ISSUE BRIEF September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit: Which Beneficiaries Need It and How Much Are They Spending? Aditi P. Sen Sonal Parasrampuria Kelly E. Anderson Gerard Anderson Johns Hopkins Bloomberg Johns Hopkins Bloomberg Johns Hopkins Bloomberg Johns Hopkins Bloomberg School of Public Health School of Public Health School of Public Health School of Public Health ABSTRACT TOPLINES ISSUE: Between 2013 and 2017, spending on Medicare Part D catastrophic Spending on Medicare Part D coverage more than doubled, reaching over $59 billion in 2017. In the catastrophic coverage more catastrophic phase, beneficiaries are responsible for 5 percent coinsurance, than doubled between 2013 and which can result in high out-of-pocket costs. 2017, largely driven by spending on specialty drugs. GOALS: To inform redesign of the Part D catastrophic benefit by providing data on: beneficiary characteristics in the catastrophic phase; factors To reduce high drug costs for Part driving entry into catastrophic coverage; and patterns of spending, D enrollees, policy options should specialty drug use, and utilization among these beneficiaries. focus on the use and prices of METHODS: Analysis of Medicare Part D claims and beneficiary data from specialty drugs. 2013 to 2017. KEY FINDINGS: Among Part D beneficiaries not receiving Medicare low-income subsidies, those who entered catastrophic coverage in 2017 averaged $3,218 in total annual out-of-pocket spending, compared to $486 among enrollees who did not enter catastrophic coverage that year. Beneficiaries who entered catastrophic coverage had more chronic conditions, but the biggest difference was specialty drug use. Close to 60 percent of catastrophic coverage enrollees took a specialty drug compared to 11 percent of beneficiaries who did not enter this coverage phase. CONCLUSIONS: To reduce the high drug cost burden for Medicare Part D enrollees in catastrophic coverage, policy options should focus on the use and prices of specialty drugs. Catastrophic Coverage in the Medicare Part D Drug Benefit2 INTRODUCTION use of multiple prescription drugs among this group. In 2017, Medicare spent $156.5 billion on prescription Increasingly, however, the growth of specialty drugs means drugs through Part D. Over time, an increasing portion that beneficiary spending can reach high levels because of of this spending has been on catastrophic coverage. From a single drug.6 No research has yet determined how this 2013 to 2017, spending in the catastrophic phase increased trend and other market changes have impacted beneficiary more than twice as fast as overall Part D spending, entrance to and experience in Part D catastrophic coverage. reaching $59 billion in 2017, or about 40 percent of Part Improving our understanding of Part D catastrophic D spending. Spending on high-priced specialty drugs is 1 coverage is an important first step in designing policies responsible for most of the increase, making up two-thirds to help ensure that beneficiaries are able to afford drugs of Part D catastrophic spending in 2015, compared to through Medicare Part D. We need to understand who one-third in 2009. 2 enters the catastrophic coverage phase of Medicare Part Part D is administered through private prescription drug D, how much they spend before and after they enter this plans, which have the ability to negotiate drug prices with phase, how they differ from beneficiaries who do not enter manufacturers and pharmacies and employ formularies, catastrophic coverage, and what factors push beneficiaries tiered copayments, and other utilization management tools into this final phase. (within Medicare rules). Once the catastrophic portion We used enrollment and claims data for Medicare Part D of the benefit is reached, the plan pays 15 percent of the for 2013–2017 to assess the characteristics of beneficiaries cost, Medicare pays 80 percent, and the beneficiary pays in Part D catastrophic coverage; drivers of catastrophic the remaining 5 percent. Because Medicare covers most entry; and patterns of enrollee spending, specialty drug of the price of the drug, Part D plans have little incentive use, and overall utilization in the catastrophic phase. For to negotiate aggressively for high-price specialty drugs. each year, we limited the sample to those in stand-alone MedPAC has recommended changing the spending prescription drug plans who remained in the same plan distribution to give more spending risk to the plans.3 for the full year and did not die during the year. The results Under the standard Part D benefit, beneficiaries were were analyzed separately for