Commercial ACO ad negligible effect on generic use, prescription drug spend, study finds

The drug savings and greater use of generics that ACO proponents hope for did not materailize.

Those looking to ACOs as a way to temper American healthcare spending have held out hope that the organizations effects would extend to pharmaceutical spending too. With value-based care incentives at play, ACOs would lead to greater use of generics instead of expensive brand-name drug, said proponents, and improvement in quality metrics related to medication. Medicare ACOs don’t include prescription drug spending in their cost calculations so the question about the ACO effect on drug expenditures has to be answered by research into commercial ACOs.

Results of a study of a commercial ACO reported in the August issue of Health Services Research aren’t encouraging. They show the ACO as having a negligible effect on generic prescriptions and drug expenditures. Lead author Hui Zhang, Ph.D., and colleagues said that ACOs may need to go further with policies and programs if they are to reduce drug expenditures. They mentioned as possibilities reference pricing, value-based pricing and arrangements that would involve banding together with other purchasers to win price concessions.

Zhang, a researcher in the health policy research division of the California Public Employees’ Retirement System (CalPERS), and his co-investigators had data on a study population of about 40,000 CalPERS non-Medicare members who were enrolled in an HMO to work with

Roughly 20,000 of the CalPERS members were never attributed to an ACO, about 12,000 were always attributed to an ACO during the 2010-2014 time period the study included, and another 8,000 were “mixed,” spending some time attributed to the ACO and some not.

Zhang and his colleagues compared the “never group” to the “always group” to assess the effect of the ACO on various aspects of drug expenditures.

They found “no meaningful change” in per member, per year average total allowed payments for generic or brand-name drugs between the “never” group of 20,000 and the “always” group of 12,000. Utilization statistics (total scripts filled, average total days supplied) also showed no difference between “never” and “always” groups. Generics substitute metrics were higher for the “always” group than for the “never” group in years four or five of the study.

Their analysis also found no difference in HEDIS metrics that are related to adherence, medication management an appropriateness.

“We did not find meaningful ACO improvement for selected medication-related quality measures, which is worrisome especially for at-risk population since the ACO targeted chronic condition care management,” Zhang and other concluded.

They noted that the PBM benefit and design, which was for the entire HMO not just the ACO population, likely had an effect on the ACO’s impact on utilization and spending. But they also pointed They note that tiered formularies and different copayment levels are standard, so the ACOs will have to figure out other ways to influence drug expenditures and the use of generics.

Some of these findings were presented at a meeting 2018.