Eliminating Out-of-Pocket Medication Fees Associated with Lower Total Health Care Costs


Free medicine distribution was linked with a lower median total health care spending of $1641 per year over a 3-year period.

Medication nonadherence due to cost is associated with poor health outcomes and is more common in people with lower incomes. Although reducing prices could help alleviate inequities linked with avoidable disparities, few interventions have shown to be effective.

But research published in JAMA Health Forum found that removing out-of-pocket medication expenses for patients could help reduce overall health care costs.1 The study was led by a team of researchers from the University of Toronto, Northern Ontario School of Medicine and the Harvard T.H. Chan School of Public Health.

"There are millions of Canadians who report not taking medications because of the costs," Nav Persaud, lead author on the study and an associate professor at the University of Toronto, told CTVNews.2 "We were trying to measure the effects of providing people with free access to medicines, as would happen in a national pharmacare program."

Investigators conducted a secondary analysis of a multicenter randomized clinical trial. Their goal was to determine the effect of eliminating out-of-pocket medication fees on total health care costs. Data was gathered from 9 primary care sites in Ontario where health care services are usually publicly funded.

The study cohort included 747 patients with a mean age of 51, of which 56.4% were women. Participants who reported cost-related nonadherence to medicines were recruited by primary care clinicians between June 1, 2016, and April 28, 2017.

Participants in the free medicine group were provided access to 128 essential medicines, which most often were mailed. Patients in the usual access group obtained medicines at a community pharmacy with either out-of-pocket payments, public insurance for social assistance recipients or private insurance.

The main study outcome was total publicly funded health care costs over a 3 year period, which included costs of hospitalizations. Health care costs were determined using administrative data from Ontario’s single-payer health care system.

Investigators found that free medicine distribution was associated with a lower median total health care spending of $1641 per person per year over the study period. Eliminating out-of-pocket medication fees was associated with a lower number of participants who had high total health care costs.

In both groups, hospitalizations represented the largest cost. However, there was no statistically significant difference in the number of hospitalizations or the rate of being hospitalized at least once between the groups. There also was no statistically significant reduction in primary care visits, specialist visits, and emergency department visits.

Study limitations include an inability to capture expenses related to care accessed outside of Ontario, the lack of consent to the use of health administrative data by some participants, and the lack of information on out-of-pocket expenses.

"These findings suggest that eliminating out-of-pocket medication costs for patients could reduce overall costs of health care," the researchers concluded. "This randomized clinical trial of an intervention has clear policy implications, and it provides information about total health care costs using routinely collected administrative data."

1. Persaud N, Bedard M, Boozary A, et al. Effect of Free Medicine Distribution on Health Care Costs in Canada Over 3 Years: A Secondary Analysis of the CLEAN Meds Randomized Clinical Trial. JAMA Health Forum. 2023;4(5):e231127. doi:10.1001/jamahealthforum.2023.1127
2. Free prescription drugs could reduce overall health-care costs in Canada: study. News Release. CTVNews. May 29, 2023. Accessed May 31, 2023. https://www.ctvnews.ca/health/free-prescription-drugs-could-reduce-overall-health-care-costs-in-canada-study-1.6418350
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