canadian border crossing for prescription drugs

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  • 1. Canadian Border Crossing for Prescription Drugs: Evidence from Medicare Drug Discount Card Data M. Christopher Roebuck 1 Yun Wang 1 1 CVS Caremark, Hunt Valley, MD 2nd Biennial Conference of theAmerican Society of Health Economists Durham, NC June 23, 2008

2. 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 individuals 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).

3. Background

  • Reference pricing policies lead to cheaper medications at Canadian pharmacies relativeto 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).

4. Strategy

  • The most obvious research design would require obtaining prescription claims data on Americans from Canadian pharmacies.
  • Instead of examining thepresenceof prescriptions in Canada, we look at theabsenceof 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.

5. 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 withincome below 135% of the federal poverty level.
  • Cardholders may have been charged an enrollment fee of up to $30 per calendar year.

6. 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 ofenrollment and1prescriptions 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

7. 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

8. Geo-Coding EI Sample MDDC Sample 9. U.S. Road Network 10. Distance to U.S.-Canadian Border 11. Descriptive Statistics 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


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