Assessing the effect of Taiwan's outpatient prescription drug copayment policy in the elderly

OBJECTIVES. This study uses variance cost analysis and regression analysis as tools for investigating the initial effects of Taiwan's outpatient prescription drug copayment program in the elderly. Under its new National Health Insurance program, Taiwan implemented a prescription drug cost-sharing program August 1, 1999. We compare an elderly population's prescription drug use after the policy was implemented with an elderly population's prescription drug use before the policy change to describe initial and general consequences of the drug cost-sharing program. METHODS. Approximately 240,000 patients aged 65 and over representing 1,600,000 outpatient prescriptions were drawn from 21 hospitals in the Taipei area for the study using a stratified random sampling method. Variance analysis, as used primarily in accounting, was applied to decompose overall cost variance of the policy into the sum of variances of several specific factors that are important to policymakers. The cost variances of each specific factor can be further decomposed into sublevels of analyses. Regression analysis is then applied to better understand covariates that might influence drug cost variances of significant magnitude. RESULTS. The initial effects of the policy change did not reverse the trend of drug cost increases. Instead, there was a significant increase in total prescription drug costs in the cost-sharing group (approximately 12.86%) and an even higher increase rate in the non-cost-sharing group (approximately 51.42%). The main reason for the drug cost increase for the costsharing group was attributed to an increase in average drug costs per prescription (explaining 69.20% of the variance). We found physicians seemed to prescribe more expensive drugs and extend prescription duration, especially when drug costs exceed the upper bound of the costsharing schedule. By contrast, the main factor contributing to the increase in drug costs for the non-cost-sharing group was an increase in average prescription duration (explaining 64.98% of the variance). The increase mainly results from the effect of extended prescriptions for chronic diseases that were designed to reduce unnecessary visits for refills. DISCUSSION. The significant increase in average drug price per prescription indicates that many prescriptions could move above the upper bound of the cost-sharing schedule. The results suggest that the Bureau of National Health Insurance should increase the upper bound. We do not think these effects are unique to Taiwan. Rather, these effects should be considered as countries change their outpatient drug benefit programs. We also found a decrease in utilization of essential drugs with an increase in utilization of nonessential drugs for patients subject to copayments. The results suggest potential adverse effects on patients' health outcome.