The Effect of Incentive-based Formularies on Prescription-Drug Utilization and Spending

BACKGROUND: Many employers and health plans have adopted incentive-based formularies in an attempt to control prescription-drug costs. METHODS: We used claims data to compare the utilization of and spending on drugs in two employer-sponsored health plans that implemented changes in formulary administration with those in comparison groups of enrollees covered by the same insurers. One plan simultaneously switched from a one-tier to a three-tier formulary and increased all enrollee copayments for medications. The second switched from a two-tier to a three-tier formulary, changing only the copayments for tier-3 drugs. We examined the utilization of angiotensin-converting-enzyme (ACE) inhibitors, proton-pump inhibitors, and 3-hydroxy-3-methylglutaryl coenzyme A reductase inhibitors (statins). RESULTS: Enrollees covered by the employer that implemented more dramatic changes experienced slower growth than the comparison group in the probability of the use of a drug and a major shift in spending from the plan to the enrollee. Among the enrollees who were initially taking tier-3 statins, more enrollees in the intervention group than in the comparison group switched to tier-1 or tier-2 medications (49 percent vs. 17 percent, P