Payment Reform, Medication Use, and Costs: Can We Afford to Leave Out Drugs?

Medications are one of the fastest growing sources of costs in the health system and the cornerstone of disease management. Despite extensive attention around drug pricing, medications have largely been excluded from CMS-derived, value-based payment models. In this perspective, we synthesize evidence about the impact of three prominent models-primary care-based redesign, ACOs, and bundled payment programs-on medication use, adherence, and costs. We also examine the literature describing similar models implemented by private payors and their relationship with medication use and costs. The exclusion of drug costs from payment reform model design has led to missed opportunities for payors and providers to prioritize effective medication management strategies and has limited our learning about the effects on cost and quality. New CMS-based models are starting to allow greater flexibility in pharmacy benefit design and reward improved medication therapy management. Additionally, health plans, pharmacies, and pharmacy benefit managers are beginning to partner on collaborative value-based pharmacy initiatives. Taken together, these efforts encourage a paradigm shift around drug cost management that more deeply integrates pharmacy into payment and delivery reform with the goal of improving quality and reducing the total cost of care.

Duke Scholars

Author Mark B McClellan Fuqua School of Business