enrollees who received the responsible for the following in 2017: a deductible, then 25 Part D low-income subsidy, since their cost-sharing, usage, percent coinsurance up to an initial coverage limit, followed and expenditures may differ in systematic ways from other by a coverage gap (“donut hole”) in which beneficiaries enrollees. We also examined prescription drug use among paid 40 percent (brand) or 50 percent (generic) of the drug the subgroup of patients with multiple chronic conditions price until their total out-of-pocket spending reached a (based on current treatment for a chronic condition) to be given limit ($4,950 in 2017). After beneficiaries exit the able to separate out the effects of taking a specialty drug coverage gap, they enter catastrophic coverage. For many 4 from having poor health. For further detail on the study Medicare enrollees, the 5 percent cost-sharing requirement methods, see “How We Conducted This Study.” in the catastrophic coverage phase results in high spending burdens that can severely limit access to specialty FINDINGS pharmaceuticals, unless beneficiaries are eligible for patient assistance programs.5 Spending in Catastrophic Coverage There is little information on the characteristics of Total and out-of-pocket drug spending during catastrophic beneficiaries most affected by the out-of-pocket cost- coverage have increased over time. Among those not sharing burden in Part D catastrophic coverage or what receiving the low-income subsidy, total per beneficiary drives them into this phase. When Part D was established, spending in catastrophic coverage increased from $12,373 policymakers expected that beneficiaries with multiple in 2013 to $22,031 in 2017, and average per beneficiary chronic conditions who took multiple drugs would be the out-of-pocket spending in the catastrophic phase rose from primary entrants to catastrophic coverage given long-term an average of just over $900 in 2013 to $1,372 in 2017. commonwealthfund.org Issue Brief, September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit3 Unsurprisingly, increased spending in the catastrophic who consumed multiple different drugs over the course phase resulted in average annual drug costs that were of the year. Now, beneficiaries taking a specialty drug are 13 times higher for enrollees who entered catastrophic more likely to enter catastrophic coverage than those with coverage compared to those who did not ($28,771 versus multiple (three or more) chronic conditions. Specialty $2,183). As shown in the Appendix, average out-of- drugs typically treat complex or chronic diseases and pocket costs were seven times higher among enrollees are identified by the Centers for Medicare and Medicaid who entered catastrophic coverage compared to those Services (CMS) based on cost. Part D plans may put who did not ($3,218 versus $486). Total spending among drugs with a high monthly cost (greater than $600 from catastrophic entrants also grew much more over the 2013–2016 and greater than $670 in 2017) on a specialty five-year period: 53 percent compared to just 3 percent tier of their formularies.7 In this study, we used these among those who did not enter the catastrophic phase. Part D monthly cost limits to identify specialty drugs. In general, these drugs have very high price tags; for Characteristics of Beneficiaries in Catastrophic example, the average retail price of Harvoni®, used to treat Coverage Hepatitis C, was $31,050 per prescription in 2015, and the In 2017, Part D enrollees who entered catastrophic average price of Revlimid®, used to treat anemia, multiple coverage and did not receive low-income subsidies had myeloma, and lymphoma, was $10,130.8 similar demographic characteristics — age sex, race — We found that specialty drug use was a bigger driver as enrollees who did not enter this coverage phase (see of catastrophic coverage entry than the presence of Appendix). However, those in catastrophic coverage had multiple chronic conditions (Exhibit 1). Nearly 25 percent more chronic conditions (8.8 reported chronic conditions, of those without multiple chronic conditions taking a on average, compared to 6.6 among those who never specialty drug entered catastrophic coverage, compared entered catastrophic coverage). to only 4.8 percent of those with multiple chronic Enrollees in catastrophic coverage were also prescribed conditions who were not taking a specialty drug. In other more drugs (an average of 20 drugs versus 11 drugs). words, controlling for the presence of multiple chronic Generic drugs represented a smaller proportion of total conditions, those taking a specialty