PDP drug costs are higher than employer plans

With the exception of specialty drugs, enrollees in Medicare Part D plans paid more for their commonly used drugs than beneficiaries in employer plans, according to a recent report, “Medicare Prescription Drug Plans in 2008 and Key Changes Since 2006: Summary of Findings.” Although there has been minimal change in coverage benefits among Part D formularies since 2006, there has been an increase in cost sharing and utilization management restrictions, which can have important implications on beneficiaries’ access to medications or out-of-pocket expenses.

Medicare Part D plans (PDPs) charged more in 2007, on average, for preferred and nonpreferred brand drugs than did employer plans, and the financial incentives for drug switching (from nonpreferred to preferred drugs and from brands to generics) appear to be stronger in PDPs than in employer plans, according to the analysis.

Since plans have very different levels of enrollment and different cost sharing, “describing the cost sharing of a typical beneficiary may be difficult,” says Elizabeth Hargrave, senior research scientist at the National Opinion Research Center (NORC) at the University of Chicago. She is a coauthor. The researchers gave “more weight to the more common plans and less weight to some of the more obscure plans,” Hargrave says.

Change in weighted average cost sharing for national PDPs and for employer-sponsored plans

Note: Based on plans with three flat-dollar copayment tiers and includes only plans that will be offered in 2008.

Source: Georgetown University/NORC analysis of data from CMS for the Kaiser Family Foundation; employer plan data from Kaiser/HRET employer health benefits survey

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