What are the projected effects of the Department of Health and Human Services (HHS) proposed Medicare Part B drug pricing reform on drug spending and out-of-pocket costs?
In this analysis of 75 brand-name drugs with the highest Part B expenditures in 2016, shifting Medicare Part B drugs to Part D was estimated to decrease total drug spending by 7% to 18% after rebates. Under the standard 2018 Part D benefit, out-of-pocket costs for most drugs were projected to be lower in Part D among fee-for-service Medicare beneficiaries without Medicaid or supplemental insurance in Part B and among those who would qualify for the low-income subsidy program; however, out-of-pocket costs were estimated to increase among beneficiaries with Medicare supplement insurance and among those currently without Part D coverage.
Although the HHS proposal may reduce total drug spending, it could increase out-of-pocket costs for some Medicare beneficiaries.
The US Department of Health and Human Services (HHS) has proposed to reform drug pricing in Medicare Part B, which primarily covers physician-administered drugs and biologic agents. One HHS proposal would shift coverage of certain drugs from Medicare Part B to Part D, which is administered by private prescription drug plans.
To estimate the association of changes of a shift in Medicare Part B to Part D with total drug spending and patient cost-sharing.
Design, Setting, and Participants
Retrospective drug cohort study of the 75 brand-name drugs associated with the highest Part B expenditures among fee-for-service Medicare beneficiaries in 2016.
Main Outcomes and Measures
Estimated total Medicare spending in Part B and Part D; annual out-of-pocket costs in Part B and under the standard 2018 Part D benefit; and proportion of drugs in Part D’s protected drug classes (immunosuppressants for prophylaxis of organ transplant rejection, antidepressants, antipsychotics, anticonvulsants, antiretrovirals, and antineoplastics).
At 2018 prices, total Medicare Part B spending for the 75 brand-name drugs with the highest Part B expenditures was estimated to be $21.6 billion annually. Under the proposed policy, total Part D drug spending for these drugs was estimated to range between $17.6 billion and $20.1 billion after rebates, corresponding to a 6.9% to 18.3% decrease in drug spending in Part D compared with Part B. Of the 75 drugs studied, 33 (44.0%) drugs, accounting for $9.5 billion (43.9%) in Part B spending, were in protected Part D classes where plans must cover essentially all drugs. For 67 drugs with available information, the prices for 65 (97.0%) were a median of 45.8% to 59.7% lower in comparator high-income countries than Part B drug prices. Median patient cost-sharing in Part B for all 75 brand-name drugs was $4683 (interquartile range [IQR], $1069-$9282) per year. Shifting Part B drugs to the 2018 standard Part D benefit was projected to decrease out-of-pocket costs by a median of $860 (IQR, −$3884 to $496) among Medicare beneficiaries without Medicaid or Part B supplemental insurance (Medigap). For beneficiaries who would qualify for the low-income subsidy program in Part D, cost-sharing would be lower in Part D than in Part B for all drugs. For beneficiaries with Medigap insurance, estimated Part D out-of-pocket costs exceeded average Medigap premium costs by a median of $1460 for those with Part D coverage and by a median of $1952 for those without Part D coverage.
Conclusions and Relevance
Although the HHS proposal to shift certain drugs from Medicare Part B to Part D may reduce total drug spending, it may increase out-of-pocket costs for some Medicare beneficiaries, including those with Medicare supplement insurance. The Department of Health and Human Services should ensure that the proposed reforms benefit both patients and payers.
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Hwang TJ, Jain N, Lauffenburger JC, Vokinger KN, Kesselheim AS. Analysis of Proposed Medicare Part B to Part D Shift With Associated Changes in Total Spending and Patient Cost-Sharing for Prescription Drugs. JAMA Intern Med. Published online January 14, 2019179(3):374–380. doi:10.1001/jamainternmed.2018.6417
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