drug were about five drugs among the catastrophic enrollee population times more likely to enter catastrophic coverage than (68%, 16.1 drugs on average) than the population not in those not taking such a drug. catastrophic coverage (90%, 10.1 drugs on average). Rates Taking a specialty drug was also associated with higher of generic usage remained relatively consistent for all out-of-pocket costs than having multiple chronic enrollees over the 2013–2017 time period. conditions. In 2017, beneficiaries with multiple chronic The primary factor driving higher out-of-pocket costs conditions and specialty drug use had the highest average among the catastrophic coverage population was use out-of-pocket drug costs ($796) followed by enrollees of specialty drugs. Among enrollees not receiving the who took specialty drugs but did not have multiple low-income subsidy, close to 60 percent of those who chronic conditions ($474). Beneficiaries who did not take entered catastrophic coverage took a specialty drug, specialty drugs had lower average out-of-pocket costs compared to just 11 percent of enrollees who did not enter ($405 among those with multiple chronic conditions and catastrophic coverage. $168 among those without multiple chronic conditions). This spending pattern suggests that specialty drug use Entry into Catastrophic Coverage is a more significant driver of out-of-pocket spending The catastrophic benefit was initially designed primarily and catastrophic coverage entrance than the presence of to protect beneficiaries with multiple chronic conditions multiple chronic conditions. commonwealthfund.org Issue Brief, September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit4 Exhibit 1. Characteristics of Medicare Part D Enrollees by Multiple Chronic Condition and Specialty Drug Use Status, 2017 MCC, MCC, No MCC, No MCC, specialty no specialty specialty no specialty Rx Rx Rx Rx Unique individuals 3,270,025 16,894,845 208,980 1,456,490 18.8 12.2 9.6 6.0 Mean number of drugs prescribed (SD) (11.4) (8.2) (7.6) (5.1) % generic drugs 78.9 89.9 68.5 92.3 % specialty drugs 10.7 — 26.0 — 15,147 2,248 14,113 923 Mean Part D gross annual cost, $ (SD) (30,234) (3,387) (63,560) (2,070) 796 405 474 168 Mean out-of-pocket costs, $ (SD) (1,519) (563) (1,179) (294) % with low-income subsidy 40.0 23.8 32.9 25.8 % entering catastrophic coverage 34.8 4.8 24.1 0.8 % out-of-pocket spending on enrollee’s most 36.0 40.6 50.0 54.3 expensive drug (all beneficiaries)* % out-of-pocket spending on enrollee’s most expensive drug (only among beneficiaries with 40.5 43.3 53.7 57.6 positive out-of-pocket spending)* Notes: MCC = multiple chronic condition; SD = standard deviation. * Most expensive drug based on the National Drug Code with highest total spending for each individual. Data: Medicare Part D enrollment and claims data, 2017. Beneficiaries in Catastrophic Coverage for Abilify®, a psychotropic drug. These patterns suggest Multiple Years that beneficiaries who enter catastrophic coverage Many beneficiaries who entered catastrophic coverage for many years are taking a different mix of specialty did so year after year. Among the 597,155 enrollees not drugs than beneficiaries taking one expensive drug who enter catastrophic coverage for a single year. The receiving the low-income subsidy who entered the proportion of people taking a specialty drug went up catastrophic phase in 2017, 13 percent had catastrophic noticeably between 2013 and 2017 among enrollees in spending in all five years (2013–2017). Exhibit 2 shows catastrophic coverage for multiple years. For example, the number of unique Part D enrollees in catastrophic among beneficiaries in catastrophic coverage in all five coverage for one, two, three, and four years of our five-year years, 51 percent took a specialty drug in their first year sample. There were few consistently significant differences of catastrophic coverage compared to 61 percent in their in age, sex, or race among beneficiaries who were in the most recent year of coverage. catastrophic coverage all five years versus one or two years. For those in catastrophic coverage for only one year, Out-of-Pocket Spending in Catastrophic Coverage the two drugs with the largest total spending were Exhibit 3 shows the characteristics of beneficiaries Revlimid, which treats certain cancers, and Harvoni, a without low-income subsidies who entered catastrophic curative treatment for hepatitis C. The top two drugs coverage during our sample period. We compared various for those in catastrophic coverage for all five years characteristics one month, six months, and 12 months were Copaxone®, used to