Medicare Part D's Effects on Elderly Drug Costs and Utilization

Abstract

We analyze Medicare Part D's net effect on elderly out-of-pocket (OOP) costs and use of prescription drugs using a dataset containing 1.4 billion prescription records from Wolters Kluwer Health (WKH). These data span the period December 2004-December 2007 and include pharmacy customers whose age as of 2007 is greater than 57 years. The outcomes we examine are OOP cost per day's supply of a medication, the days of medication supplied per capita, and the number of individuals filling prescriptions. We compare outcomes before vs. after January 2006, for those over age 66 years vs. for those age 58-64 years, adjusting for the under-reporting of certain cash-only transactions in the WKH data. Our results indicate that from [2005][2006][2007], Part D reduced elderly OOP costs per day's supply of medication by 21.7%, and increased elderly use of prescription drugs by 4.7%, implying a price elasticity of demand of -0.22. These effects occurred primarily during the first year of the program. An age-and time-standardized comparison of our quantity results with previous estimates from Walgreens data shows that our findings are 2.6 times as large. We conclude that Part D lowered elderly patients' OOP costs substantially and increased utilization modestly, and note that in comparing results across studies on this topic, magnitudes may vary substantially due to differences in data and methods. DataWe analyze a large data set of prescriptions covering the MethodsWe first present nationwide difference-in-difference ( 5We present results for three main outcomes: days' supply, number of patients filling prescriptions, and patient OOP costs per prescription. We also analyzed total prescriptions filled, but we do not report it separately because the results were virtually identical to those for days supply. Because our two utilization outcomes (days supply and number of patients with prescriptions filled) are compared in terms of totals for the two cohorts over time, we must adjust for different rates of mortality for the two cohorts or we could find relative decreases in total use occurring for the older cohort simply due to more deaths. To do this, we normalize our totals by the size of the national population

Cost Sharing and Decreased Branded Oral Anti-Diabetic Medication Adherence Among Elderly Part D Medicare Beneficiaries

“…[1][2][3][4][5][6][7][8][9][10][11][12][13] The introduction of the Part D program led to higher medication use rates among seniors, with recent studies indicating that other healthcare service use reductions partly offset program costs. [14][15][16][17][18][19][20][21][22][23][24][25][26][27][28] Most Part D enrollees' expenditures do not reach the gap threshold: 12 % of enrollees, and 19 % of those who filled at least one prescription, reached the gap in 2009, lower proportions than in previous years. 29,30 Still, enrollees who reach the gap are more likely to discontinue or reduce medication use.…”

How the Medicare Part D Drug Benefit Changed the Distribution of Out-of-Pocket Pharmacy Spending Among Older Beneficiaries

“…After Part D's implementation, the proportion of Medicare beneficiaries without drug coverage fell to 9%, and most of those with limited prior drug coverage gained improved coverage. On average, Part D increased drug use 6%-16% and reduced out-of-pocket spending 13%-23% (Ketcham & Simon, 2008;Lichtenberg & Sun, 2007;Yin et al, 2008). However, Part D's effect on out-of-pocket costs of individual beneficiaries will vary depending on their drug spending and the richness of their pre-Part D coverage.…”

Hips and hearts: The variation in incentive effects of insurance across hospital procedures

“…Examples of studies estimating causal effects are: Ettner (1997), Vera-Hernandez (1999), Harmon and Nolan (2001) and Jones et al (2006). Examples based on natural experiments are: Currie and Gruber (1996), Stabile (2001), Remler and Atherly (2003), Decker and Remler (2004), Currie and Fahr (2005), McWilliams et al (2007), Grignon et al (2008), Ketcham and Simon (2008), Card et al (2009), Hullegie and Klein (2010) and Anderson et al (2012). Studies using panel data that control for unobserved fixed effects are less common but include the recent work of Bolhaar et al (2012) for Ireland where they find no evidence of moral hazard.…”