Specialty Drugs May Drive Higher Out-of-Pocket Costs for Medicare Patients in 2019

Despite efforts to ease cost burden for Medicare Part D beneficiaries, high out-of-pocket costs for specialty tier drugs continue to be a concern for patients without low-income subsidies.
A new Kaiser Family Foundation (KFF) analysis points to the high out-of-pocket cost burden for Medicare enrollees taking specialty medications, with some expected to spend thousands of dollars out of pocket for a single specialty tier drug in 2019. For the majority of these medications, costs will occur above the catastrophic threshold, translating to $5444 in out-of-pocket costs in the catastrophic phase alone.
Specialty drugs drive a large portion of prescription drug costs in the United States, approaching nearly half of overall medicine spending. In Medicare Part D, spending on these drugs has steadily increased, now comprising more than 20% of total Part D spending despite only being prescribed to a relatively small share of enrollees, according to KFF.
For the analysis, investigators pulled data from Medicare’s Plan Finder website to calculate the expected annual 2019 out-of-pocket costs for 30 specialty tier drugs across 4 conditions: hepatitis C virus (HCV), multiple sclerosis (MS), cancer, and rheumatoid arthritis (RA). Two of the 30 specialty drugs in the analysis, Gleevac and Viekira Pak, are not covered by any plan in 2019.
According to their findings, annual out-of-pocket costs are expected to be higher in 2019 on average for 8 of the 10 specialty tier drugs analyzed compared with 2016. The data also showed that for 28 of the 30 specialty drugs covered by some or all plans, out-of-pocket costs in 2019 will average $8109.
Coverage varied widely for many of these specialty medications, reflecting a broad spectrum of out-of-pocket costs across the 4 conditions and 28 specialty tier drugs analyzed. Total median annual out-of-pocket costs for 2019 range from $2622 for Zepatier, a drug used to treat HCV, to $16,551 for Idhifa, a leukemia therapy. The share of out-of-pocket costs incurred in the catastrophic phase in 2019 ranges from 13% to 86%, respectively.

Related: Specialty Drug Spending Grows While Traditional Medicine Spending Drops
Patients taking cancer medications are most likely to face higher out-of-pocket costs in 2019 than enrollees taking any of the other specialty medications. With out-of-pocket costs that can exceed $8000, most of this spending is above the catastrophic threshold. The overall expected annual out-of-pocket costs for cancer drugs in 2019 range from $8181 for Zytiga to $16,551 for Idhifa.
Other key findings include:
  • Expected annual out-of-pocket costs for HCV medications exceed $2000, with the highest at $6338 for Harvoni. 
  • Expected annual out-of-pocket costs in 2019 for MS range from $6507 for Avonex to $7409 for glatiramer acetate.
  • Expected annual out-of-pocket costs in 2019 for RA range from $4372 for Kevzara to $5471 for Humira. 
For specialty tier drugs that are not covered, the authors estimated annual costs in Part D are at least 10 times higher than when covered.
“Part D enrollees who need specialty drugs that are not covered by their plan could be exposed to substantial costs—which would likely mean not filling a prescription for the off-formulary drug and instead taking a therapeutic substitute,” the authors wrote.
Even as the coverage gap for brand name drugs was closing, median annual out-of-pocket spending for several specialty drugs in the analysis increased by 12% on average, according to the analysis. Out-of-pocket costs decreased for HCV treatments Harvoni and Sovaldi, however, by 13% from 2016. The authors concluded that out-of-pocket costs above the catastrophic threshold are estimated to increase for several of the specialty drugs in the analysis in 2019.
“With the now-complete closure of the Part D coverage gap for brand-name drug, enrollees who take selected specialty tier drugs can expect to face lower out-of-pocket costs below the catastrophic threshold in 2019 than in 2016, but higher costs above,” the authors wrote.
Cubanski J, Koma W, Neuman T. The Out-of-Pocket Cost Burden for Specialty Drugs in Medicare Part D in 2019. Kaiser Family Foundation. 2019. https://www.kff.org/medicare/issue-brief/the-out-of-pocket-cost-burden-for-specialty-drugs-in-medicare-part-d-in-2019/. Accessed February 4, 2019.

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