Inside the Doughnut Hole - Pharmaceutical Executive


Inside the Doughnut Hole

Pharmaceutical Executive

In analysis of several therapeutic classes, the group that shows the most change has often been the cohort that never reaches the coverage gap. For most therapeutic classes, this is the largest cohort. They cut back refills the most, reducing their days of therapy. And they start to change their behavior earlier in the calendar year. The "avoidance cohort," as it is called, typically start out taking many different drugs each month, and the majority of these patients spend more than $200 a month in the first half of the year. By mid-year, however, these patients change their behavior significantly. They drop therapy or switch to an OTC alternative (which can't be tracked in retail Rx data). They reduce their compliance and stretch out their prescriptions. They are also more likely to switch to a generic if it is available in the classes of drugs they are using.

Patients who reached the $2,400 threshold in 2007 got there for a reason. They were compliant with their medications, and filled enough prescriptions to get into the gap early in the year. In terms of days of therapy lost, however, they can be less important than the avoidance cohort. For one thing, there are far fewer of them. And on average, they reduce usage less and are affected for the shortest periods of time.

Patients who started the year on a branded PPI product, but didn't spend enough on all prescriptions to reach the coverage limit, were just as likely to drop off therapy as were patients who reached the coverage gap and faced full prices. Patients with coverage in the gap—from their LIS status or some other coverage—were far more likely to be persistent.

When you calculate—How many? How much impact? How long?—for each of these cohorts, you can determine the overall impact of the gap in coverage on the nonsubsidy patients in a therapeutic class. In the PPI class, for example, about 2 percent of days of branded therapy were lost among nonsubsidy Part D patients as a result of the coverage gap.

Variation by Therapeutic Class and Brand

Although this analysis has been conducted for a wide range of therapeutic classes and products, we have been unable to predict, a priori, which patients will be most impacted by the coverage gap. However, the coverage gap can be less of an issue in classes in which LIS enrollees account for a disproportionately high percentage of the Part D prescriptions. For example, LIS patients may account for more than 75 percent of prescriptions filled for atypical antipsychotics, such as Zyprexa (olanzapine). Conversely, the presence of a widely accepted generics alternative, such as omeprazole or simvastatin, is a good predictor of a class that will be impacted more significantly. Other factors that may influence the importance of the coverage gap include the existence of manufacturers' patient assistance programs, the legacy effects of state patient assistance programs that might have granted preferred status to a particular product, and the availability of OTC alternatives that would be acceptable to the consumer—such as allergy products.

Will patients who hit the coverage gap in 2007 come back to the brand when their cumulative drug spend resets to $0? Will patients who were exposed to the coverage gap last year learn how to manage around it and get smarter every year? Will manufacturers find ways to respond to the coverage gap in a cost-effective way?

Like our clients, we want to lift another veil from the coverage gap mystery, and will do so as 2008 data become available.

Mason Tenaglia and Lauri Mitchell are directors of the Amundsen Group. They can be reached at
. Keith Mandia is senior director of managed care product management for Verispan. He can be reached at


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