A Trump administration plan to lower drug costs for seniors on Medicare could end up forcing seniors to pay hundreds of dollars more for their arthritis medication, according to a new analysis.
The pharma-funded study from the consulting firm Avalere Health found that Medicare patients with rheumatoid arthritis could pay more for their drugs due to a proposal in the administration’s blueprint released last May to tackle high drug prices.
As part of its plan, the administration is considering moving drugs covered under Medicare Part B into Part D, the program’s prescription drug plan. Medicare Part B reimburses doctors and hospitals for drugs that are administered in an office or hospital like a vaccine or chemotherapy, while Part D refers to the program that seniors use to buy drugs at the pharmacy.
Private plans can negotiate drug prices under Part D, but Avalere's study, which was funded by the pharma lobbying group Pharmaceutical Research and Manufacturers of America, found that seniors often pay more out-of-pocket for rheumatoid arthritis drugs covered under Part D compared to those under Part B.
“In 2016, the average annual out-of-pocket costs for Part B-covered [arthritis] drugs was $1,380, compared to $1,990 for drugs covered by Part D,” the analysis said.
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The reason for the discrepancy is differences in benefits between Part B and Part D, and how Medicare Part D covers out-of-pocket costs.
For Part B, beneficiaries pay 20 percent of the total cost of medical services, which is called coinsurance, and this includes all the medicines that were administered in a doctor’s office. Beneficiaries can also get supplemental plans to cover costs of deductibles or coninsurance.
But such supplemental plans are not allowed under Part D, Avalere said.
“Medicare Part D covers only self-administered prescription medicines and has a more complex structure that requires some degree of out-of-pocket spending for beneficiaries who do not qualify for low-income subsidies,” the analysis said.
Avalere found that Part D plans require patients to pay a coinsurance for all arthritis therapies rather than a copayment, which offers a fixed discount to a drug. But seniors cannot use a supplemental plan to lower their coinsurance for a Part D drug, which is why they must pay more money than they would under Part B.
“As a result of the different benefit structures of Part B and Part D, Avalere’s analysis finds that in 2016, patients receiving Part-D covered therapies on average paid $610 more per year compared to those taking [rheumatoid arthritis] therapies covered by Part B,” Avalere said.
The analysis also found that it might be harder for seniors to gain access to the drugs they want.
Avalere cited the use in Medicare Part D of strategies called utilization management, which restrict access to more expensive drugs. Strategies including step therapy and prior authorization require a patient to try a cheaper version of a prescription drug and move on to a more expensive version only if it doesn't work.
Part B does not have utilization management, but that could change under a separate proposal in the Trump administration’s blueprint. Today, only six percent of rheumatoid arthritis drugs covered in Medicare Part D don’t have any utilization management strategies attached.
“The proposal to move drugs from Part B into Part D may subject more patients to utilization management for rheumatoid arthritis medications,” said Richard Kane, senior director at Avalere, in a statement. “As a result, beneficiaries may find it more difficult to access care.”