treat multiple sclerosis, and before and after entry into catastrophic coverage. commonwealthfund.org Issue Brief, September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit5 Exhibit 2. Characteristics of Medicare Part D Catastrophic Coverage Enrollees Without Low-Income Subsidies for a Single Versus Multiple Years, 2013–2017 Years in catastrophic coverage 1 year 2 years 3 years 4 years 5 years Unique individuals* 652,250 250,645 67,800 78,380 78,755 Mean age* 71.4 74.0 75.4 74.6 74.1 % female 53.9 53.0 54.9 52.6 52.1 Race/Ethnicity % White 88.1 91.3 92.6 92.1 92.2 % Black 7.1 4.4 3.9 4.0 3.7 % Latino 1.1 0.5 0.4 0.4 0.4 First Latest First Latest First Latest First Latest year year year year year year year year Mean number of chronic 8.5 8.5 9.2 8.8 10.1 8.0 9.7 7.8 9.8 conditions (SD) (3.9) (3.8) (3.8) (3.7) (3.7) (3.7) (3.6) (3.5) (3.6) Mean number of drugs 19.8 19.7 20.3 20.5 21.9 19.9 20.9 19.8 21.4 prescribed (SD) (10.5) (9.9) (10.2) (9.9) (10.6) (9.9) (10.2) (9.8) (10.5) % of drugs generic 73.6 65.4 67.4 63.0 68.9 61.9 67.0 58.1 66.3 (SD) (18.0) (17.1) (16.4) (16.9) (15.5) (17.0) (15.7) (17.4) (16.0) % of beneficiaries 43.0 52.6 54.0 44.4 50.4 45.1 55.2 51.2 61.5 taking a specialty drug Mean Part D gross 15,478 21,670 25,779 18,120 21,159 20,129 28,007 24,185 35,036 annual cost, $ (SD) (27,789) (30,432) (37,918) (22,976) (28,879) (25,557) (39,230) (29,135) (52,069) Mean out-of-pocket 2,077 3,427 3,565 3,256 3,367 3,307 3,711 3,498 3,972 costs, $ (SD) (1,825) (1,693) (2,095) (1,350) (1,660) (1,465) (2,178) (1,668) (2,959) Note: SD = standard deviation. * Number of unique individuals scaled to 100%. Age defined based on most recent year in catastrophic coverage. Data: Medicare Part D enrollment and claims data, 2013–2017. Exhibit 3. Characteristics of Medicare Part D Catastrophic Coverage Enrollees Without Low-Income Subsidies, Pre- Versus Post-Catastrophic Entry 1 month 1 month 6 months 6 months 12 months 12 months pre-CC post-CC pre-CC post-CC pre-CC post-CC Mean number of fills (SD) 5.0 (4.1) 5.1 (4.1) 28.7 (20.1) 28.3 (18.9) 50.6 (35.4) 53.9 (36.8) Mean total drug costs, $ (SD) 1,804 (4,020) 3,080 (7,179) 5,572 (4,776) 13,630 (23,221) 8,318 (6,671) 23,340 (38,404) Mean out-of-pocket costs, $ (SD) 530 (760) 203 (430) 1,891 (889) 1,239 (1,363) 2,667 (1,112) 2,712 (2,338) % total drug costs on most 71.2 (23.3) 73.0 (23.5) 57.5 (22.4) 61.6 (23.6) 54.6 (22.1) 59.3 (23.4) expensive drug (SD)* % fills generic (SD) 62.4 (29.7) 66.9 (28.1) 67.4 (20.2) 69.6 (18.6) 69.1 (19.3) 70.1 (17.6) Notes: CC = catastrophic coverage; SD = standard deviation. * Most expensive drug based on the National Drug Code with highest total spending for each individual. Data: Medicare Part D enrollment and claims data, 2013–2017. commonwealthfund.org Issue Brief, September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit6 Average total drug spending rose in the month following Among those who entered catastrophic coverage, out-of- catastrophic coverage entry (from $1,804 in the month pocket spending was highest in the coverage gap; however, before entry to $3,080 in the month after entry). In this spending was also high during the catastrophic phase, and one-month period, spending was highly concentrated on the amount of catastrophic spending grew higher between the most expensive drugs (73% in the month following 2013 and 2016. Total out-of-pocket spending in this entry). However, this distribution decreased over time. Six population increased over the 2013–2016 period, driven months after entry, 62 percent of total spending was on by growth in catastrophic coverage spending. There was a the most expensive drug. Overall, average out-of-pocket small decrease in out-of-pocket spending in 2017. spending dropped following entry into catastrophic coverage (from $530 in the month prior to entry to $203 in the month post-entry). This pattern is consistent with DISCUSSION AND POLICY IMPLICATIONS lower cost-sharing in the catastrophic coverage phase Our analysis suggests that, in recent years, taking a compared to the coverage gap period. The mean number specialty drug is a driving factor for why beneficiaries not of prescription fills and the percentage of generic fills were on low-income subsidies reach the catastrophic phase. relatively consistent before and after entry. This was not the expectation when the Medicare Part D Among beneficiaries who did not receive low-income legislation was passed in 2003. The original belief was subsidies, total out-of-pocket spending among those in that beneficiaries with multiple chronic conditions taking catastrophic coverage was more than six times higher