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The Effect of Three-Tier Formulary Adoption on Medication Continuation and Spending among Elderly Retirees

Objective. To assess the effect of three-tier formulary adoption on medication continuation and spending among elderly members of retiree health plans.

Data Sources. Pharmacy claims and enrollment data on elderly members of four retiree plans that adopted a three-tier formulary over the period July 1999 through December 2002 and two comparison plans that maintained a two-tier formulary during this period.

Study Design. We used a quasi-experimental design to compare the experience of enrollees in intervention and comparison plans. We used propensity score methods to match intervention and comparison users of each drug class and plan. We estimated repeated measures regression models for each class/plan combination for medication continuation and monthly plan, enrollee, and total spending. We estimated logit models of the probability of nonpersistent use, medication discontinuation, and medication changes.

Data Collection/Extraction Methods. We used pharmacy claims to create person-level drug utilization and spending files for the year before and year after three-tier adoption.

Principal Findings. Three-tier formulary adoption resulted in shifting of costs from plan to enrollee, with relatively small effects on medication continuation. Although implementation had little effect on continuation on average, a small minority of patients were more likely to have gaps in use and discontinue use relative to comparison patients.

Conclusions. Moderate cost sharing increases from three-tier formulary adoption had little effect on medication continuation among elderly enrolled in retiree health plans with relatively generous drug coverage.

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