The effect of direct payment policies on people’s use of medicines

Researchers at The Cochrane Collaboration conducted the first update of the original review of the effects of different policies determining how much people should pay for their medicines. Between 2011 and 2013, they searched for all relevant studies and found 32 studies. Their findings are summarised below.

What are pharmaceutical payment policies?

Large quantities of healthcare funds are spent on medicines, and these amounts are increasing. Spending more on medicines could mean having less money for other healthcare or non-healthcare services. Also, misuse, overuse and underuse of appropriate medicines can lead to wasted resources and health hazards. Health insurers therefore are looking for ways of ensuring better use of medicines and controlling the costs of medicines, while still ensuring that patients get the medicines they need.

Patient payment policies vary with respect to the medicines included, the patient groups targeted, the amount of money patients are expected to pay and the ways in which they are expected to pay. Different policies may be used alone or together and include the following.

1. With a cap policy, patients are reimbursed for their prescription medicines up to a maximum amount, then are expected to pay costs higher than this amount.

2. With a fixed co-payment policy, patients pay a fixed amount per medicine or prescription.

3. With a co-insurance policy, patients pay a set percentage of the price of the prescription or medicine, rather than a fixed fee.

4. With a ceiling policy, patients pay full cost or part of the cost up to a certain amount, then are given medicines for free or at reduced cost.

These policies may lead people to use fewer medicines or to choose cheaper medicines. Although they may deter people from using unnecessary medicines, these policies may cause harm.

What happens when new payment policies are introduced?

Policies that increase the amount of money people have to pay for medicines may reduce insurers’ medicine expenditures and may reduce patients’ medicine use. They may result in a reduction in patients’ use of life-sustaining medicines or other medicines that are important for their health. These types of policies also may lead to small decreases in or uncertain effects on patients’ use of healthcare facilities. No studies have looked at the effects of these policies on patients’ health.

Authors' conclusions: 

The diversity of interventions and outcomes addressed across studies and differences in settings, populations and comparisons made it difficult to summarise results across studies. Cap and co-payment polices may reduce the use of medicines and reduce medicine expenditures for health insurers. However, they may also reduce the use of life-sustaining medicines or medicines that are important in treating chronic, including symptomatic, conditions and, consequently, could increase the use of healthcare services. Fixed co-payment with a ceiling and tiered fixed co-payment may be less likely to reduce the use of essential medicines or to increase the use of healthcare services.

Read the full abstract...

Growing expenditures on prescription medicines represent a major challenge to many health systems. Cap and co-payment policies are intended as an incentive to deter unnecessary or marginal utilisation, and to reduce third-party payer expenditures by shifting parts of the financial burden from insurers to patients, thus increasing their financial responsibility for prescription medicines. Direct patient payment policies include caps (maximum numbers of prescriptions or medicines that are reimbursed), fixed co-payments (patients pay a fixed amount per prescription or medicine), co-insurance (patients pay a percentage of the price), ceilings (patients pay the full price or part of the cost up to a ceiling, after which medicines are free or are available at reduced cost) and tier co-payments (differential co-payments usually assigned to generic and brand medicines). This is the first update of the original review.


To determine the effects of cap and co-payment (cost-sharing) policies on use of medicines, healthcare utilisation, health outcomes and costs (expenditures).

Search strategy: 

For this update, we searched the following databases and websites: The Cochrane Central Register of Controlled Trials (CENTRAL) (including the Cochrane Effective Practice and Organisation of Care (EPOC) Group Specialised Register, Cochrane Library; MEDLINE, Ovid; EMBASE, Ovid; IPSA, EBSCO; EconLit, ProQuest; Worldwide Political Science Abstracts, ProQuest; PAIS International, ProQuest; INRUD Bibliography; WHOLIS, WHO; LILACS), VHL; Global Health Library WHO; PubMed, NHL; SCOPUS; SciELO, BIREME; OpenGrey; JOLIS Library Network; OECD Library; World Bank e-Library; World Health Organization, WHO; World Bank Documents & Reports; International Clinical Trials Registry Platform (ICTRP), WHO;, NIH. We searched all databases during January and February 2013, apart from SciELO, which we searched in January 2012, and ICTRP and, which we searched in March 2014.

Selection criteria: 

We defined policies in this review as laws, rules or financial or administrative orders made by governments, non-government organisations or private insurers. We included randomised controlled trials, non-randomised controlled trials, interrupted time series studies, repeated measures studies and controlled before-after studies of cap or co-payment policies for a large jurisdiction or system of care. To be included, a study had to include an objective measure of at least one of the following outcomes: medicine use, healthcare utilisation, health outcomes or costs (expenditures).

Data collection and analysis: 

Two review authors independently extracted data and assessed study limitations. We reanalysed time series data for studies with sufficient data, if appropriate analyses were not reported.

Main results: 

We included 32 full-text articles (17 new) reporting evaluations of 39 different interventions (one study - Newhouse 1993 - comprises five papers). We excluded from this update eight controlled before-after studies included in the previous version of this review, because they included only one site in their intervention or control groups. Five papers evaluated caps, and six evaluated a cap with co-insurance and a ceiling. Six evaluated fixed co-payment, two evaluated tiered fixed co-payment, 10 evaluated a ceiling with fixed co-payment and 10 evaluated a ceiling with co-insurance. Only one evaluation was a randomised trial. The certainty of the evidence was found to be generally low to very low.

Increasing the amount of money that people pay for medicines may reduce insurers’ medicine expenditures and may reduce patients’ medicine use. This may include reductions in the use of life-sustaining medicines as well as medicines that are important in treating chronic conditions and medicines for asymptomatic conditions. These types of interventions may lead to small decreases in or uncertain effects on healthcare utilisation. We found no studies that reliably reported the effects of these types of interventions on health outcomes.