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New study shows lowering co-payments can lead to lower total healthcare costs, improved overall health

Study published in Journal of Occupational and Environmental Medicine investigates relationship of co-payments, medication adherence, and health resource utilization

Philadelphia, PA (May 12, 2008) — High prescription drug co-payments are associated with lower medication adherence and higher total healthcare costs, according to a new study published this month in the Journal of Occupational and Environmental Medicine.  The study, funded by GlaxoSmithKline (NYSE: GSK), investigated the effects of varied co-payment levels on oral diabetes medication adherence, health resource utilization, and total health costs for PPG Industries employees, retirees, and dependents.

In comparing medication adherence and healthcare costs for patients with diabetes, PPG Industries, a global manufacturer and provider of coatings, glass and chemical products, noted that those with lower co-payments had better adherence to oral diabetes medicines, and averaged $3116 less per year in total health care costs than those in the highest co-payment group.

Poor medication adherence can be attributed to several factors.[1,2]  The effects of high prescription drug co-payments have been studied extensively since they have often been used by employers and insurers in an attempt to contain spiraling drug costs for chronic diseases, such as diabetes, and to prevent individuals from seeking unnecessary medical care.[3]  Increasing co-payments has been shown to decrease use of medications for chronic conditions.[4-6] Until recently, few studies have investigated the relationship between co-payment level, adherence, and use of subsequent health resources.

The Effects of Health Plan Co-payments on Adherence to Oral Diabetes Medication and Health Resources Utilization was a 2-year retrospective study. In it, PPG Industries analyzed the eligibility, medical, and pharmacy claims data from 2052 employees, retirees, and dependents with type 2 diabetes to determine the impact of different co-payment levels.    

Using data from 2003-2005, individuals were grouped according to their average monthly prescription co-payments: low ($0–9), medium ($10–19), or high ($20+).  Within these groups, individuals were then further divided by age. This stratification [under 65 years (n=908) and those 65 years or older (n=1144)] was necessary because for those individuals over 65, healthcare coverage is provided in part by Medicare, therefore complete cost data were not available.

The study was co-authored by Alberto M. Colombi, MD, (PPG Industries); Kristina Yu-Isenberg, PhD and Julie Priest, MSPH (GSK).

Key findings

Key findings of the study included:

  • High co-payments were associated with lower adherence to oral diabetes medications for all patients regardless of age.   
  • High co-payments were associated with higher total healthcare costs for patients less than 65.
    • For those under 65, total healthcare costs for the low co-payment group were 22% lower than the highest co-payment group, amounting to $3116 per patient per year.
  • For those aged 65 or older, the risk for hospitalizations was 36% lower among those in the lowest co-payment group.


The current study complements the results of earlier studies from GSK’s Health Management Innovations team which indicate that increasing prescription co-payments results in decreased medication adherence. These studies, read in the context of the body of literature on medication adherence, suggest that value-based benefit design can lead to better adherence—and better outcomes for both patients and employers.

“We have seen in earlier studies how increasing co-payments negatively affects patient medication adherence.  With this study, we’ve shown that high co-payment levels and low adherence increase the use of other health resources, leading to higher overall health costs,” said Michael C. Sokol, MD, MS, medical director for GSK’s Health Management Innovations team.  “Our goal must be to develop health benefit strategies that improve the health of patients—which can lead to lower total healthcare costs.”                                   

Investing in health instead of paying for sickness

Today’s greatest healthcare threats are chronic conditions which require ongoing, patient-centered management.  In fact, $3 of every $4 spent on healthcare in the US[7] goes to treating the 45% of Americans with at least one chronic disease.[8]   As well, according to the Milken Institute, the seven most common chronic diseases cost the US economy $1 trillion each year—including both direct and indirect costs.  That figure is expected to reach $6 trillion each year by the middle of the century if unchecked.[9]

While employers have often implemented strategies of shifting costs onto the patient, this is only a short-term economic fix. To lower overall healthcare costs and improve the health of patients, the focus must be on the real problem—chronic diseases. 

“Clearly, adherence is a critical component of chronic disease management, where patients have to play an active role in their own treatment,” said Alberto Colombi, MD, Corporate Medical Director, PPG Industries. “One important way to enable active involvement is by providing education and facilitating access to care.”

“Additionally, the healthcare delivery system should focus on prevention to keep people healthier, provide patients the right treatments to maintain their health, and design benefit plans that invest in health instead of paying for sickness,” Dr. Colombi said. 

GSK’s Health Management Innovations team is also analyzing the results of several other studies investigating potential factors affecting patient compliance, including assessing the impact of:

  • Overall medication adherence on health outcomes
  • Health management initiatives on adherence and health outcomes
  • Co-payment on diabetes medication adherence and HbA1c levels
  • Income and out-of-pocket cost on adherence and outcomes


Formal results of these studies will be announced as they are published.

About GlaxoSmithKline

GlaxoSmithKline, one of the world's leading research-based pharmaceutical and health care companies, is committed to improving the quality of human life by enabling people to do more, feel better, and live longer.

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1. Haynes RB, Yao X, Degani A et al. Interventions to enhance medication adherence. Cochrane Database Syst Rev. 2005:CD000011.

2. McDonald HP, Garg AX, Haynes RB. Interventions to enhance patient adherence to medication prescriptions: scientific review. JAMA. 2002;288:2868-2879.

3. Kaiser Family Foundation and Health Research and Educational Trust. Annual Surveys of Employer-Sponsored Health Benefits, 2000-2005.

4. Gibson TB, Ozminkowski RJ, Goetzel RZ. The effects of prescription drug cost sharing: a review of the evidence. Am J Manag Care. 2005;11:730-740.

5. Lexchin J, Grootendorst P. Effects of prescription drug user fees on drug and health services use and on health status in vulnerable populations: a systematic review of the evidence. Int J Health Serv. 2004;34:101-122.

6. Goldman DP, Joyce GF, Escarce JJ et al. Pharmacy benefits and the use of drugs by the chronically ill. JAMA. 2004;291:2344-2350.

7. CDC, “Chronic Disease Overview: Costs of Chronic Disease,” available at http://www.cdc.gov/nccdphp/overview.htm, accessed October 20, 2006.

8. American College of Physicians. “Costs and Quality Associated With Treating Medicare Patients With Multiple Chronic Diseases.” Available at http://www.acponline.org/hpp/costs_quality.pdf. Accessed September 18, 2007.

9. Devol R and Bedroussian A. An Unhealthy America: The Economic Burden of Chronic Disease. Milken Institute. October 2007.

 

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