Impact of Three-Tier Pharmacy Benefit Structures on Consumer Attitudes, Pharmacy, Medical Utilization and Costs: A Critical Review

Three-tier pharmacy benefit plans are the dominant structure in prescription drug coverage today. In these plans three copayments exist. The lowest copayment is for generics, the middle copayment is for preferred brands and the highest copayment is for non-preferred brands. The premise of these plans is that by shifting the burden of cost onto the consumer, consumers will be more judicious in their prescription purchasing behavior. This review article outlines the empirical evidence regarding the utility of three-tier plans in changing consumer The results from a few key studies appear to suggest that three-tier plans reduce prescription drug spending for health plans while significantly increasing the cost-sharing amount for consumers. While the increased cost sharing created higher levels of dissatisfaction among three-tier plan members, it appears that they modify their behavior in accordance with these plans by switching to lower cost formulary alternatives. The factors that appeared to affect these behaviors included provider opinion and the comparability of the formulary and non-formulary alternatives. However, there are a myriad of factors that could influence the decision to switch from one drug to another (one example is switching for purely clinical reasons), and thus a clear link between the implementation of three-tier plans and switching behavior is hard to establish. What still remains unanswered is the impact of three-tier plans on vulnerable populations such as the elderly, low-income individuals and individuals with chronic disease who may be most adversely affected by the implementation of such policies. These individuals may discontinue or reduce appropriate utilization of their medications that could lead to adverse outcomes. Adequate follow-up for these vulnerable populations who are enrolled in a three-tier plan needs to be conducted to ensure appropriate medication use.