Paying for Pharmaceuticals: Trends from Medicare Part D

Paying for Pharmaceuticals: Trends from Medicare Part D

Contact: Margaret Nowak, 202.207.3684, mnowak@avalerehealth.net

10.18.10

On October 14, Avalere Health conducted an audio conference focusing on the changing landscape in the Medicare Part D prescription drug program. You may download the presentation by accessing the following link.

Avalere Health focused on the emerging trends in the Part D benefit for 2011, including plan availability, premium changes, and the increase in the number of plans offering coverage in the Part D donut hole. Brian Cohen, Senior Investigator and Policy Advisor for the House Energy and Commerce Committee, and Nora Super, Director of Federal Government Relations, Health, and Long-term Care at AARP, both also presented the impact of Part D changes on Medicare beneficiaries.

Additional data released by the Centers for Medicare & Medicaid Services have allowed Avalere to refine and enhance our previous analyses on the 2011 Part D marketplace. Overall, the enrollment-weighted average premium for all stand-alone prescription drug plans (PDPs) will rise almost 10 percent from 2010 to 2011. All of Avalere’s premium estimates assumes that beneficiaries will not change plans, making our estimates different from CMS. The enrollment-weighted average premium for the top 10 PDPs will rise by only 0.23 percent from 2010 to 2011.

Overall, average premiums for basic plans are growing at a much slower rate – just 3 percent – from 2010 to 2011. Average premiums for enhanced PDPs will increase by 28 percent from 2010 to 2011. This difference in premium growth explains, in part, why the average premium increase for the top 10 PDPs by enrollment is so much lower than the overall average – 9 out of the top 10 PDPs are basic plans. In addition, three of the top 10 PDPs will see their premiums decrease in 2011, which is also driving down the average premium for the top 10 PDPS. For instance, the AARP MedicareRx Preferred plan, the most popular PDP, will see an 11 percent decline in average premiums.

For the first time since the start of the Part D program, there is an increase in the number of PDPs offering some level of gap coverage in the Part D coverage gap. Part D beneficiaries in most states will see an average of 20 percent more PDPs offering gap coverage from 2010 to 2011. Also, beneficiaries in all states will have at least one more PDP in 2011 that offers some level of coverage of branded drugs in the coverage gap. The majority of plans offer coverage of only generic drugs, however in 2011, 106 PDPs will offer coverage of some generics and some brand name drugs.

Avalere will continue to examine the Part D marketplace and will update our analyses as additional data become available.

Avalere Health is an advisory services company whose core purpose is to create innovative solutions to complex healthcare problems. Based in Washington DC, the firm delivers research, analysis, insight, and strategy for leaders in healthcare business and policy. Avalere's experts span 170 staff drawn from the federal government (e.g., CMS, OMB, CBO, and the Congress), Fortune 500 healthcare companies, top consultancies, and nonprofits. The firm offers deep substance in areas ranging from healthcare coverage and financing to the changing role of evidence in healthcare decision-making. Its focus on strategy is supported by a rigorous, in-house analytic research group that uses public and private data to generate quantitative insight. Through events, publications, and interactive programs, Avalere also translates real-time healthcare developments into actionable information.

Learn more at www.avalerehealth.net.

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