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Studies Examine Effects of 'Doughnut Hole' on Medicare Beneficiaries

By Melissa Attias, CQ Staff

FEBRUARY 3, 2009 -- Two studies released Tuesday show that while the Medicare Part D drug benefit reduced out-of-pocket spending for seniors and increased their use of essential medicines during its first year in 2006, Part D patients increased their use of less beneficial medications and decreased medication usage when they entered the coverage gap known as the "doughnut hole."

The authors of both studies, published on the Health Affairs Web site, recommended redesigning the benefit to provide additional coverage in the doughnut hole to prevent adverse health effects in seniors. The coverage gap was originally implemented to keep the cost of the program within the amount specified by the congressional budget resolution.

While the Centers for Medicare and Medicaid Services did not comment directly on the studies, agency spokesman Peter Ashkenaz said CMS data shows that in 2007 and 2008, the average number of prescriptions filled showed little change as enrollees entered the coverage gap.

Specifically, among enrollees who reached the coverage gap, there were small decreases in the average number of prescriptions per beneficiary per month from before beneficiaries they reached the gap to after they reached the gap. For beneficiaries qualifying for Medicare's low-income subsidy, the decline was from 6.63 to 6.55 prescriptions. Among beneficiaries who do not qualify for the subsidy, for those who have gap coverage, the number of prescriptions declined from 5.26 to 4.87 prescriptions. For beneficiaries without gap coverage, the decline was from 4.77 to 4.39 prescriptions, Ashkenaz said.

In the first study, researchers tracked 114,766 continuous users of three pharmacy chains who lacked prescription drug benefits and found that 55 percent initiated drug insurance under Part D. Among seniors who selected the benefit, Part D increased their drug use three to 37 percent and reduced their out-of-pocket spending 37 to 58 percent.

In addition, the data showed that co-payments for one month's worth of selected medications were $15 to $80 lower under Part D, in comparison with the pre-Part D period.

The study also measured usage levels in four drug categories: statins (used to reduce cholesterol), clopidogrel (used to prevent blood clots that can lead to heart attacks and strokes), proton-pump inhibitors (PPIs, use to reduce gastric acid) and warfarin (also used to prevent clotting). According to the findings, use of clopidogrel under Part D increased 11 percent while use of statins increased by 22 percent. In contrast, warfarin, which is less expensive, did not significantly increase, while PPIs, a drug class that many health experts think is overused, increased by 37 percent.

Finally, the study found that patients who reached the coverage gap filled fewer prescriptions than they did during the previous months under Part D. Specifically, medication usage decreased by amounts ranging from 5.7 percentage points a month for warfarin to 6.3 percentage points a month for statins for seniors who reached the doughnut hole.

"The Part D program has expanded seniors' access to prescription drugs while keeping costs far below expectations. In 2008, every senior across the country had access to a prescription drug plan that provided at least some coverage in the gap, and those without coverage still received discounts negotiated by Part D plans," said Robert Zirkelbach, spokesman for America's Health Insurance Plans. "Moreover, plans have also taken steps to mitigate the impact of the coverage gap, including incentives for greater use of generic prescription drugs which reduce out-of-pocket costs for seniors and delay their entry into the gap. Most importantly, seniors continue to express very high satisfaction with their prescription drug coverage."

The Pharmaceutical Research and Manufacturers of America (PhRMA) did not immediately respond to a request for comment.

To ensure that seniors are using the benefit effectively, the study authors suggest redesigning Part D to require evidence of clinical appropriateness before authorizing medication use and instituting benefit designs to reduce the cost patients must pay for the most effective medications.

The authors also recommend providing additional coverage in the doughnut hole for essential medications to prevent seniors from damaging their health.

In the second study, researchers examined two groups of Medicare beneficiaries: a group covered through an employer-sponsored plan with no coverage gap and a group covered by individual Medicare Advantage Prescription Drug plans with either no coverage or some generic drug coverage in the doughnut hole.

The results also show that those who received no coverage in the doughnut hole reduced their use of prescription drugs by 14 percent, or about 0.7 prescriptions per month, when they entered the coverage gap. Patients with coverage for generic drugs but not brand name drugs, in contrast, only reduced their medication use by 3 percent, or 0.14 prescriptions per month.

To overcome this drop-off in drug usage, researchers suggest mandating generic coverage in the doughnut hole. Researchers say increasing the initial 25 percent co-pay for drug spending between $250 and $2,250 by 5.6 percentage points to 30.6 percentage points will enable patients to have generic coverage in the doughnut hole with a $10 co-pay for each monthly prescription. Increasing the initial co-pay to 34.1 percent would provide generic coverage and eliminate the need for the $10 co-pays.

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