Five-year impact of Medicare Part D coverage gap reform on drug expenditures and utilization

Abstract

Objective: To estimate the impact of the Medicare Part D coverage gap reform under the Affordable Care Act (ACA) on the utilization of and expenditures for prescription drugs within the first five years of the policy's implementation.

Data sources: 2008-2015 Medicare Current Beneficiary Survey (MCBS).

Study design: We used a difference-in-differences approach to estimate the year-by-year changes in prescription drug use and expenditures before (2006-2010) and after (2011-2015) the ACA's Part D coverage gap reform between Part D beneficiaries not receiving the Low-Income Subsidy (LIS) and those receiving the LIS.

Data collection: The study sample included Part D beneficiaries (a) aged 65 years or older; (b) not disabled or having end-stage renal disease; (c) continuously enrolled in a Part D plan (d) having at least one prescription fill in a given year. Survey-reported and administrative Part D events data in the MCBS were used for the analyses.

Principal findings: After the ACA reform, annual out-of-pocket drug spending significantly decreased by $88 (P < .01) among non-LIS beneficiaries compared to LIS beneficiaries, with growing decreases over time (average decreases of $41 in 2011, $49 in 2012, $105 in 2013, and $135 in 2015, P < .01 or <.05). Changes in out-of-pocket costs were largely driven by significant decreases among brand-name drugs (overall decrease of $106, P < .01). Despite significantly reduced out-of-pocket spending, there were no significant changes in the overall number of 30-day drug fills and total drug spending; however, changes in the use of brand-name and generic drugs were seen after the ACA (increase of 1.9 fills for brand-name drugs and decrease of 2.3 fills for generic drug in 2015, P < .05).

Conclusions: The ACA coverage gap reform has helped to reduce the out-of-pocket drug cost burden for beneficiaries, although it had no noticeable impact on drug use or total drug spending.

Keywords: Affordable Care Act; Medicare Part D; coverage gap; drug utilization; expenditure; out-of-pocket costs; prescription drug.