Comparison of Out-of-Pocket Spending on Ultra-Expensive Drugs in Medicare Part D vs Commercial Insurance

Abstract

Importance: Little is known about how out-of-pocket burden differs between Medicare and commercial insurance for ultra-expensive drugs.

Objective: To investigate out-of-pocket spending for ultra-expensive drugs in the Medicare Part D program vs commercial insurance.

Design, setting, and participants: This was a retrospective, population-based cohort study of individuals using ultra-expensive drugs included in a 20% nationally random sample of prescription drug claims from Medicare Part D and individuals aged 45 to 64 years using ultra-expensive drugs included in a large national convenience sample of outpatient pharmaceutical claims from commercial insurance plans. Claims data from 2013 through 2019 were used, and data were analyzed in February 2023.

Main outcomes and measures: Claims-weighted mean out-of-pocket spending per beneficiary per drug by insurance type, plan, and age.

Results: In 2019, 37 324 and 24 159 individuals using ultra-expensive drugs were identified in the 20% Part D and commercial samples, respectively (mean [SD] age, 66.2 [11.7] years; 54.9% female). A statistically significant higher share of commercial enrollees vs Part D beneficiaries were female (61.0% vs 51.0%; P < .001), and a statistically significantly lower share were using 3 or more branded medications (28.7% vs 42.6%; P < .001). Mean out-of-pocket spending per beneficiary per drug in 2019 was $4478 in Part D (median [IQR], $4169 [$3369-$5947]) compared with $1821 for commercial (median [IQR], $1272 [$703-$1924]); these differences were statistically significant every year. Differences in out-of-pocket spending comparing commercial enrollees aged 60 to 64 years and Part D beneficiaries aged 65 to 69 years exhibited similar magnitudes and trends. By plan, mean out-of-pocket spending per beneficiary per drug in 2019 was $4301 (median [IQR], $4131 [$3000-$6048]) in Medicare Advantage prescription drug (MAPD) plans, $4575 (median [IQR], $4190 [$3305-$5799]) in stand-alone prescription drug plans (PDPs), $1208 (median [IQR], $752 [$317-$1240]) in health maintenance organization plans, $1569 (median [IQR], $838 [$481-$1472]) in preferred provider organization plans, and $4077 (median [IQR], $2882 [$1075-$4226]) in high-deductible health plans. There were no statistically significant differences between MAPD plans and stand-alone PDPs in any study year. Mean out-of-pocket spending was statistically significantly higher in MAPD plans compared with health maintenance organization plans and in stand-alone PDPs compared with preferred provider organization plans in each study year.

Conclusions and relevance: This cohort study demonstrated that the $2000 out-of-pocket cap included in the Inflation Reduction Act may substantially moderate the potential increase in spending faced by individuals who use ultra-expensive drugs when moving from commercial insurance to Part D coverage.

Figure.. Share of Total Beneficiaries and Total Spending Attributable to Ultra-Expensive Drugs (UEDs) in Medicare Part D and Commercial Insurance, 2013-2019