Journal of General Internal Medicine

, Volume 34, Issue 3, pp 473–476 | Cite as

Payment Reform, Medication Use, and Costs: Can We Afford to Leave Out Drugs?

  • Natasha ParekhEmail author
  • Mark McClellan
  • William H. Shrank


Medications are one of the fastest growing sources of costs in the health system and the cornerstone of disease management. Despite extensive attention around drug pricing, medications have largely been excluded from CMS-derived, value-based payment models. In this perspective, we synthesize evidence about the impact of three prominent models—primary care-based redesign, ACOs, and bundled payment programs—on medication use, adherence, and costs. We also examine the literature describing similar models implemented by private payors and their relationship with medication use and costs. The exclusion of drug costs from payment reform model design has led to missed opportunities for payors and providers to prioritize effective medication management strategies and has limited our learning about the effects on cost and quality. New CMS-based models are starting to allow greater flexibility in pharmacy benefit design and reward improved medication therapy management. Additionally, health plans, pharmacies, and pharmacy benefit managers are beginning to partner on collaborative value-based pharmacy initiatives. Taken together, these efforts encourage a paradigm shift around drug cost management that more deeply integrates pharmacy into payment and delivery reform with the goal of improving quality and reducing the total cost of care.


payment reform health policy medication adherence medication costs 



Contributors: There were no other contributors to the manuscript.

Compliance with Ethical Standards

Conflict of Interest

Natasha Parekh is employed by the UPMC Center for High-Value Health Care and Center for Value-Based Pharmacy Initiatives. Mark McClellan is the Director of the Robert J. Margolis Center for Health Policy. William H. Shrank is the Chief Medical Officer of the UPMC Health Plan.


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Copyright information

© Society of General Internal Medicine 2019

Authors and Affiliations

  • Natasha Parekh
    • 1
    • 2
    Email author
  • Mark McClellan
    • 3
  • William H. Shrank
    • 2
  1. 1.Division of General Internal MedicineUniversity of PittsburghPittsburghUSA
  2. 2.Center for High-Value Health Care and Center for Value-Based Pharmacy InitiativesUPMC Health PlanPittsburghUSA
  3. 3.Duke Margolis Health Center for PolicyWashingtonUSA

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