D-Day

September 27, 2006
Pharmaceutical Executive
Volume 0, Issue 0

The Part D donut hole has arrived, and pharma is scrambling to maintain brand loyalty.

Medicare beneficiaries have begun reaching the so-called "donut hole," the gap in Part D drug coverage, presenting--at best--a temporary dip in sales for pharma companies. At worst, pharma could suffer serious long-term effects, should beneficiaries choose not to resume their prescriptions in 2007, when coverage resumes.

With a significant number of beneficiaries facing the donut hole choosing to forgo medications altogether rather than switch to a generic (or pay out of pocket for the branded version), pharma finds itself struggling not only to maintain brand loyalty, but also to convince affected beneficiaries of the importance of sticking with treatment.

One message pharma wants to get across is that Part D beneficiaries have the option of upgrading their plans to a level at which they don't suffer the consequences of the donut hole; a recent Wolters Kluwer study found that many beneficiaries are unaware of this option.

Pharma companies are prohibited from targeting Medicare Part D beneficiaries directly, but they can work with insurers and other organizations on education efforts.

Already, said Carolyn Stables, a spokeswoman for the Academy of Managed Care Pharmacy, pharma companies are ramping up efforts to provide doctors with additional drug samples and get out the word about patient assistance programs.

The Wolters Kluwer study, one the first analyses of the donut hole's effect, found that about 16 percent of beneficiaries are discontinuing therapy once their plans no longer cover the cost of their prescriptions. Patients were most likely to discontinue medications in non-acute therapeutic categories, like arthritis drugs and proton pump inhibitors. About 33.4 percent of patients discontinued their arthritis drugs, while only 8.1 percent discontinued cholesterol reducers and 11.5 percent discontinued oral diabetes therapies. It remains unclear whether they will discontinue therapy indefinitely, or until their 2007 coverage kicks in.

About 35 percent of Medicare beneficiaries, or six million people, are expected to reach the coverage gap this year, and will be responsible for up to $2,850 in drug costs, the report found. (Estimates on the exact number of beneficiaries to hit the donut hole vary, however, and other analyses have suggested the exact number could be anywhere from three to seven million.) Compared with patients still in the deductible phase of their Part D plans, donut hole patients were about seven years older (with an average age of 73.1 compared to 66.3) and spent more per prescription ($77.47 per drug versus $32.86).

"People who are getting into the donut hole are much sicker," said Chris Messner, product director in Wolters Kluwer's Pharma Solutions unit. "They're on eight to nine therapies per month."

These older, sicker patients are also less likely to switch to a generic in the same drug category because of the risk of side effects or drug interactions, said Peter Demogenes, product director in Wolters Kluwer's Pharma Solutions unit. "They remain loyal to the brands that were most important to their health."