Measuring economic impact of applying daily average consumption limits

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Medication Management

Background:

• Health plans aim to reduce costs by managing medication consumption and promoting cost-effective dosing.
• Higher-strength medications may offer cost savings per unit compared to lower-strength alternatives.
• This study investigates the economic impact of limiting daily average consumption (DACON) for specific medications.

Purpose of the Study:

• To quantify the economic impact of implementing daily average consumption (DACON) limits for selected medications.
• To assess cost avoidance and administrative burden associated with DACON limit implementation.
• To evaluate the effect on patient access and pharmacy operations.

Main Methods:

• Analysis of prescription claims data for top medications to identify DACON limit opportunities.
• Implementation of DACON limits through pharmacy messaging and claims system edits.
• Monitoring of claims impacted by limits, cost avoidance, and administrative costs over a 3-month period post-implementation.

Main Results:

• DACON limits were applied to 41 medications for commercial lines and 35 for Medicare Part D.
• Approximately $730,000 in cost avoidance was achieved in the first three months post-implementation.
• Duloxetine, niacin CR, and generic temazepam were key drivers of claims volume impacted by DACON limits.

Conclusions:

• Implementing DACON limits resulted in significant cost avoidance with minimal disruption to patient access.
• Estimated annualized savings from this strategy approach $3 million.
• The program demonstrated a low administrative burden for the health plan.