canadian border crossing for prescription drugs

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Canadian Border Crossing for Prescription Drugs: Evidence from Medicare Drug Discount Card Data

M. Christopher Roebuck1

Yun Wang1

1CVS Caremark, Hunt Valley, MD

2nd Biennial Conference of the American Society of Health EconomistsDurham, NCJune 23, 2008

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©2008 Caremark. All rights reserved.Caremark proprietary and confidential information. Not for distribution.

Objective

• To estimate the extent to which seniors were filling prescriptions in Canada prior to the implementation of Medicare Part D

Hypothesis

• American consumers must incur time and travel costs to conduct these transactions in person.

• Thus, an individual’s net economic benefit from border crossing for prescription drugs should depend on his proximity to Canada (cost) and his potential out-of-pocket drug cost savings (benefit).

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Background

• Reference pricing policies lead to cheaper medications at Canadian pharmacies relative to the U.S.

• Much anecdotal evidence in the mainstream media on seniors visiting Canada to fill their prescriptions

• Reports of bus trips from northern border states, some even encouraged by public officials (e.g., Warren, Michigan)

• However, little or no scientific investigation

• In a 2006 national survey of Medicare beneficiaries, 5% of Part D-enrolled seniors reported having purchased prescription drugs from Canadian or Mexican pharmacies; 10% among those without drug coverage (Neuman et al., 2007).

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Strategy

• The most obvious research design would require obtaining prescription claims data on Americans from Canadian pharmacies.

• Instead of examining the presence of prescriptions in Canada, we look at the absence of prescriptions in the U.S.

• If individuals living closer to Canada have lower domestic pharmacy utilization rates, this might indicate that they are receiving medications from across the border.

• Also, this driving distance effect on utilization should theoretically also differ by generic/brand and insured/uninsured.

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Medicare Drug Discount Card

• Created via the Medicare Modernization Act

• A temporary program (enrollment period: June 2004 - December 2005) for non-dual eligible beneficiaries

• Offered discounts on prescription drugs

• Transitional Assistance Program (TAP) provided a $600 annual subsidy to seniors with income below 135% of the federal poverty level.

• Cardholders may have been charged an enrollment fee of up to $30 per calendar year.

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Data

Medicare Drug Discount Card (MDDC) Sample

• Eligibility and pharmacy claims data from 15 MDDC programs managed by CVS Caremark

• Included 15,082 cardholders with ≥ 6 months of enrollment and ≥1 prescriptions from 6/1/2004 through 11/12/2005

• Non-seniors and TAP subsidy recipients excluded

Employer-Insured (EI) Sample

• Used the same inclusion criteria

• 38,531 employer-insured seniors

• Studied for comparison

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Methods• Datasets geo-coded using street address and ZIP code

• Manually recorded X-Y coordinates for 83 intersections of the U.S. road network and Canadian border

• Estimated driving time in hours to nearest border crossing• Using travel speeds by U.S. highway type and cost-weighted

distance function

• Analyzed seniors residing within 15 hours of Canada (midpoint of the 0-31 hour range) • Others excluded given their proximity to Mexico

• Gamma-log link generalized linear models (GLM) of annualized generic and brand pharmacy utilization were estimated as functions of: • Age• Gender• Log out-of-pocket costs• Log hours driving time to Canada

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Geo-Coding

EI Sample

MDDC Sample

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U.S. Road Network

_̂ US NEXUS Point

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Distance to U.S.-Canadian Border

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Descriptive Statistics

VariableMDDC Sample

(N=15,082)EI Sample(N=38,531)

Age 75.47 (7.43) 76.30 (7.26)

Male (proportion) 0.39 (0.49) 0.44 (0.50)

Generic OOP Cost ($) 22.79 (2.64) 7.21 (3.20)

Brand OOP Cost ($) 79.29 (7.14) 26.87 (9.81)

Miles to Canadian Border 388.45 (152.83) 330.94 (169.85)

Hours to Canadian Border 7.88 (2.99) 6.62 (3.44)

Annual Number of Generic Rxs

7.57 (9.92) 15.94 (16.45)

Annual Number of Brand Rxs 8.70 (10.24) 16.27 (16.11)

Notes: MDDC = Medicare Drug Discount Card; EI = employer-insured; OOP = out-of-pocket. Presented are mean values with standard deviations in parentheses. All variable means are statistically different (p<0.01) across samples using Kruskal-Wallis equality of populations test.

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Gamma-Log GLM Models ofPrescription Utilization

Independent Variable

Annualized Generic Rxs Annualized Brand Rxs

MDDC Sample

(N=15,082)

EISample

(N=38,531)

MDDC Sample

(N=15,082)

EISample

(N=38,531)

Log Hours to Canadian Border

0.115*** 0.012 0.080*** 0.056***

(0.022) (0.008) (0.022) (0.007)

Age0.017*** 0.015*** 0.018*** 0.003***

(0.001) (0.001) (0.001) (0.001)

Male-0.076*** -0.108*** -0.152*** -0.126***

(0.022) (0.011) (0.020) (0.010)

Log GenericOOP Cost

-1.242*** -0.014— —

(0.097) (0.012)

Log BrandOOP Cost

— —-0.669*** -0.179***

(0.102) (0.011)

Notes: MDDC = Medicare Drug Discount Card; EI = employer-insured; OOP = out-of-pocket.Presented are coefficient estimates with Huber-White robust standard errors in parentheses.Constant suppressed. Statistical significance denoted as: *** p<0.01; ** p<0.05; * p<0.10

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Results

• As expected, closeness to Canada was negatively associated with rates of U.S. pharmacy utilization suggesting possible border crossing activity.

• The marginal effect was greater for uninsured versus insured, and greater for brands than generics in the employer-insured sample.

• Medicare Drug Discount Cardholders living 10% closer to Canada filled 1.15% fewer generic prescriptions and 0.80% fewer brand prescriptions in the U.S.

• Employer-insured seniors living 10% closer to Canada filled the same number of generic prescriptions and 0.56% fewer brand prescriptions in the U.S.

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Policy Implications

• Medicare Part D likely reduced senior Canadian border crossing for prescription drugs, but probably did not eliminate it.

• The re-importation debate may not be over.• Support remains.

• Those opposing on quality and safety grounds may not yet be satisfied.

• Pharmaceutical manufacturers are also likely still concerned about the issue.

• Researchers using prescription claims should consider if data are missing due to cross-border filling, perhaps critically important for medication adherence studies.

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Limitations

• MDDC claims may be incomplete.

• Cyber-border-crossing activity was not examined.

• The number of foreign Internet pharmacies has dramatically increased in the past several years.

• This is probably the primary method used today.

• Potential endogeneity of key independent variable

• Unobserved factors correlated with both driving distance to Canada and pharmacy utilization may lead to biased results. Examples include:

- Health status

- State policies

- Income

- Education

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Thank YouComments and suggestions are welcomed.

M. Christopher RoebuckCVS CaremarkDirector, Health Economics11311 McCormick Road, Suite 230Hunt Valley, MD [email protected]

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