Change Only	No. of NSA prescriptions per 1,000 members per month	19.18	17.29	–9.85	0.1955
	PMPM total costs	$1.17	$1.08	–7.69	0.3042
	PMPM plan costs	$0.46	$0.41	–10.87	0.2042
	PMPM member costs	$0.71	$0.66	–7.04	0.3841
Control	No. of NSA prescriptions per 1,000 members per month	29.72	30.09	1.25	0.8285
	PMPM total costs	$1.84	$1.90	3.26	0.4245
	PMPM plan costs	$1.30	$1.34	3.08	0.4025
	PMPM member costs	$0.53	$0.55	3.77	0.5748

PMPM total costs in the Step Therapy and Formulary Change Group decreased from $1.48 to $0.97 (34.46%; p<0.0001). In the Step Therapy Only Group, PMPM total costs decreased from $1.83 to $1.38 (24.59%; p<0.0001). PMPM total costs in the Formulary Change Only Group decreased from $1.17 to $1.08 (7.69%; p=0.3042). In contrast, the Control Group experienced an increase in PMPM total costs from $1.84 to $1.90 (3.26%; p=0.4245) (Table 2; Figure 2).

Figure 2. Trends in PMPM total costs for non-sedating antihistamines in each cohort.

The average PMPM plan costs decreased from $0.76 to $0.53 (30.26%; p<0.0001) in the Step Therapy and Formulary Change Group, from $1.28 to $0.97 (24.22%; p<0.0001) in the Step Therapy Only Group and from $0.46 to $0.41 (10.87%; p=0.2042) in the Formulary Change Only Group. In the Control Group, average PMPM plan costs increased from $1.30 to $1.34 (3.08%; p=0.4025) (Table 2; Figure 3).

Figure 3. Trends in PMPM plan cost for non-sedating antihistamines in each cohort.

Average PMPM member costs in the Step Therapy and Formulary Change Group decreased from $0.72 to $0.44 (38.89%; p<0.0001). PMPM member costs in the Step Therapy Only Group decreased from $0.55 to $0.40 (27.27%; p<0.0001). PMPM member costs in the Formulary Change Only Group decreased from $0.71 to $0.66 (7.04%; p=0.3841). In the Control Group, PMPM member costs increased from $0.53 to $0.55 (3.77%; p=0.5748) (Table 2; Figure 4).

Figure 4. Trends in PMPM member cost for non-sedating antihistamines in each cohort.

PMPM costs for the Control Group increased slightly from $1.84 in the pre period to $1.90 in the post period. The ratio of PMPM pre and post costs (R_ct) for the Control Group was 1.033. Using the Control Group as a point of reference, the author estimated that this national PBM's formulary and step therapy programmes resulted in PMPM total cost savings of: $0.56 for those who moved the prescription NSAs to non-preferred status and implemented a step therapy programme; $0.51 for those who implemented a step therapy programme only; and $0.13 for those who moved prescription NSAs to non-preferred status only (Table 2).

Discussion

The literature indicates that newer NSAs are quite comparable, with none offering a distinct advantage over the others9,15,16. The four second-generation NSAs do not differ in any significant way in either effectiveness, safety or side-effect profiles. All bring some symptom relief in 1–3 hours9,17. All four NSAs cause less sedation and drowsiness than conventional antihistamines and are, therefore, interchangeable.

However, the costs of NSAs differ substantially, ranging from as low as $3 per month to more than $150 per month17. The availability of OTC loratadine, which can be less expensive than either brand or generic prescription NSAs when used intermittently for allergies, often presents an opportunity for savings. A variety of MCOs are making changes in their pharmacy benefit management strategies that provide incentives for choosing OTC allergy medications when appropriate18.

Following FDA approval of OTC loratadine, it was anticipated that the overall demand for prescription NSAs would decrease and shift to OTC loratadine because of improved access, ease of purchase and the lower opportunity cost of OTC medications. Cost-shifting programmes for prescription-to-OTC medications typically result in higher co-payments for prescription substitutes, prior authorisation, step therapy or other restrictions19. Health plans can benefit from reduced prescription utilisation and lower costs. Plan members can often benefit from the lower price of OTC loratadine compared with mean co-payments for prescription NSAs in managed care plans10.

