Volume 43 | Number 5p1 | October 2008

Abstract List

Stephen T. Parente Ph.D., Roger Feldman Ph.D., Song Chen


To compare pharmaceutical spending and utilization in a consumer driven health plan (CDHP) with a three‐tier pharmacy benefit design, and to examine whether the CDHP creates incentives to reduce pharmaceutical spending and utilization for chronically ill patients, generic or brand name drugs, and mail‐order drugs.

Study Design

Retrospective insurance claims analysis from a large employer that introduced a CDHP in 2001 in addition to a point of service (POS) plan and a preferred provider organization (PPO), both of which used a three‐tier pharmacy benefit.


Difference‐in‐differences regression models were estimated for drug spending and utilization. Control variables included the employee's income, age, and gender, number of covered lives per contract, election of flexible spending account, health status, concurrent health shock, cohort, and time trend.


CDHP pharmaceutical expenditures were lower than those in the POS cohort in 1 year without differences in the use of brand name drugs. We find limited evidence of less drug consumption by CDHP enrollees with chronic illnesses, and some evidence of less generic drug use and more mail‐order drug use among CDHP members.


The CDHP is cost‐neutral or cost‐saving to both the employer and the employee compared with three‐tier benefits with no differences in brand name drug use.