than multiple different drugs would comprise most of the those who did not enter catastrophic coverage (Exhibit 4). beneficiaries reaching catastrophic coverage. Exhibit 4 Annual Out-of-Pocket Spending by Coverage Phase Among Medicare Part D Exhibit 4. Annual Out-of-Pocket Spending by Coverage Phase Among Medicare Part D Enrollees Enrollees Not ReceivingNot Receiving Low-Income Low-Income Subsidies, 2013–2017Subsidies, 2013–2017 $4,000 $3,500 Initial coverage phase, catastrophic coverage $3,000 entrants Coverage gap, catastrophic coverage $2,500 entrants Catastrophic coverage, $2,000 catastrophic coverage entrants $1,500 Total, catastrophic coverage entrants $1,000 Total, non-catastrophic coverage entrants $500 $0 2013 2014 2015 2016 2017 Data: Data:Medicare MedicarePartPart D enrollment and claims D enrollment anddata, 2013–2017. claims data, 2013–2017. Source: Aditi P. Sen et al., Catastrophic Coverage in the Medicare Part D Drug Benefit: Which Beneficiaries Need It and How Much Are They Spending? commonwealthfund.org (Commonwealth Fund, Sept. 2020). Issue Brief, September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit7 Beneficiaries entering the catastrophic benefit phase tend to be HOW WE CONDUCTED THIS STUDY sicker and take more drugs, especially We identified Medicare Part D beneficiaries who entered catastrophic specialty drugs, relative to enrollees coverage using enrollment and claims data for Medicare Part D for who do not reach this coverage level. 2013–2017. The sample consists of all prescription drug claims for a 20 For nearly all Medicare enrollees, percent sample of the Medicare population, which forms a nationally rates of specialty drug use are representative panel. The numbers in the brief have been scaled to be representative of all Medicare Part D beneficiaries in stand-alone going up over time, but this trend prescription drug plans who had continuous coverage and did not die. is especially pronounced for those The claims data include detailed information on prescription drug who enter catastrophic coverage. The characteristics, such as the total cost of the drug, the out-of-pocket findings suggest that use of specialty amount paid by the beneficiary, and whether the drug was generic drugs is the primary driver of entry or brand name. The data also include personal characteristics of the into catastrophic coverage relative beneficiaries, such as the prescription drug plan type, number of chronic to the presence of multiple chronic conditions, portion of the benefit phase an individual is in, whether conditions. Among those with an individual receives a low-income subsidy, and basic demographic multiple chronic conditions, close to characteristics (such as age, gender, and race). 35 percent of those using specialty Because of the large sample size, there was sufficient power to analyze drugs entered catastrophic coverage subgroups of the larger population. The study was able to investigate patterns in drug utilization by benefit phase of a beneficiary and receipt in 2017, compared to 5 percent of of low-income subsidies. those with no specialty drug use. For each year included in the analysis, we limited the sample to those The financial burdens documented in stand-alone prescription drug plans who remained in the same in this brief suggest that affordability plan for the full year and did not die during the year. We analyzed their is likely to be an issue for many of demographics, prescription drug use, and drug-related expenditures. the sickest Medicare beneficiaries, Then we compared these characteristics between beneficiaries who did especially those entering the and did not enter catastrophic coverage in the same year. In addition, the results were analyzed separately for enrollees who received the Part catastrophic phase each year D low-income subsidy since their cost-sharing, usage, and expenditures for multiple years. The recent may differ in systematic ways from enrollees who did not receive the low- legislation passed in the U.S. House income subsidy. of Representatives includes a cap Prescription drug use among the subgroup of patients with multiple on out-of-pocket costs for Part D chronic conditions (based on current treatment for a chronic condition) enrollees, which will reduce the was analyzed to separate out the effects of a specialty drug from financial burden for individuals having poor health. Chronic conditions were identified based on the with especially high spending.9 This 27 condition-specific variables available in the Centers for Medicare policy would relieve some of the cost- and Medicaid Services’ Master Beneficiary