Medicare Part D enrollees have higher cost-sharing amounts for brand name prescription drugs than those in employer plans

Research Activities, April 2011, No. 368

Cost sharing is used by Medicare Part D prescription drug plans to discourage the use of unnecessary and more expensive brand-name medications in covered patients by raising the amount patients must pay out-of-pocket for brand name drugs versus generic drugs. Indeed, a new study found that Medicare Part D enrollees had larger differences between cost sharing amounts for brand name and generic drugs than individuals with employer coverage. This difference resulted in more generic drug use among Part D enrollees.

The researchers surveyed individuals aged 65 and older in 2005 and conducted a followup survey 2 years later. It was during this period that the Medicare Part D prescription drug benefit was implemented. Both surveys asked for information on the individual's prescription drug coverage, including cost-sharing amounts, and asked what prescription medications they were taking.

The proportion of respondents without drug coverage declined from 33.6 percent in 2005 to 8.6 percent in 2007. There was also a decrease in the percentage of individuals who were not responsible for any drug costs, from 7.5 percent in 2005 to 5.9 percent in 2007. At the same time, enrollment decreased in single- and two-tier plans and expanded in three-tier drug plans (generic, preferred brand, and nonpreferred brand drugs for which the individual paid progressively higher copayments). Copayment level was not significantly associated with the number of prescriptions used by enrollees.

For those in Medicare Part D three-tier plans, brand drug copayments were higher compared with those in employer-based plans. For example, while Part D enrollees paid $55 for nonpreferred brands, those in employer-based plans only paid $39. The use of generics remained the lowest for participants in employer-based plans both before and after Part D went into effect. The study was supported in part by the Agency for Healthcare Research and Quality (HS15094).

See "Impact of cost sharing on prescription drugs used by Medicare beneficiaries," by Amber M. Goedken, Pharm.D., Julie M. Urmie, Ph.D., Karen B. Farris, Ph.D., and William R. Doucette, Ph.D., in Research in Social and Administrative Pharmacy 6, pp. 100-109, 2010.

Current as of April 2011
Internet Citation: Medicare Part D enrollees have higher cost-sharing amounts for brand name prescription drugs than those in employer plans: Research Activities, April 2011, No. 368. April 2011. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/newsletters/research-activities/apr11/0411RA17.html