Reference no: EM13699010

Discuss: Plan Restrictiveness vs. Drug Cost

Health plans use many tools to try to control the cost of prescription medicines. For older drugs, generic substitutes that are equivalent to name brand drugs are sometimes available at a lower cost. Another tool that may lower costs is restricting the drugs that physicians may prescribe. For example, if three similar drugs are available for treating the same symptoms, a health plan may require physicians to prescribe only one of them. Since the usage of the chosen drug will be higher, the health plan may be able to negotiate a lower price for that drug.

Instructions:

The graph below can be used to explore the effectiveness of the restrictiveness strategy in controlling drug costs. The response variable is COST, the average cost of drugs per prescription per day, and the predictor Restrictiveness measures the restrictiveness of the plan, from zero, no restrictions on the physician, to 100, the maximum possible restrictiveness.