Summary File Chronic Conditions Data Warehouse Conditions segment. Finally, we compared sharing burden on enrollees but is drug utilization and spending for individuals at one month, six months, unlikely to result in lower drug prices and 12 months before and after entry into catastrophic coverage during and could even encourage drug our sample period. For example, we assessed patterns of drug use and manufacturers to increase prices spending in the 12 months before and 12 months after catastrophic given that the beneficiary would coverage entry for those who entered catastrophic coverage between not have any cost-sharing in the January 2013 and December 2016. catastrophic phase. commonwealthfund.org Issue Brief, September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit8 Related policies, such as the MedPAC proposal to adjust NOTES the burden of cost-sharing in the catastrophic period, 1. Authors’ calculations. could help lower prices. MedPAC recommends that beneficiaries pay nothing, Part D plans pay 80 percent, 2. U.S. Department of Health and Human Services, and Medicare pays 20 percent,10 which could help to Office of the Inspector General, High-Price Drugs strengthen plans’ negotiating leverage. The recently Are Increasing Federal Payments for Medicare Part D passed House bill also targets high prices by allowing Catastrophic Coverage (DHHS, Jan. 2017). CMS to negotiate prices for certain high-cost drugs with no generic competition and international prices used as a 3. Medicare Payment Advisory Commission, target price ceiling. Strengthening these negotiation efforts “Restructuring Medicare Part D for the Era of Specialty could play an important role in lowering list prices if Drugs,” in Report to the Congress: Medicare and the Medicare has the necessary leverage. Without lowering list Health Care Delivery System (MedPAC, June 2019), pp. prices, the Medicare program will continue to shoulder 25–51. the costs of expensive specialty drugs. 4. Jack Hoadley, Juliette Cubanski, and Tricia Neuman, Medicare Part D: A First Look at Prescription Drug Plans CONCLUSION in 2017 (Henry J. Kaiser Family Foundation, Oct. 2016). The Medicare Part D benefit structure has not been updated to reflect the growing dominance and cost of 5. Jalpa Doshi, Amy R. Pettit, and Pengxiang Li, specialty drugs. Our analysis shows that specialty drugs “Addressing Out-of-Pocket Specialty Drug Costs in are a major contributor to Part D spending and beneficiary Medicare Part D: The Good, the Bad, the Ugly, and the out-of-pocket costs. Going forward, it will be critical to Ignored,” Health Affairs Blog, July 25, 2018. reduce enrollee burden and take broad actions to lower prices to ensure that drugs are affordable for Part D 6. Juliette Cubanski, Wyatt Koma, and Tricia Neuman, enrollees. The Out-of-Pocket Cost Burden for Specialty Drugs in Medicare Part D in 2019 (Henry J. Kaiser Family Foundation, Feb. 2019). 7. Centers for Medicare and Medicaid Services, “Announcement of Calendar Year (CY) 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter,” (CMS, Apr. 2, 2018). 8. Anna Anderson-Cook, Jared Maeda, and Lyle Nelson, Prices for and Spending on Specialty Drugs in Medicare Part D and Medicaid: An In-Depth Analysis (Congressional Budget Office, Mar. 2019). 9. Elijah E. Cummings Lower Drug Costs Now Act of 2019, H.R. 3, 116th Cong. (2019). 10. MedPAC, “Restructuring Medicare,” 2019. commonwealthfund.org Issue Brief, September 2020 The Commonwealth Catastrophic Coverage Fund in the Medicare Part D Drug Benefit9 How High Is America’s Health Care Cost Burden? 9 Appendix. Characteristics of Medicare Part D Beneficiaries Who Entered Catastrophic Coverage, 2017 Individuals who Individuals who never entered catastrophic entered catastrophic coverage coverage Individuals not receiving the low-income subsidy Mean age (SD) 71.6 (10.4) 74.5 (8.3) % female 51.7 58.4 Race/Ethnicity % White 88.2 89.9 % Black 6.5 5.5 % Latino 0.9 0.5 Mean number of chronic conditions (SD) 8.8 (3.8) 6.6 (3.7) Mean number of drugs prescribed (SD) 20.1 (10.2) 11.1 (7.4) Mean number of generic drugs prescribed (SD) 16.1 (9.1) 10.1 (6.8) % generic drugs 67.6 89.9 % of drug claims dispensed as brand rather than generic due to 30.9 26.6 patient request % of beneficiaries taking a specialty drug 58.3 11.4 Mean Part D gross annual cost, $ (SD) 28,771 (42,280) 2,183 (9,232) Mean out-of-pocket costs, $ (SD) 3,218 (2,502) 486 (546) Number of individuals 597,155 15,463,980 Individuals receiving the low-income subsidy Mean age (SD) 62.7 (15.2) 64.7 (16.7) % female 59.8 60.5 Race/Ethnicity % White 67.1 63.6 % Black 18.2 18.9 % Latino 5.7 6.9 