Effect of copayments on drug use in the presence of annual payment limits.

OBJECTIVE

To test the hypothesis that deductibles (copayment combined with annual limits on out-of-pocket payments) may reduce the effect of copayments on drug use for patients who expect to reach the annual limit, using as a natural experiment the introduction of copayments with an annual maximum to the seniors' drug plan in Nova Scotia.

STUDY DESIGN

An interrupted time-series design estimated effects of the introduction of and subsequent increase in drug copayments on the use (vs nonuse) of medications and on the mean daily quantity of use among users by patients' likelihood of exceeding the annual maximum copayment. Effects on the use of less essential medications (histamine(2)-receptor antagonists) and more essential medications (oral antihyperglycemic agents) were examined. methods: Data were drug claims for beneficiaries 65 years and older from April 1, 1989, through September 30, 1992. Regression models (applied to person-month data) estimated effects of the policies on the use and quantity of medication use.

RESULTS

Copayments ($3 per prescription and 20% of the prescription cost) were associated with reductions in the quantity of medication use, ranging from 5% to 15%, but only when the annual maximum copayment was unlikely to be reached. Introducing a 20% copayment increased the percentage who reached the annual maximum, decreasing the proportion of patients who reduced their drug use.

CONCLUSION

Although copayment policies are associated with reductions in the use of essential and less essential medications, annual limits on total copayments paid will limit copayment effects to patients who are unlikely to reach the annual maximum copayment.