Embargoed Until:
February 3, 2009
12:01 a.m. Eastern Time



Christopher Fleming

Medicare Drug Benefit Reduced Costs For Seniors And Increased Their Use Of Essential Medications

But Use Of Less Beneficial Medications Also Increased, And Medication Use Decreased In Coverage Gap

Researchers Calculate The Increase In Initial Copayments Needed To Finance Insurance For Generic Prescriptions In Coverage Gap

Bethesda, MD -- The first year of the Medicare Part D prescription drug benefit saw increased use of essential medications and reduced out-of-pocket spending for seniors, but it also led to the increased use of already overused medications. Moreover, medication usage went down for patients who had no coverage in the "doughnut hole," a coverage gap in the standard Part D benefit that in 2006, the first year of the benefit, occurred between $2,250 and $5,100 of total drug spending.

Those conclusions emerge from two studies released today in the Health Affairs Web site. In the first study, Sebastian Schneeweiss, an associate professor of medicine at Brigham and Women's Hospital and Harvard Medical School in Boston, and coauthors looked at approximately 115,000 continuous users of three pharmacy chains who had no prescription drug coverage before Part D took effect at the beginning of 2006. The researchers found that copayments for a month's worth of selected medication classes were $15-$80 lower after Part D had taken full effect, as compared to the pre-Part D period. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.2.w305

Schneeweiss and colleagues also found that previously uninsured people who enrolled in Part D were more likely to use medications that can improve health outcomes. The researchers examined usage levels for four drug categories: clopidogrel (used to prevent blood clots that can cause heart attacks and strokes); statins (used to reduce cholesterol); warfarin (another anti-clotting drug); and proton-pump inhibitors (PPIs) (used to reduce gastric acid).

Compared to pre-Part D levels, the use of clopidogrel went up 11 percent, and the use of statins (used to reduce cholesterol) went up 22 percent. However, the highest increase in usage -- 37 percent -- was for PPIs, a drug class that many believe is already overused. The researchers say that Medicare should consider benefit designs that require evidence of clinical appropriateness before authorizing medication use, as well as value-based benefit designs that reduce cost sharing for the most effective medications.

Moreover, for the 12 percent of seniors who reached the doughnut hole, medication usage went down by amounts ranging from 5.7 percentage points per month for warfarin to 6.3 percentage points a month for statins. "Particularly since the seniors who reached the coverage gap tended to be those most burdened by chronic disease, the decrease in medication use during this period could undo much of the benefit of increased medication usage under Part D," said Schneeweiss.

Coverage For Generics In The Doughnut Hole
Could Be Financed Through Increase In Initial Copays

In the second study, Yuting Zhang and colleagues examined two groups of seniors with Medicare drug coverage through a major Pennsylvania insurer: a group covered through an employer-sponsored plan who had coverage in the doughnut hole for brand-name and generic drugs, and a group covered through individual Medicare Advantage Prescription Drug (MA-PD) plans who had either no drug coverage in the doughnut hole or coverage for generic drugs only. MA-PD plans cover beneficiaries for all Medicare services, such as hospital and physician treatment, as well as prescription drugs. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.2.w317

Zhang and colleagues found that, overall, 40 percent of those in the employer plan reached the doughnut hole, compared with only 25 percent in the individual plans, indicating that beneficiaries lacking doughnut-hole coverage anticipated the gap and adjusted their spending accordingly. Seniors with chronic conditions were more likely to reach the doughnut hole and to do so more quickly, according to Zhang, an assistant professor of health economics at the University of Pittsburgh Graduate School of Public Health, and coauthors  

Compared to seniors in the employer plan, who had doughnut-hole coverage for both brand-name and prescription drugs, those lacking any coverage in the doughnut hole reduced their drug usage by 14 percent when they reached that gap. By contrast, those with generic-only coverage in the doughnut hole decreased their usage rate by much less -- by only 3 percent compared to those with full coverage.

"The high drop-off in drug usage among those with no doughnut-hole coverage could have adverse health consequences. It could also increase hospital and physician costs, but even so, MA-PD plans might shy away from offering doughnut-hole coverage for fear of attracting seniors with high drug costs," Zhang said. To overcome this dynamic, Richard Frank and Joseph Newhouse have proposed mandating generic coverage in the doughnut hole and financing this by allowing the 25 percent coinsurance rate for drug spending between $250 to $2,250 to increase, something currently prohibited by law.

Increasing the initial 25 percent copay 5.6 percentage points, to 30.6 percent, would finance generic coverage in the doughnut hole with a $10 copay for each monthly prescription, according to Zhang and coauthors. An increase of 9.1 percentage points, to 34.1 percent, would be required to finance generic coverage in the doughnut hole with no copays, the researchers say.

After the embargo lifts, the article by Schneeweiss and coauthors will be available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.2.w305

The article by Zhang and coauthors will be available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.2.w317



Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will switch to pay-per-view for nonsubscribers. Web Exclusives are supported in part by a grant from the Commonwealth Fund.


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