Mean number of chronic conditions (SD) 9.1 (4.2) 6.9 (4.1) Mean number of drugs prescribed (SD) 25.0 (13.0) 13.6 (9.1) Mean number of generic drugs prescribed (SD) 20.6 (11.7) 12.3 (8.5) % generic drugs 72.8 90.2 % of drug claims dispensed as brand rather than generic due to 25.6 28.4 patient request % of beneficiaries taking a specialty drug 59.4 12.3 Mean Part D gross annual cost, $ (SD) 22,511 (29,043) 2,069 (2,562) Mean out-of-pocket costs, $ (SD) 80 (114) 58 (76) Number of individuals 1,415,450 4,353,755 Notes: Twenty percent sample of Medicare Part D claims. Analysis limited to enrollees in stand-alone Part D plans who remained in the same plan for a full year and did not die during the year. SD = standard deviation. Data: Medicare Part D enrollment and claims data, 2017. commonwealthfund.org Issue Brief, September 2020 Catastrophic Coverage in the Medicare Part D Drug Benefit10 ABOUT THE AUTHORS Gerard Anderson, Ph.D., is a professor of health policy and Aditi P. Sen, Ph.D., is a health economist and assistant management and international health at the Johns Hopkins professor in the Department of Health Policy and Bloomberg School of Public Health, professor of medicine at Management at the Johns Hopkins Bloomberg School the Johns Hopkins University School of Medicine, associate of Public Health. Her research addresses the potential chair for health services research in the Department of of innovative payment and delivery models, as well as Health Policy and Management, director of the Johns insurance design, to improve the quality and value of health Hopkins Center for Hospital Finance and Management, care. From 2015–16, she was a Health and Aging Policy director of the Johns Hopkins Washington program in Fellow in the Office of the Assistant Secretary for Planning health policy, codirector of the Johns Hopkins program for and Evaluation at the U.S. Department of Health and Human medical technology and practice assessment, and senior Services. She also served on the staff of the White House’s fellowship advisor to the Commonwealth Fund’s Harkness Council of Economic Advisers. Sen received her B.A. from Fellowships in Health Care Policy and Practice. Anderson is Yale University and her Ph.D. in health economics from the currently conducting research on prescription drug payment Wharton School of the University of Pennsylvania. and delivery system options for chronically ill Medicare beneficiaries, comparative insurance systems in developing Sonal Parasrampuria, Ph.D., completed work as a Ph.D. countries, medical education, hospital payment reform, and candidate in health economics and policy at the Johns technology diffusion. Prior to his arrival at Johns Hopkins Hopkins Bloomberg School of Public Health. Her research in 1983, Anderson held various positions in the Office of the is focused on ensuring access to health care services by Secretary, U.S. Department of Health and Human Services, making insurance affordable and adequately generous. She where he helped to develop Medicare prospective payment also holds an M.P.H. from Columbia University’s Mailman legislation. He has authored two books on health care School of Public Health and a B.A. with Honors from payment policy, has published 160 peer-reviewed articles, Swarthmore College. testified in Congress more than 25 times as an individual witness, and serves on multiple editorial committees. Kelly E. Anderson, M.P.P., is a health services research and policy Ph.D. candidate in health services research at the Johns Hopkins Bloomberg School of Public Health. Editorial support was provided by Maggie Van Dyke. Her dissertation research studies access to, and utilization of, physician-administered drugs for enrollees with fee-for-service coverage compared to Medicare Advantage For more information about this brief, please contact: coverage. Prior to beginning her doctoral studies, Ms. Aditi P. Sen, Ph.D. Anderson conducted contract research work for the Assistant Professor Centers for Medicare and Medicaid Services. She previously Department of Health Policy and Management completed master of public policy and bachelor of science in Johns Hopkins Bloomberg School of Public Health biomedical engineering degrees at the University of Virginia. asenjhu.edu commonwealthfund.org Issue Brief, September 2020 About the Commonwealth Fund The mission of the Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, and people of color. Support for this research was provided by the Commonwealth Fund. The views presented here are those of the authors and not necessarily those of the Commonwealth Fund or its directors, officers, or staff.