Increasing Time Costs and Copayments for Prescription Drugs: An Analysis of Policy Changes in a Complex Environment

Abstract

To estimate the effect of two separate policy changes in the North Carolina Medicaid program: (1) reduced prescription lengths from 100 to 34 days' supply, and (2) increased copayments for brand name medications. Medicaid claims data were obtained from the Centers for Medicare and Medicaid Services for January 1, 2000-December 31, 2002. We used a pre-post controlled partial difference-in-difference-in-differences design to examine the effect of the policy change on adults in North Carolina; adult Medicaid recipients from Georgia served as controls. Outcomes examined include medication adherence and Medicaid expenditures. Data were aggregated to the person-quarter level. Individuals in HMOs, nursing homes, pregnant, or deceased in the quarter were excluded. Both policies decreased medication adherence. The days' supply policy had a much larger effect on adherence than did the copayment increase. Total Medicaid spending declined from the days' supply policy, but the copayment policy resulted in a net increase in Medicaid expenditures. Although Medicaid costs decreased with the change in days supply policy, these savings were due to reduced adherence to these chronic medications. Additional research should examine the effect of these policy changes from the perspective of Medicaid enrollees.