Premium
The impact of a national formulary expansion on diabetics
Author(s) -
McNamara Cici,
Sertalia
Publication year - 2022
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.4583
Subject(s) - formulary , rationing , medicine , health care , medical prescription , scope (computer science) , drug , prescription costs , pharmacoeconomics , prescription drug , public economics , actuarial science , business , intensive care medicine , economics , family medicine , pharmacology , economic growth , computer science , programming language
Abstract This paper estimates the causal effect of the expansion of Colombia's national prescription drug formulary to include five new types of insulin on the healthcare utilization and costs of type I diabetics and explores the mechanisms through which outpatient cost reductions are realized. We find that expanded coverage generates an increase in the cost of insulin for type I diabetics equal to 17% of their baseline healthcare costs. At the same time, their annual outpatient care utilization falls by 1.9 claims. We devise tests to explore the relative importance of two mechanisms by which the expansion may have lowered type I diabetics' non‐drug healthcare utilization: spillovers from drug to non‐drug spending and rationing of care. We find no evidence that the formulary expansion reduces the rate of complications from diabetes and find substantial declines in non‐drug costs even among the subset of diabetics with no scope for spillovers. We find large reductions in the utilization of discretionary care including diagnostic tests, but no such declines for the use of essential drugs, suggesting that rationing of care is the primary driver of observed cost savings.