Has Medicare Part D Done its Job?
No one will argue that Medicare Part D met a genuine need at its inception in the mid-2000s – offering US Seniors an affordable voluntary health insurance plan that would cover their outpatient prescription needs. Fast forward 10 years. Has Part D met its objective? Looking at the front-end of things in terms of the availability of a wide range of plans at an affordable premium in all parts of the nation, yes, definitely. Looking at the back-end of things in terms of actual payments made to beneficiaries, this is a question mark.
Diving in to the Claims Data
The good thing about CMS is that they are true to their commitment to data transparency and availability. Seventy percent of all claims leading to a Medicare Part D reimbursement event are available on their website for anyone to download and analyze. Which I did and which I will keep doing regularly given the wealth of insight laying in that goldmine for anyone interested in value-based healthcare. And because this is individual claims data, you can aggregate them by any variable you are interested in – product if you are a pharma company, region if you are a policymaker, indication if you are a physician, etc. I have looked at it through the lens of the beneficiary. More precisely, by asking the data:
“How much could the maximum financial burden for a patient be in one year and for one single medicine?”
The Six Drugs Costing Patients Over $10,000 a Year
The short answer is “a lot”. In more details, there are 6 prescription drugs that will, on average, cost a patient more than US$10,000 a year:
- Cinryze® – a C1 Esterase Inhibitor indicated for the prevention of swelling and/or painful attacks in teenagers and adults with Hereditary Angioedema (HAE)
- Berinert® – a C1 Esterase Inhibitor indicated for the on-demand treatment of swelling and/or painful attacks of hereditary angioedema (HAE) in adults and children
- Actiimune® – an Interferon Gamma-1B indicated for the treatment of chronic granulomatous disease and severe malignant osteoporosis
- Gattex® – a glucagon-like peptide-2 (GLP-2) analog indicated for the treatment of adult patients with Short Bowel Syndrome (SBS)
- Kalbitor® – a plasma kallikrein inhibitor indicated for treatment of acute attacks of hereditary angioedema (HAE)
Where Does this Cost Come From?
Now, the purpose of this post is not to discuss the merit of these products from the point of view of value-based pricing. Because value-based pricing is my day job and I somewhat consider this blog to be my night job. No, the purpose of this post, also because it is getting late in the day and I am craving sugar, is to write about donuts. More specifically what is usually in the middle of it – a big hole.
Somewhere in the thick piece of legislation that provides the framework for Part D, lawmakers have designed a sophisticated scheme that would make the beneficiaries financially accountable for a portion of their drugs payment. The definition of “portion” has been the subject of intense Experts meetings and has led to this –
source: Center for Medicare and Medicaid Sevices / Inbeeo’s analysis
I have put this schematic together because trying to write about it would have led to something like-
The beneficiary funds the first tens of dollars of the cost – except in the case of $0-deductible plans – and then splits the cost 25-75 with the plan, before paying a bigger portion of the cost in something called the “donut hole” – portion that becomes smaller and smaller as manufacturers are required to chip in as part of the Affordable Care Act – for finally paying a small portion of the highest tranche of the cost – for which the manufacturer is not required to chip in – although it is aptly named the “catastrophic coverage portion”.
And there goes the rule to write short sentences in articles – down the toilet!
The Number of Patients Affected may be Small but is Rapidly Rising
So, how big is the problem? Surely small in absolute terms. Surely big if you ask the affected patients. And there are worryingly more and more of them-
source: Center for Medicare and Medicaid Sevices / Inbeeo’s analysis (based on 70% of all claims; beneficiaries of Low-Income Subsidies were excluded)
Putting the initial legislation aside, what stuns me the most in this story is the level of sophistication that has been applied to the progressive closing of the donut hole, while the Catastrophic Coverage Portion was ignored altogether. It inevitably reminds me of one of my all-time favorite scenes from The Simpsons-
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