The Economic Impact of Payer Policies after the Rx-to-OTC Switch of Second-Generation Antihistamines* *Preliminary results of this analysis were presented at the 9th annual HMO Research Network Conference April 1-2, 2003

Objective: As a result of the over-the-counter (OTC) introduction of loratadine, health plans have been strug- gling to determine the best policy to incorporate this change within their existing drug benefit structure for sec- ond-generation antihistamines (SGA). The objective of this study was to examine the economic impact of payer policies in response to the Rx-to-OTC switch of loratadine. Study Design: Decision analysis was used to model the budgetary impact and cost-effectiveness of four policies for SGA benefits for the managed care organization (MCO), employer, and Medicaid perspectives separately. Patients and Methods: Outcomes included direct medi- cal costs and lost productivity (employers only), dis- counted, quality-adjusted life-years (QALYs) saved because of amelioration of allergic rhinitis symptoms and avoidance of unintentional injuries associated with the use of first-generation antihistamines (FGA). Bayesian probabilistic sensitivity analysis was conducted using sec- ond-order Monte Carlo simulation. Results: Providing limited OTC and second-tier prescrip- tion benefits would cost approximately $0.13 and $0.30 compared to third-tier prescription benefits for employers and MCOs, respectively, and would save Medicaid $.02 per member per month (PMPM). Providing limited cov- erage for OTC loratadine while retaining second-tier pre- scription benefits for SGA was the optimal policy for a willingness to pay below $26,200 per QALY for all payers. Conclusions: Offering second-tier prescription and lim- ited OTC benefits provides greater effectiveness and is not significantly more expensive PMPM than discontinua- tion. Some of the drug savings from limiting coverage of prescription SGA may be attenuated by the cost of lost productivity and direct medical expenditures due to unin- tentional injuries associated with increased FGA use in addition to the increased cost of therapeutic substitutes.