Comparison of Out-of-Pocket Spending on Ultra-Expensive Drugs in Medicare Part D vs Commercial Insurance

Little is known about how out-of-pocket burden differs between Medicare and commercial insurance for ultra-expensive drugs.

To investigate out-of-pocket spending for ultra-expensive drugs in the Medicare Part D program vs commercial insurance.

This was a retrospective, population-based cohort study of individuals using ultra-expensive drugs included in a 20% nationally random sample of prescription drug claims from Medicare Part D and individuals aged 45 to 64 years using ultra-expensive drugs included in a large national convenience sample of outpatient pharmaceutical claims from commercial insurance plans. Claims data from 2013 through 2019 were used, and data were analyzed in February 2023.

Claims-weighted mean out-of-pocket spending per beneficiary per drug by insurance type, plan, and age.

In 2019, 37 324 and 24 159 individuals using ultra-expensive drugs were identified in the 20% Part D and commercial samples, respectively (mean [SD] age, 66.2 [11.7] years; 54.9% female). A statistically significant higher share of commercial enrollees vs Part D beneficiaries were female (61.0% vs 51.0%; P < .001), and a statistically significantly lower share were using 3 or more branded medications (28.7% vs 42.6%; P < .001). Mean out-of-pocket spending per beneficiary per drug in 2019 was $4478 in Part D (median [IQR], $4169 [$3369-$5947]) compared with $1821 for commercial (median [IQR], $1272 [$703-$1924]); these differences were statistically significant every year. Differences in out-of-pocket spending comparing commercial enrollees aged 60 to 64 years and Part D beneficiaries aged 65 to 69 years exhibited similar magnitudes and trends. By plan, mean out-of-pocket spending per beneficiary per drug in 2019 was $4301 (median [IQR], $4131 [$3000-$6048]) in Medicare Advantage prescription drug (MAPD) plans, $4575 (median [IQR], $4190 [$3305-$5799]) in stand-alone prescription drug plans (PDPs), $1208 (median [IQR], $752 [$317-$1240]) in health maintenance organization plans, $1569 (median [IQR], $838 [$481-$1472]) in preferred provider organization plans, and $4077 (median [IQR], $2882 [$1075-$4226]) in high-deductible health plans. There were no statistically significant differences between MAPD plans and stand-alone PDPs in any study year. Mean out-of-pocket spending was statistically significantly higher in MAPD plans compared with health maintenance organization plans and in stand-alone PDPs compared with preferred provider organization plans in each study year.

This cohort study demonstrated that the $2000 out-of-pocket cap included in the Inflation Reduction Act may substantially moderate the potential increase in spending faced by individuals who use ultra-expensive drugs when moving from commercial insurance to Part D coverage.