New Avalere Analysis Shows that Seniors Need to Look Beyond Premiums in Choosing Medicare Drug Plans

New Avalere Analysis Shows that Seniors Need to Look Beyond Premiums in Choosing Medicare Drug Plans

Contact: Erica Garland, 202-745-5119, egarland@gymr.com

11.01.12

Formulary Size, Cost Sharing, and Use of Preferred Pharmacy Networks All Vary Widely in New 2013 Part D Offerings

Washington, D.C. – A new analysis by Avalere Health reveals looking beyond premiums in the selection of a Part D plan is increasingly important for Medicare beneficiaries. The study found major differences in three areas: number of drugs on the formulary, cost-sharing amounts, and use of preferred pharmacies. The analysis shows that patients should select plans carefully and examine all four factors when they make their coverage decisions for 2013.

Significant variations exist in the percentage of drugs covered among the top 10 standalone prescription drug plans (PDPs), with Humana Enhanced covering 76 percent of Part D covered drugs, while WellCare Classic covers only 53 percent. The two lowest-premium plans, the Humana Walmart-Preferred Rx Plan and the new United AARP Saver Plus Plan each cover 63 percent of covered drugs.

Percentage of Total Drugs Covered by Top 10 PDPs, 2012-2013

Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features. 2013 plan data were released in October 2012.
*Part D covered drugs are those drugs that appear on at least one Part D formulary. There were 2,306 drugs that appeared on at least one formulary in 2012. There will be 2,262 drugs that appear on at least one formulary in 2013.
**CVS Caremark Value was renamed as SilverScript Basic for the 2013 plan year. Additionally, CVS Caremark consolidated the Community CCRx Basic PDP and Health Net Orange Option 1 PDP into the new SilverScript Basic plan for 2013.
***Medco Medicare Prescription Plan – Value was renamed as Express Scripts Medicare – Value for the 2013 coverage year.

Beneficiaries also need to look at tier structures when choosing plans. The typical tier structure for five-tier formularies in 2013 is: Tier One: preferred generics; Tier Two: non-preferred generics; Tier Three: preferred brands; Tier Four: non-preferred brands; and Tier Five: specialty/injectable drugs.

The Avalere analysis found that the number of plans offering five or more-tier formularies continues to increase in 2013. Over two-thirds of plan offerings will have five or more tiers, up from 58 percent in 2012 and 41 percent in 2011. The overwhelming majority of PDPs, 90 percent, will continue to use specialty tiers—tiers covering high-cost biologics and drugs for diseases such as multiple sclerosis, cancer, and rheumatoid arthritis.

Part D plans are increasingly using percentage cost sharing instead of fixed dollar copayments, increasing the variability of patients' out-of-pocket costs. In 2013, all five-tier plans use cost sharing on the fifth tier, almost half use cost sharing on tier four, and one-third of plans use percent cost sharing on tier three - the preferred brand tier. With percentage cost sharing, beneficiaries' costs depend on the cost of the drug, and could be significantly higher than fixed-dollar copayments for some brand name drugs.

"Beneficiaries continue to have a wide range of choices for Part D coverage in 2013," said Bonnie Washington, senior vice president of Avalere Health. "However, many beneficiaries with serious illnesses may see higher cost sharing. In assessing Part D plans, Medicare beneficiaries need to look beyond premiums to really understand which drugs are covered and what their cost will be at the pharmacy counter."

Increasingly popular low-premium plans are using preferred pharmacy networks to keep costs low. In these plans, cost-sharing differences between preferred and non-preferred pharmacies are often significant. While the cost-sharing differences for generic tiers is not substantial in 2013, the difference for non-preferred branded drugs is quite large ($45 vs. $70 on the non-preferred brand tier for the AARP Saver Plus plan and $75 vs. $90 on the non-preferred brand tier for the First Health Part D Value Plus Plan).

Cost Sharing for Branded Drugs Can Be Much Higher at Non-Preferred Pharmacies in the Market's Two Lowest Cost Basic and Enhanced PDPs

Tier	Preferred	Non-Preferred
AARP Saver Plus Plan Formulary Structure, Preferred vs. Non-Preferred Pharmacies, 2013
1 (Preferred Generic)	$1	$4
2 (Non-Preferred Generic)	$2	$5
3 (Preferred Brand)	$25	$35
4 (Non-Preferred Brand)	$45	$70
5 (Specialty)	25%	25%
Percentage of Total Drugs Covered: 63.4%

Tier	Preferred	Non-Preferred
Humana Walmart Plan Formulary Structure, Preferred vs. Non-Preferred Pharmacies, 2013
1 (Preferred Generic)	$1	$10
2 (Non-Preferred Generic)	$5	$18
3 (Preferred Brand)	20%	25%
4 (Non-Preferred Brand)	34%	37%
5 (Specialty)	25%	25%
Percentage of Total Drugs Covered: 62.6%

Source: Avalere Health analysis using the Medicare Plan Finder tool. Avalere used a zip code of 20036, or Washington, DC in order to find preferred and non-preferred pharmacy information.

Tier	Preferred	Non-Preferred
First Health Part D Value Plus Plan Formulary Structure, Preferred vs. Non-Preferred Pharmacies, 2013
1 (Generic)	$0	$7
2 (Preferred Brand)	$35	$45
3 (Non-Preferred Brand)	$70	$95
4 (Specialty)	33%	33%
Percentage of Total Drugs Covered: 60.0%

Tier	Preferred	Non-Preferred
SilverScript Choice Plan Formulary Structure, Preferred vs. Non-Preferred Pharmacies, 2013
1 (Generic)	$0	$7
2 (Preferred Brand)	$34	$41
3 (Non-Preferred Brand)	35%	45%
4 (Specialty)	33%	33%
Percentage of Total Drugs Covered: 57.5%

Source: Avalere Health analysis using the Medicare Plan Finder tool. Avalere used a zip code of 20036, or Washington, DC in order to find preferred and non-preferred pharmacy information.

Methodology: The analysis was conducted using Avalere Health's DataFrame database, a proprietary database of all stand-alone PDPs and Medicare Advantage Prescription Drug plans. The database uses the Centers for Medicare and Medicaid Services data on Medicare Part D plan and formulary design and includes additional proprietary and public data sets.

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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