Market forces and employer-driven cost-cutting strategies have combined to slow the annual growth in prescription drug spending to single digits. But inappropriate use - both over- and under-utilization - continues to drive the bulk of overall program costs for many large payers.

As employers contemplate the next frontier of pharmacy management, many are intrigued by the concept of a "value-based" plan design. The appeal is that it allows employers to selectively lower copayments for high-value interventions.

 In a value-based plan design, treatments are categorized according to their anticipated clinical benefit.

The goal of this strategy is simple: Reduce barriers to care for clinically significant and proven therapies by reducing or eliminating copays. At the same time, attempt to discourage inappropriate use by maintaining appropriately high cost sharing strategies for interventions of modest or low value.

Building the business case

While many employers have embraced value-based design concepts, there still is considerable confusion on how to build the business case for migrating to this approach and how to implement a measurement strategy.

Employers can construct a business case analysis and measurement approach using a six-point framework for value-based pharmacy benefits:

1. Determine top medical conditions and develop adherence scores by condition. For most employers, top disease states will directly correlate to those already most commonly included in value-based plans. Once the top medical conditions are established, employers should analyze medication compliance rates for medications associated with these conditions using the medication possession ratio.

MPR is a statistical technique that approximates patient compliance levels by measuring the percentage of time a patient has access to medications. While still an imperfect measure of compliance, it is one of the more commonly used metrics that has become standard.

2. Stratify individuals based on adherence levels. Once compliance measures are known, patients can be grouped as compliant or noncompliant.Generally, an MPR score of 0.80 or better is considered compliant; 0.79 or less is considered noncompliant.

3. Track medical, absenteeism and presenteeism data to create a "before" picture of program cost, utilization and business metrics. While medication adherence is an outcome used to measure the impact of value-based design strategies, ultimately it is the impact that improved compliance has on other medical resources that must be measured. Some employers may also wish to evaluate how improving medication compliance rates contributes to productivity, absenteeism and presenteeism.

4. Establish program goals, including estimated reductions in medical services that will offset the cost hikes associated with increased prescription drug use.

Typically, goals associated with value-based designs include: Improved patient compliance, improved quality of care, decreased adverse health events, decreased hospital and ER visits, decreased absenteeism, increased productivity, increased presenteeism and decreased overall health care costs.

5. Implement elements of the value-based design strategy. While most employers begin a value-based program through targeted copay reductions or elimination strategies, nearly every successful initiative also includes other program elements to positively impact patient behavior. Key components include extensive member communications, provider outreach initiatives and access to health coaching.

6. Analyze baseline changes to assess overall outcomes. In most employer settings, a pre-post study design comparing the selected outcomes measurement variables between the control and study groups will be sufficient for measuring program performance. This analysis also should include additional direct program costs incurred to implement the strategy, such as copay offset fees and increases in drug costs due to greater compliance.

While some early adopters of value-based designs have published outcomes associated with their initiatives - see www.vbhealth.org for case studies - most reported outcomes focus on improvements in patient compliance, not reduced medical costs. For value-based designs to take hold among employers, business case development and outcomes research initiatives must become more commonplace.

Tim Watson is a principal with Pharmaceutical Strategies Group, a pharmacy benefit consulting business based in Irving, Texas. He may be reached at twatson@psgconsults.com.