Why higher copayments for opioids did not reduce use among Medicare beneficiaries

To examine whether higher cost‐sharing deterred prescription opioid use. Medicare Part D claims from 2007 to 2016 for a 20% random sample of Medicare enrollees. We obtain estimates of the effect of cost‐sharing on prescription opioid use using ordinary least squares and instrumental variables methods. In both, we exploit the variation (change) in cost‐sharing within plans over time for a sample of beneficiaries who remain in the same plan. Focusing on changes in cost‐sharing within a plan for a constant sample of beneficiaries mitigates potential bias from plan selection and using a constant set of weights derived from use in year (t) eliminates changes in the cost‐sharing indexes due to (endogenous) consumer choice in year (t+1). Part D plans adopted benefit changes designed to reduce opioid use, including moving opioids to higher cost‐sharing tiers. Increasing plan copayments for hydrocodone or oxycodone was associated with reductions in plan‐paid claims and offsetting increases in cash claims. Widespread availability of low‐cost generics combined with the anti‐clawback provision in Part D mediated the effect of higher cost sharing to curb opioid use. As plans moved generic opioids to higher cost‐sharing tiers, beneficiaries simply paid cash prices and aggregate use remained largely unchanged. The anti‐clawback provision in Part D, intended to protect beneficiaries from price gouging, limited plans' ability to constrain opioid use through typical demand‐side measures such as increased cost‐sharing.