Who Pays for Specialty Medicines? - Pharmaceutical Executive


Who Pays for Specialty Medicines?

Pharmaceutical Executive

The analysis

We evaluated the impact of out-of-pocket (OOP) cost on access to specialty medicines for enrollees in Medicare Part D, using patient-specific, de-identified longitudinal claims data that capture the sequence of steps in pharmacy transactions. First, we assessed the cost burden in 2011 for Part D enrollees in three therapeutic areas: rheumatoid arthritis (RA), multiple sclerosis (MS), and oral oncology. For each therapeutic area, we determined patients' actual out-of-pocket costs for Part D prescriptions filled in 2011 that had no secondary source of payment. Because one specialty prescription claim may span several Part D coverage phases, we estimated monthly OOP costs in each coverage phase by applying phase-specific coinsurance rates to the total cost per product.

We then evaluated whether behavior of new patients is affected by the OOP costs they face at the pharmacy. We measured the proportion of Medicare patients without a low income subsidy who did not fill (abandoned) their first approved prescription for a specialty medicine during 2009 through 2011. The analysis was restricted to prescriptions approved in the initial coverage phase for patients new to a specialty therapy (i.e., with no prescription for the product within the previous 12 months). We assessed abandonment by OOP cost at three time points: the initial approval date, 30 days, and 90 days thereafter.

Our results

Average Monthly Patient Out-of-Pocket Cost per Prescription, 2011*
First, we identified the OOP cost burden of specialty tier medicines for patients in each of these three therapeutic areas. In all three, patients' estimated cost for a 30-day fill exceeded $400 at the 25 percent coinsurance level and $600 at the 33 percent coinsurance level (see table).

Second, we asked if OOP cost matters—and does it affect patient behavior? Across all three therapeutic areas, more than half of patients starting treatment with a medication covered on the specialty tier abandoned their prescriptions at the pharmacy. The total proportion of new patients who abandoned their first script was 56 percent for RA patients, 55 percent for MS, and 53 percent for oral oncology (see figure). These rates were substantially greater than the abandonment rates below 20% that we observed during the same time period for traditional oral therapies that treat chronic conditions such as high cholesterol and Parkinson's disease.

And abandonment of specialty tier medicines went up as patient out-of-pocket cost increased. Most new RA patients faced OOP cost of $100 or more, and their abandonment rate (52 percent and higher) was more than double the 11 percent and 21 percent seen in cohorts paying less than $50 and $50-$99.99, respectively. For new MS and oral oncology patients, the first jump in abandonment occurred when OOP cost reached $250 or more.

Among our sampled patients, the cost burden was highest for oncology patients: 78 percent of their initial scripts showed OOP cost of $500 or higher. Because cancer is often acutely life-threatening, oral oncology patients were less likely to abandon medications than RA and MS patients who faced similar OOP costs. For example, 45 percent of oncology patients abandoned prescriptions despite OOP cost of $500-$749.99, compared with 71 percent of RA patients. Abandonment of oral oncology products increased steadily as patients' costs for these life-saving medicines escalated to thousands of dollars per month.

To make sure high abandonment wasn't a transient phenomenon, we reassessed rates at two additional time periods. Longitudinal data showed progressive slight improvement in fill rates after 30 and 90 days, with abandonment decreasing in several cost cohorts. However, overall abandonment rates remained high even after 90 days, dropping by only 8 to 10 percentage points to 47 percent for RA and MS patients and 43 percent for oral oncology patients.

The bottom line

Analysis of Medicare claims demonstrates that patients on specialty tier medicines face high out-of-pocket costs. High cost sharing impedes access to these medicines, causing a large proportion of new patients to abandon therapy. In some instances, patients may be able to choose an alternative treatment, but our analysis shows that many patients are not initiating therapy that their doctors prescribed and their plans authorized. Delaying or foregoing treatment can have serious health consequences and result in higher overall health costs. As health plans design prescription drug coverage, it is crucial to assure that benefit designs spread costs across the entire insured population, rather than concentrate the highest costs on a small subset of patients who may be forced to abandon needed prescriptions for specialty tier therapies.

Alison King is a Senior Consultant at The Amundsen Group and can be reached at
. Lauri Mitchell is a Director at The Amundsen Group, and can be reached at

Author's Note: The authors appreciate the data analysis conducted by Christopher Katz and William Aubin of The Amundsen Group. This research was funded in part by the Pharmaceutical Research and Manufacturers of America.


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