Step therapy programmes require members to use an interchangeable lower-cost therapy before a higher-cost option is approved. Research is necessary to determine the magnitude and durability of the drug cost savings of step therapy programmes. The NSA step therapy programme is only one of many step therapy programmes in use today. Other common programmes include those for proton pump inhibitors, non-steroidal anti-inflammatory drugs, selective serotonin reuptake inhibitors and renin–angiotensin system blockers20–22. Several studies assessing the effects of these step therapy programmes have found significant savings22–24.

This study reports the first evidence of the impact that formulary changes and step therapy programmes can have on prescription drug costs for NSAs. The authors showed that utilisation management strategies such as formulary change and step therapy for NSAs resulted in a significant decrease in the utilisation and costs of prescription NSAs. The cohorts with either a formulary change, a step therapy programme or both had lower NSA utilisation and costs than the comparison group without such programmes in place. Step therapy combined with formulary changes resulted in PMPM total cost savings of $0.56. For a managed care population of 1 million members, the resulting annual savings amount to more than $6 million (in 2004–2005 dollars, the period when this study was conducted).

The policies that eliminate coverage for OTC loratadine and restrict access to other NSAs could inadvertently result in increased medical expenditures owing to the inappropriate use of substitute drugs or discontinuation of all drug therapy. Possible risks of prescription-to-OTC switch are inaccurate self-diagnosis, delayed or suboptimal treatment of a serious condition, inappropriate medication use and a redistribution of healthcare costs13. It has been suggested that the potential exists for exacerbation of co-morbid illness if patients are not capable of appropriately self-treating their AR with OTC loratadine25. Thus, the impact of the prescription-to-OTC conversion of loratadine could have wide-ranging implications and consequences for members of a commercially insured population. Health plans may need to examine the wide-ranging consequences of their medication coverage decisions.

Examining the impact of these policies on the larger issue of medical resource utilisation and costs will provide a truer assessment of how these pharmacy benefit policies influence overall healthcare costs. No published study is available that examined the medical resource utilisation after loratadine prescription-to-OTC switch. A class of drugs that has been studied with regard to medical resource utilisation after its OTC conversion is the histamine2-receptor antagonists (H2RAs). One study showed similar healthcare costs associated with the initial treatment of dyspepsia regardless of the OTC availability of H2RA scenarios26. Another study examined the impact of the OTC switch of H2RAs on prescribing patterns and utilisation of physician visits in a population of chronic users27. The findings showed a significant reduction in H2RA prescriptions without an associated increase in physician visits, but a relatively small increase in prescriptions for other gastrointestinal agents.

In addition, physician preferences may play an important role in the success of a step therapy programme owing to the fact that individuals do not necessarily respond similarly to specific agents in the second-generation antihistamine class28. Physicians may have their preferences on the second-generation histamines for their patients. In this step therapy programme, the prescription NSAs would be available to patients when physicians had documented that the OTC loratadine did not work for them or that they had experienced an adverse event from the medication. Thus, pharmacy benefit administers need timely commutations with physicians and make sure patients receive proper treatment.

Study limitations

This study did not measure the administrative costs incurred by the PBM while administering the interventions and, therefore, it may overestimate the cost saving from the interventions. Because the utilisation data for OTC loratadine were not available, this analysis did not include an estimate of the total NSA costs to plan members, some may have paid out-of-pocket for OTC loratadine. This study also did not measure the utilisation of intranasal corticosteroids (INS) and montelukast. However, as INS and montelukast do not have comparable efficacy as NSAs, the PBM had a step therapy in place for montelukast sodium, and as most commonly used prescription drugs in INS (e.g. fluticasone) are more expensive than NSAs, it is unlikely that there are significant switches from NSAs to INS or montelukast. An additional important limitation of this study was the absence of an assessment of medical costs and clinical outcomes. It is unclear whether individuals who decreased their utilisation of prescription NSAs self-treated appropriately with OTC loratadine. The effects of prescription-to-OTC switch of loratadine and concomitant pharmacy benefit changes on treatment or health outcomes are unclear from the results of this study, which was based on pharmacy claims only. It is also unclear whether the reduction in utilisation of prescription NSAs found in this study was associated with an increase in medical utilisation. Further research is needed to understand better the potential clinical outcomes and total medical costs associated with step therapy, including pharmacy provider and administrative costs.

Conclusion

This study shows that cohorts with a formulary change, step therapy programme or both had lower utilisation of NSAs than a control group. Formulary and step therapy programmes are effective in controlling the utilisation of and expenditures for prescription NSAs, which could potentially lead to cost savings for health plans and plan members. Third-party payers should evaluate their formularies and strategies for achieving cost savings when there is no significant clinical difference among medications.

Notes