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New study examines impact of ‘doughnut hole’ on people enrolled in Medicare Drug Plans in 2007…Approximately 3.4 million Part D enrollees, including many with serious Medical Conditions, reached the Coverage Gap in 2007, leading some to stop treatment

A new analysis from the Kaiser Family Foundation quantifies, for the first time, the number of Medicare Part D plan enrollees in 2007 who reached a gap in their prescription drug coverage known as the “doughnut hole,” as well as the changes in beneficiaries' use of medications and out-of-pocket spending after they reached that gap. 

The analysis excludes beneficiaries who receive low-income subsidies because they do not face a gap in coverage under their Medicare drug plan.

The study of Part D prescription drug utilization finds that one in four (26 percent) Part D enrollees who filled any prescriptions in 2007 reached the coverage gap.

This includes 22 percent who remained in the gap for the remainder of the year, and 4 percent who ultimately received catastrophic coverage. 

Applying this estimate to the entire population of Part D enrollees, the analysis suggests that about 3.4 million beneficiaries (14 percent of all Part D enrollees) reached the coverage gap and faced the full cost of their prescriptions in 2007. pan>

Beneficiaries taking drugs for serious chronic conditions had a substantially higher risk of a gap in coverage under their Medicare drug plan. 

For example, 64 percent of enrollees taking medications for Alzheimer’s disease reached the coverage gap in 2007, as did 51 percent of those taking oral anti-diabetic medications and 45 percent of patients on antidepressants.

As noted above, these percentages are among Part D plan enrollees who did not receive low-income subsidies.

Conducted by researchers at Georgetown University, NORC at the University of Chicago and Kaiser, the study found evidence of patients changing their use of prescription drugs when they are required to pay the full cost of medications in the coverage gap. 

Across eight classes of drugs examined – used to treat a variety of relatively common chronic conditions – 15 percent of Part D enrollees who reached the gap stopped their drug therapy for that condition, 5 percent switched to another medication in the class, and 1 percent reduced the number of drugs they were taking in the class.

”The Medicare drug benefit has produced tangible relief for millions of people, despite the unusual coverage gap that was created to make the benefit fit within budget constraints,” Kaiser CEO and President Drew Altman said. 

“But if a new president and Congress consider changes to the drug benefit, it will be important to keep in mind that the coverage gap has consequences for some patients with serious health conditions.”

For people with a chronic condition such as diabetes, stopping a medication even temporarily can have serious and immediate health consequences.

The study found that 10 percent of Part D enrollees taking oral anti-diabetic drugs who reached the coverage gap stopped taking their medications.  In other cases, the potential consequences

It may be realized over a longer term.  For example, among Part D enrollees taking a drug for osteoporosis who reached the gap, 18 percent stopped taking medications.

In other instances, the health implications are less clear.  For example, 20 percent of those taking Proton Pump Inhibitors who ended up in the gap discontinued their medications.  Because there is some concern that such drugs (for ulcers and acid reflux) are overused for more routine gastrointestinal conditions, termination of therapy might not pose serious health risks in all cases.

Beneficiaries who reached the coverage gap faced substantial increases in out-of-pocket spending. 

For example, among Part D enrollees who reached the coverage gap, but did not receive catastrophic coverage, average monthly out-of-pocket costs nearly doubled from $104 prior to the coverage gap, to $196 in the “doughnut hole.” 

The vast majority (84 percent) of the Part D enrollees who reached the coverage gap did not have sufficient additional drug spending during the year to receive catastrophic coverage, at which point their Part D plan would pay 95 percent of drug costs. 

The study also found that people who reached the gap paid the full cost of their medications, without any help from their Part D plan, for an average of just over 4 months and received catastrophic coverage for less than one month.

This study analyzes retail pharmacy claims data, based on 4.5 million Medicare beneficiaries in Part D plans in 2007, the first year that most people would be enrolled in a Part D plan for a full calendar year.

The analysis is based on 2007 data from IMS Health’s Longitudinal Prescription Drug Database, which includes prescription drug information that represents half of all retail prescriptions filled in the U.S.

The report, The Medicare Part D Coverage Gap: Costs and Consequences in 2007, is available online.  The research team includes:  Jack Hoadley of Georgetown University, Elizabeth Hargrave of NORC at the University of Chicago, and Juliette Cubanski and Tricia Neuman at the Kaiser Family Foundation.