VHA Sees Better Medication Adherence Despite High Drug Costs

January 08, 2020 - The drug pricing and coverage plan at Veterans Health Administration (VHA) is poised to improve medication adherence, with the payer boasting a 5.9 percentage point lower rate of cost-related medication nonadherence than non-VHA payers do, a study recently found.

“Although people with VHA coverage were older and in worse health and had lower incomes than those with other coverage, VHA patients had lower rates of cost-related medication nonadherence: 6.1 percent versus 10.9 percent for non-VHA patients, an adjusted 5.9-percentage-point difference,”  the researchers said. “VHA coverage was associated with especially large reductions in nonadherence among people with chronic illnesses and with reduced racial/ethnic and socioeconomic disparities in nonadherence.”

The VA’s drug coverage program is largely credited with these better medication adherence rates, the researchers said.

VHA prescription drug spending is discounted to 24 percent the cost of nonfederal average manufacturer prices and through negotiation the administration can achieve cost reductions of up to 40 percent. The administration uses monthly copayments to provide veterans with low or even zero cost-sharing.

The researchers compared 89,000 individuals without VHA coverage and just over 2,500 with VHA coverage, looking specifically at  demographic distinctions to determine whether the VHA program was more effective at suppressing medication nonadherence.

READ MORE: 3 Strategies for Payers to Improve Member Medication Adherence

VHA-covered veterans in this study were largely older, male, black, unmarried, unemployed, and in fair or poor health. The study also looked at VHA beneficiaries who came from small families, were low-income, and had one or more chronic illness.

One the whole, those with VHA coverage experienced fewer cost-related medication adherence barriers than those without VHA insurance.

Only 6.1 percent of individuals in the VHA reported cost-related medication nonadherence. That was exactly five percentage points lower than cost-related medication nonadherence in populations under other insurance.

For the most part, VHA members who were nonadherent for financial reasons stated two reasons for not adhering: they either could not afford the prescription or they delayed filling it in order to save.

These were the two most common reasons among non-VHA members as well, although more people responded that they were trying to save than that they could not afford it altogether.

READ MORE: High-Deductible Health Plans Are a Big Hit to Medication Adherence

The disparity became even starker when the population was limited to VHA and non-VHA members who had three out of the four chronic diseases tested. VHA members were more likely to take their medication. There was an 11.7 percentage point difference between the VHA members who suffered from obstructive lung disease and the non-VHA members who had the same disease, with VHA members demonstrating more positive medication habits.

For those whose chronic disease management was for cardiovascular disease, diabetes, or cancer, the odds were similar, ranging from a 4.3 percentage point difference to 11.5 percentage points.

Income level and race also had no impact on whether or not a VHA member was less likely than a non-VHA member to attain medication adherence. While there were always those who struggled to follow their medication plan, non-VHA members always had a higher percentage of the population that was nonadherent than the Department of Veterans Affairs did.

That being said, the researchers found that low income was a risk factor for nonmedication adherence due to affordability barriers and they argued that the VHA’s approach was a much more reliable system for lowering out-of-pocket healthcare spending.

One of the reasons that out-of-pocket healthcare spending is so high is that prescription drug prices have skyrocketed. Furthermore, although they have taken some action against high prices, Congress’s promised prescription drug spending plan has failed to pan out thus far.

READ MORE: Alternative Payment Models Rein in State Prescription Drug Spending

However, the researchers also allot some blame for out-of-pocket drug spending to payers.

“Although manufacturers’ pricing affects the costs paid by insurers (and the uninsured), insurers’ decisions regarding benefit design largely determine out-of-pocket spending for people with coverage,” the researchers said.

In particular, payers tend to price specialty drugs at crippling rates. While VHA members may pay installments of $33 every three months or $11 for one-month of hepatitis C and COPD drugs, respectively, non-VHA members face bills of $5,000 and $1,600 per year respectively.

And still, VHA spends less on drugs than private payers. This is in part because of the discounts afforded to the veteran association. 

Payers also place less costly generics in high drug tiers that are more expensive.

Some argue that the VHA formulary is too restrictive, but the researchers dispelled these claims.

“The VHA covers nonformulary medications when clinical circumstances dictate, effectively the same as private coverage of drugs that require prior authorization but are deemed ‘on formulary,’” the researchers explained.

In fact, in January 2014, when most private insurers would not cover over half of the direct-acting antivirals for hepatitis C while the VHA made these drugs available once they were released.

As policymakers search for a permanent solution to the drug pricing problem, payers can do everything possible to lower out-of-pocket healthcare spending in order to increase medication adherence and patient outcomes for their members.

Payers can also work together with the VA to lower cost-related medication nonadherence, as Cigna did on opioid abuse.