The Effect of the Medicare Part D Prescription Benefit on Drug Utilization and Expenditures

5 February 2008 | Volume 148 Issue 3 | Pages 169-177

Background: Information about the effect of the Medicare Part D Prescription Drug Benefit on drug utilization and expenditures is limited.

Objective: To estimate changes in prescription utilization and out-of-pocket expenditures attributable to Part D among a sample of persons eligible for the benefit.

Design: Generalized estimating equations were used to estimate changes in expenditures and utilization among beneficiaries. A control group was included to control for secular trends unrelated to the Part D benefit.

Setting: National pharmacy chain representing approximately 15% of all U.S. retail pharmacy sales.

Participants: Persons age 66 to 79 years (those eligible for Part D) and a control group of persons age 60 to 63 years (those ineligible for Part D). The final sample represented approximately 5.1 million unique beneficiaries and 1.8 million unique control individuals.

Measurements: Prescription utilization (measured in pill-days) and out-of-pocket expenditures, as determined from pharmacy claims from September 2004 to April 2007.

Results: During the penalty-free Part D enrollment period (January 2006 to May 2006), average monthly drug utilization increased by 1.1% (95% CI, 0.5% to 1.7%; P < 0.001) and out-of-pocket expenditures decreased by 8.8% (CI, 6.6% to 11.0%; P < 0.001). After enrollment stabilized (June 2006 to April 2007), average monthly drug utilization increased by 5.9% (CI, 5.1% to 6.7%; P < 0.001) and out-of-pocket expenditures decreased by 13.1% (CI, 9.6% to 16.6%; P = 0.003). Compared with eligible nonenrollees, enrollees had higher out-of-pocket expenditures and utilization at baseline but experienced significantly larger decreases in expenditures and increases in utilization after enrollment.

Limitations: Analyses were limited to claims within 1 pharmacy chain. The effect of the "doughnut hole" and the effect of changes on clinical outcomes were not evaluated.

Conclusion: The Medicare Part D prescription benefit resulted in modest increases in average drug utilization and decreases in average out-of-pocket expenditures among Part D beneficiaries. Further research is needed to examine patterns among other beneficiaries and to evaluate the effect of these changes on health outcomes.

Editors' Notes Context In 2006, Medicare inaugurated a drug benefit for older adults. Contribution Using data from a random sample of pharmacy customers who were beneficiaries of the program after the enrollment deadline, the authors estimate that the drug benefit saved people about $9 a month and gave them an extra 14 days of pills, on average. Caution The authors did not examine effects of the doughnut hole and did not look at specific drugs or drug classes. Implication The Medicare drug benefit has led to modest decreases in expense and increases in drug use for older adults. —The Editors

 

Author and Article Information

From Robert Wood Johnson Scholars in Health Policy Program, Harvard University, Cambridge, Massachusetts; University of Chicago, Harris School of Public Policy, Center for Health and Social Sciences, and MacLean Center for Clinical Medical Ethics and University of Illinois at Chicago School of Pharmacy, Chicago, Illinois; and Virginia Commonwealth University, Richmond, Virginia.

Grant Support: Dr. Zhang was supported in part by a grant from Merck & Co. Dr. Meltzer is supported by the Centers for Disease Control and Prevention Chicago Center of Excellence in Health Promotion Economics and the Merck Foundation through the University of Chicago Program for Pharmaceutical Policy Research. Dr. Alexander is supported by career development awards from the Agency for Healthcare Research and Quality (K08 HS15699-01A1) and the Robert Wood Johnson Physician Faculty Scholars Program.

Potential Financial Conflicts of Interest: Consultancies: A. Basu (Pfizer, GlaxoSmithKline, Bristol-Myers Squibb, FasterCures, Best Practice), D.O. Meltzer (Pfizer, Merck & Co., Eli Lilly, AstraZeneca, TAP Pharmaceuticals), G.C. Alexander (AstraZeneca). Grants received: A. Basu (Pfizer), J.X. Zhang (Merck & Co.), D.O. Meltzer (Pfizer, Merck & Co., Eli Lilly, AstraZeneca, TAP Pharmaceuticals), G.C. Alexander (Merck & Co., Pfizer). Other: D.O. Meltzer (Medicare Trustees Technical Advisory Panel).

Requests for Single Reprints: G. Caleb Alexander, MD, MS, University of Chicago, 5841 South Maryland, MC 2007, Chicago, IL 60637; e-mail, galexand{at}uchicago.edu.

Current Author Addresses: Dr. Yin: Harvard University, 1730 Cambridge Street, s409, Cambridge, MA 02138.

Drs. Basu, Rabbani, Meltzer, and Alexander: University of Chicago, 5841 South Maryland, MC 2007, Chicago, IL 60637

Dr. Zhang: Department of Pharmacy, Virginia Commonwealth University, Smith Building, Room 434, 410 North 12th Street, Richmond, VA 23298-0533.

Author Contributions: Conception and design: W. Yin, A. Basu, J.X. Zhang, G.C. Alexander.

Analysis and interpretation of the data: W. Yin, A. Basu, J.X. Zhang, G.C. Alexander.

Drafting of the article: W. Yin, A. Basu, G.C. Alexander.

Critical revision of the article for important intellectual content: W. Yin, A. Basu, J.X. Zhang, A. Rabbani, G.C. Alexander.

Final approval of the article: W. Yin, A. Basu, J.X. Zhang, G.C. Alexander.

Provision of study materials or patients: W. Yin.

Statistical expertise: W. Yin, A. Basu, J.X. Zhang, A. Rabbani.

Obtaining of funding: W. Yin, G.C. Alexander.

Administrative, technical, or logistic support: W. Yin, A. Basu.

Collection and assembly of data: W. Yin, A. Rabbani, G.C. Alexander.