Does a One-Size-Fits-All Cost-Sharing Approach Incentivize Appropriate Medication Use? A Roundtable on the Fairness and Ethics Associated with Variable Cost Sharing


Tiered formularies, in which patients pay copays or coinsurance out-of-pocket (OOP), are a strategy used to manage costs and encourage more efficient health care resource use. Formulary tiers are typically based on the cost of treatment rather than the medical appropriateness for the patient. However, patients with the same or similar condition may need alternative treatments due to their genetic characteristics, comorbidities, or disease severity, requiring medications on different formulary tiers and out-of-pocket expenses. Cost sharing, based on formulary tier rather than medical appropriateness for patients, may have unintended consequences on treatment adherence, costs and health outcomes.

To discuss the trade-offs associated with variable cost sharing in pharmacy benefits, we convened an expert roundtable of patient, payer, and employer representatives to review four case studies to understand when it would be more (or less) acceptable to require patients with the same or similar condition to have variable OOP expenses. The stakeholders made their recommendations using a case study approach, an ethics framework, actuarial analysis, legal review, and multi-stakeholder perspectives from employers, health plans and patients. Using case studies, panelists were asked to consider (a) when it would be more (or less) acceptable to require higher cost sharing; (b) the optimal distribution of financial burdens across patients, all plan members, and employers; and (c) the existing barriers and potential solutions to align OOP costs with medically appropriate treatments.

Panelists felt it was least acceptable for patients to have greater OOP costs if the use of the higher-cost treatment was due to biological reasons such as step therapy or diagnostic results. In contrast, panelists felt it was more acceptable for patients to pay greater OOP costs when treatment choice was based on preferences to avoid a side-effect risk or the route/frequency of administration.

Five guiding principles emerged from the discussion to understand when variable cost-sharing is less acceptable for patients who require higher-tier formulary medications:

  1. "Try and Fail” is Important
  2. Benefits Should be Certain and Significant
  3. Costs Must Align with Benefits
  4. Penalties Because of “Bad Luck,” not Preferences, Should be Mitigated
  5. Differences in OOP should be Lowered but not Eliminated

In addition, the panelists identified practical barriers to be resolved to align patient cost-sharing with appropriate care: 

  1. Ensure Evidence is Available About Which Treatments Work for Which Patients
  2. Facilitate the Linkage of Benefits and Appropriate Care
  3. Increase Consumerism and Member Communication
  4. Balance Effect of Cost-sharing, Premium, and Deductible Changes
  5. Avoid Unintended Consequences

The proposed solutions and discussion can help add clarity and priority to guide decisions which require trade-offs between who benefits and who pays.