Making Part D Access Affordable: Revising the Prescription Drug Benefit for 2020+

By Xcenda |

The Medicare prescription drug benefit (Part D) was enacted over 15 years ago and remains a model of private-public partnership with high beneficiary satisfaction. But, despite its success, the program needs to evolve to meet the needs of beneficiaries moving forward. Since the Medicare prescription drug benefit (Part D) was implemented in 2006, utilization of drugs has evolved. While there is high generic utilization, availability of specialty medication options has increased, creating affordability challenges for beneficiaries. 

According to the Kaiser Family Foundation, over 1 million beneficiaries had spending in the catastrophic phase of the benefit in 2017. While this may not seem significant, these beneficiaries often face chronic conditions for which they face significant medical expenses in addition to their prescription drug costs. Access is measured, in part, by affordability and the benefit is not working for these beneficiaries. 

While the Affordable Care Act (ACA) did allow for branded pharmaceutical manufacturer discounts (now 70%) in the coverage gap to assist with beneficiary out-of-pocket (OOP) costs and help move them to catastrophic coverage. The issue is that 5% of a drug that costs thousands of dollars is still out of reach for many beneficiaries. 

There has been momentum in Congress to look at the Part D benefit structure to determine the feasibility of a true OOP cap. The American Action Forum (AAF), inspired by Aetna’s work with Milliman, released a proposed model for the Part D benefit which would incentivize plans to do more to control drug spending. In recent weeks, they have proposed an alternate model which we are calling AAF+, that modifies their original proposal but moves manufacturer discounts over the course of the benefit.

But who do these models help? Xcenda was commissioned on behalf of the Council for Affordable Health Coverage to create patient profiles for typical patients with various conditions to determine the impact of the models on patient OOP spending.  The results clearly demonstrate that the OOP caps would create a meaningful step toward more affordable access for beneficiaries who face significant drug spending.