ISSUE: Prescription drug affordability remains a critical challenge for patients in the U.S.; 39% of insured adults aged 19-64 were unable to fill their prescriptions due to cost in 2020 (Commonwealth Fund). Particularly in the commercial market, cost-related affordability issues appear to disproportionately burden sicker patients from lower-income and historically marginalized communities. Escalating financial pressure on patients can lead to decreased medication adherence, adverse health outcomes, and excess healthcare utilization. Barriers in insurance design reduce the real-world value of medical innovation to society. The panel will explore these issues and offer varied perspectives on patient cost-sharing in insurance design and its intersection with the valuation of medical innovation.

OVERVIEW: Economic moral hazard theory posits that insurance can cause pharmaceutical overuse by lowering costs for the insured. This has spurred the rise of increased patient cost sharing, such as in High-Deductible Health Plans in the U.S. Yet, the shift away from copays towards coinsurance and deductibles – culminating in a record $82Bn patient out-of-pocket costs in 2022 (IQVIA) – remains underexplored in empirical economic research. Since price elasticities have been found to vary considerably across therapy areas and medication classes, uniform levels of coinsurance lack clinical nuance. Additionally, without adjustments for income, people with limited financial resources continue to bear a disproportionate burden. The pressing need to reduce healthcare inequities and to optimize pharmacy benefits in the context of these challenges underscores the imperative for an interdisciplinary dialogue on value: Without innovation in benefit design, even the most transformative treatments will not deliver value to patients. Darius Lakdawalla will discuss moral hazard and economic incentives in US insurance designs, A. Mark Fendrick will talk about dynamic cost exposure and designing value-based insurance. Annette James will discuss equity-enhancing benefits in employer-based insurance. Kimberly M. Hooks will share her experience as a chronic disease patient.