Pharmaceutical Care Management Association Releases Hep C Medicare Part D Impact Study

July 30, 2014
Tom Norton

Tom Norton is Principal at NHD Smart Communications of Illinois, Inc.

Pharmaceutical Executive

PCMA represents several American managed care entities and has been an active participant in the national debate over the issue of high priced biotech Rx drugs.

As the controversy over Sovaldi’s $84,000 per therapy cost continues to build, the Pharmaceutical Care Management Association has released a study on the impact of the new Hepatitis C drugs on the overall costs to the US Medicare Part D pharmaceutical program (http://www.pcmanet.org/images/stories/uploads/2014/partdpremiumstudymilliman.pdf)

PCMA represents several American managed care entities and has been an active participant in the national debate over the issue of high priced biotech Rx drugs.  Several of the PCMA’s members, including CVS Caremark, have publicly objected to the pricing of Sovaldi by the drug’s manufacturer, Gilead (http://goo.gl/vgFtvR ).  Gilead, interestingly, is listed as a PCMA affiliate on the PCMA website (http://goo.gl/TwdtzY ).

It should be noted that the study was created for the PCMA by the respected actuarial service, Milliman.

Highlights:

  • The study noted that an estimated 3.2 million people in the U.S. are infected with HCV.  Based on a statistical analysis completed by Milliman in 2013 (http://goo.gl/NOlTWG), it is estimated that approximately 270,000 Medicare Part D participants have HCV.

  • Given this, Milliman estimated that the cost of the new HCV drugs (Sovaldi & Olysio) to the Part D Medicare program will increase expenditures in that federal program by $2.9 billion to $5.8 billion annually.

  • These increases work out to be an estimated 6% to 11% overall increase for Part D spending in 2015 and result in potential individual Medicare Part D beneficiary increases of $100 to $200 per year.

  • Milliman states that it estimates these HCV therapies will increase “total annual individual Medicare Part D beneficiary premiums by $481 million to $965 million in 2015.”

The actuarial firm noted that their analysis was based on a representative 2015 Prescription Drug Plan (PDP) bid that was developed by using a comprehensive Medicare Care Part D database that utilized a defined standard benefit design.

Milliman emphasized that while the actual bids of the PDPs will vary based on populations and several other demographic variables, the firm used an estimate that models that entire Medicare population which enabled Milliman to generate Part D 2015 estimates with - and without - the new HCV product coverage.

A few other points that Milliman offers to readers of this report:

  • Unlike many of the new high cost, specialty drugs now coming onto the market, Milliman notes that the HCV pharmaceuticals have “a significant patient base so their financial impact causes meaningful and measurable increase in the cost to Medicare Part D beneficiaries and to the United States taxpayer.”

  • Milliman also notes that based on above mentioned 2013 HCV study, that HCV is more prevalent among low income individuals than it is for non-low income individuals.  Milliman states that as a result, the federal government will pay more in low income cost sharing and premium subsidies, and will collect less member sharing from these individuals to offset government spending in Part D associated with HCV therapy.

Milliman underscores that the report is limited only to the cost of the new HCV drugs and stresses that these cost impacts do not address the potential savings that these new PCV drugs may drive.  The potential, overall savings that may result from the Sovaldi therapy is a major issue that Gilead, manufacturer of Sovaldi, has emphasized repeatedly in the public media (http://goo.gl/XH5w37 ).