Pharmacy Benefit Caps And the Chronically Ill

Geoffrey F. Joyce
Dana P. Goldman
Pinar Karaca-Mandic
Yuhui Zheng

Abstract

In this paper we examine medication use among retirees with employersponsored drug coverage both with and without annual benefit limits. We find that pharmacy benefit caps are associated with higher rates of medication discontinuation across the most common therapeutic classes and that only a minority of those who discontinue use reinitiate therapy once coverage resumes. Plan members who reach their cap are more likely than others to switch plans and increase their rate of generic use; however, in most cases, the shift is temporary. Given the similarities between these plans and Part D, we make some inferences about reforms for Medicare.