Reducing drug costs using behavioural science

Strategies inspired by opt-in, opt-out approach of pensions
By Michael Biskey
|Canadian HR Reporter|Last Updated: 04/07/2014

The health plan cost increases besieging Canadian companies are driven by many factors, including the availability of specialty drugs for treating rare and complex diseases. But the primary driver of drug cost inflation is a lack of informed patient decisions — decisions employers have the power to influence.

Each year, about $3.9 billion is lost to drug-mix waste associated with the use of higher-cost medications that generate no additional health benefit, according to the Express Scripts Canada 2012 Drug Trend Report.

Another $1.2 billion is wasted annually through patient decisions about where, how and when they fill their prescriptions.

Prescription drug spending in Canada’s private sector has doubled each decade: In 2012, $15.4 billion was spent on prescription drugs, up from $7.9 billion in 2002 and $3.2 billion in 1992. Far in excess of inflation, this cost burden is a drag on the competitiveness of Canadian companies.

In total, one of every three dollars spent on prescription medication in Canada is wasted — about $5.1 billion each year, according to the report.

Of equal concern is the fact that 40 to 50 per cent of plan members do not take their medications according to their doctor’s directions, thereby worsening their conditions and adding costs for plan sponsors.

3 strategies to bend cost trajectory

But it is possible to bend the cost trajectory by leveraging strategies to influence employees to make better, more informed decisions about their prescriptions. Here are three examples:

Strategic interventions: Employees are interested in saving money, both for themselves and for their plan. But they’re often busy — they simply don’t get around to making the necessary changes. One remedy is through the use of strategic interventions, informed by behavioural science, to ensure employees become actively engaged in acting on their best intentions. As a result, costs can be reduced and outcomes improved.

For example, when employees are encouraged to switch to a lower-cost pharmacy offered through their employer, they’re invariably enthusiastic but often don’t get around to moving their prescriptions. Through active choice intervention, the provider can ask them about their choice of pharmacy.

Employees can make a choice either way, without penalty, but if they haven’t made the choice by a certain point in time, an adjudication system can intervene to enforce the need for them to make a choice.

Active choice strategies are inspired by pension plan research which has proven that asking employees to opt out of a pension plan — rather than asking them to opt in — results in a much higher participation level, leading to vastly improved retirement savings outcomes.

If the default is to do nothing, most people tend to do nothing. But if there’s an intervention in the decision process where the default is either “I want to do this” or “I want to do that,” with no option to do nothing, people are far more likely to align their actions with their intentions.

Behavioural science-informed strategies result in greater uptake and engagement and better
decisions overall from members. Even something as simple as the way a message is framed can help create alignment between intention, behaviour and the desired outcome — better health for employees as well as sustainable health-care plans.

Message-framing strategies: Various message-framing strategies can also be used to influence better decisions. For example, while employees are inspired by the opportunity to save money — for themselves and their health plan — using loss-aversion message framing is even more effective.

People work harder to avoid losses than they do to seek gains, so when they hear “Stop wasting money” versus “You can save money,” they are more likely to take action.

Reminders support adherence: Rising rates of chronic disease burden Canada’s health-care system and undermine workplace productivity. One of the greatest challenges in the prevention and treatment of many of these conditions is non-adherence — patients don’t comply with their doctor’s advice and don’t take their medications as prescribed.

Procrastination is a key culprit — often patients just don’t get around to refilling their prescriptions or they forget.

Fortunately, it’s a problem that is easy to overcome. Patients can be sent reminders when it’s time for a refill — and those reminders can include the number of refills they have remaining — to help ensure treatment continuity.

Partners in health care

In a perfect world, physicians would know the cost of each prescription, whether or not it is covered by the patient’s plan and whether the co-pay is appropriate for the patient. But today, that information only comes to light after a physician has written the prescription, the patient has taken it to the pharmacy and the claim is submitted.

Leveraging behavioural science will help employers influence members to make better decisions.

Michael G. Biskey is the Mississauga, Ont.-based president of Express Scripts Canada, a provider of health benefits management services. For more information, visit

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