Medicare Drug Benefit Boosts Pharmaceutical Use

Expanded access to drugs for seniors has increased demand and focused attention on costs.
Oct 02, 2007
Volume 31, Issue 10

Jill Wechsler
As the Medicare prescription drug benefit heads into its third year, analysts are applauding the program's success in providing pharmaceutical coverage for millions of elderly patients. Surveys show a substantial expansion of benefits, particularly for low-income seniors. Despite initial predictions that the Medicare Part D program would fail, there are multiple signs of success: major insurers are sticking with the program, costs are holding steady, employers are continuing to provide retiree benefits, and drug coverage remains fairly broad. Beneficiaries appear generally satisfied with their plans and express increased comfort in navigating the complex system. Even the much-feared "donut hole," a gap between Part D basic benefits and catastrophic coverage, has created fairly limited problems.

At the same time, many seniors have failed to sign up for drug benefits, either because they still don't know about the program or they use few medicines and don't consider coverage necessary. Many Part D enrollees still have high out-of-pocket drug expenses, especially those who don't qualify for low-income subsidies. And critics of the program claim that Part D plans pay too much for drugs and that the government should negotiate lower prices with manufacturers.

Broad coverage

The good news from the Centers for Medicare and Medicaid Services (CMS) this year is that most Medicare beneficiaries now have prescription drug coverage through a Part D prescription-drug plan (PDP) or other program. By the beginning of 2007, CMS reported that almost 40 million seniors had drug benefits, a substantial increase from the 27 million of the previous year. More than half (24 million) are enrolled in Part D, including nine million seniors eligible for low-income subsidies assigned to PDPs and eight million who obtain coverage through Medicare Advantage (MA) plans. Another seven million retirees receive drug benefits from employers, and five million federal government and military retirees have coverage through government health programs.

Similarly, a national survey of 16,000 seniors reports that 90% of seniors had some kind of prescription-drug coverage in 2006, up from less than 50% in 2005. The breakdown for sources of coverage fits the CMS numbers: half are in Part D plans, one-third obtain coverage from employers, and about 10% have benefits from the Veterans Administration (VA) or military, according to this analysis by the Kaiser Family Foundation, the Commonwealth Fund, and Tufts-New England Medical Center (published online by Health Affairs, Aug. 21, 2007). The survey found that Part D plans had higher proportions of low-income members that were automatically enrolled by CMS, and that seniors with chronic health conditions and high drug use were more likely to obtain coverage than those with low drug use.

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In addition to expanding coverage, CMS and the plans themselves are making it easier for seniors to select appropriate programs. Another survey of more than 10,000 seniors, conducted by University of Michigan economists, reports that Part D enrollees feel more confident and less confused about the drug-benefit program.

Increased use

The big jump in prescription-drug coverage is boosting drug use for an important patient cohort, thus affecting pharmaceutical manufacturers. The 24 million seniors enrolled in Part D plans filled approximately 486 million prescriptions in 2006—almost 15% of the total retail prescription-drug market, according to IMS Health (Norwalk, CT); the Part D share stabilized at 17% of US retail by the end of 2006.

The Medicare program stimulated the use of most chronic therapeutic classes of drugs, particularly those for asymptomatic conditions such as hypertension and high cholesterol. Hypertension drugs got the biggest chunk of the pie, accounting for 122 million prescriptions, or one-fourth of all the drugs provided under the program. Lipid regulators came in second with 7.4% (36 million scripts), and antidepressants accounted for 25 million prescriptions, a 5.1% share.

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