Utilization Management in the Medicare Part D Program and Prescription Drug Utilization

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Public Health

Background:

• Medicare Part D improved prescription drug access for beneficiaries.
• Utilization management policies in Medicare Part D may negatively impact drug access.
• Understanding the impact of these policies is crucial for healthcare policy.

Purpose of the Study:

• To analyze the effects of utilization management policies on prescription drug utilization and spending within Medicare Part D.
• To quantify the impact of prior authorization, step therapy, and quantity limits on drug spending and prices.

Main Methods:

• Utilized Medicare Part D claims data from 2009-2016.
• Employed an instrumental variables strategy using lagged health status and plan availability.
• Examined expected and observed exposure to utilization management.

Main Results:

• Expected exposure to utilization management increases observed exposure, particularly for prior authorization.
• Increased prior authorization exposure raises Part D spending by $122.27 per percentage point, with Medicare covering most costs.
• Step therapy increased spending by $46, while quantity limits decreased spending by $31.
• Prior authorization and quantity limits increased the average price per prescription.

Conclusions:

• Utilization management policies in Medicare Part D have complex effects on drug spending and access.
• Prior authorization significantly increases overall spending, largely borne by Medicare.
• Quantity limits may reduce spending, but all policies can increase average prescription prices.