The AARP Doughnut Hole
Calculator launched today, giving seniors another way to access and
calculate the most cost-efficient options for purchasing their prescription
drugs.The goal, ultimately, is to avoid
the dreaded “doughnut hole,” Medicare Part D’s coverage gap where beneficiaries
are responsible for the full cost of their prescription drugs before the drug
plan once again starts picking up the bill.
DestinationRx is powering the calculator as part of a special
arrangement between AARP and CMS, using the same data accessed by the Medicare Prescription Drug Plan Finder. Where the Plan Finder tool is designed to help
beneficiaries pick the best plan, the user interface of the AARP Doughnut Hole
Calculator is designed to help beneficiaries optimize the benefits of their
current Part D plan.
We have studied the impact of such optimization of drug costs on
seniors enrolled in Part D, with positive results: our most recent report,
which covered the top five health plans in one particular zip code, showed that
the average Part D enrollee with osteoarthritis, GERD, high cholesterol, and
hypertension could save an average of 88%, or $4,461.36 annually – and avoid the doughnut hole entirely – when
following a DestinationRx-optimized drug regimen.Download the full text version of the 2008 Doughnut Hole Study.
We’ve been working to run some numbers to calculate the
impact of the PhRMA
/Baucus deal announced over the weekend, which aims to cut in half
the cost of brand-name drugs for seniors in the Medicare Part D “doughnut hole” coverage
gap. A preliminary analysis suggests that the average senior entering the
gapwill save about a thousand dollars a
year. The analysis does not consider any means testing that might be
applied. There are obvious benefits for seniors in terms of immediate
cost, but it may also end up being an excellent trade-off for branded drug manufacturers: the self-rationing that seniors engage in during
the doughnut hole is much more heavily weighted to branded drugs, and once a
drug therapy is interrupted, a significant majority of patients do not resume
that therapy while another segment switches to generic alternative
therapies. The discount applied via the PhRMA/Baucus planwill keep those seniors on their regimens and
reduce the self-rationing and substitution behavior that could hurt the
manufacturers long-term. This will become even more important as large
numbers of baby boomers on branded medicines transition to Medicare Part D
plans in the next few years. We’ll be posting more details soon.
Over the next several months, we will be tracking the average cost of
several top hypertension medications. This chart shows average pricing
across four major retailers for both brand and generic options; each
month the line graph will grow illustrating trends within the drug
category as they emerge.
Ken Schachmut, Senior VP Strategic Initiatives, Health
Initiatives, and Health Re-engineering at Safeway, recently talked with The
Health Care Blog about how DestinationRx helped the grocery store chain
achieve significant savings for itself and its employees.
Last November, DestinationRx technology was integrated into
Safeway’s pharmacy benefits plan to encourage employees to seek out lower cost
alternatives for their prescribed medications. The program has already been deemed a success:
according to Schachmut, DestinationRx “helped Safeway to embrace and implement
therapeutic equivalency to most effectively allocate our health care
resources.”
As the
economy slips into recession, many employees are ignoring healthcare needs and
are taking risky actions to lower their drug costs that may seriously impact
their long-term health. According to a study by the Kaiser Family
Foundation, “Nearly
half (47 percent) of Americans report someone in their household taking one of
five actions involving skipping necessary health care in the past year because
of the cost. Roughly one in four say they did not fill a prescription,
and only slightly fewer say they cut pills or skipped doses.” This trend
is concerning because failure to follow prescription drug regimens can have
serious and expensive short and long term consequences. Fortunately, in
many cases switching to lower-cost alternatives could save more than cutting
back.
For
example, a patient prescribed Zocor 20mg to control cholesterol, who is
uninsured, underinsured, is in the “Donut Hole”, or for other reasons is
responsible for the full cost of the drug has several options1:
1.Pay
$145.09 retail for a 30-day supply of the brand drug as prescribed. (Annual cost: $1,741.08)
2.Substitute
with the direct generic equivalent2, simvastatin 20mg, for $75.30
retail. (Annual savings: $837.48)
3.Substitute
with lovastatin 40mg, an indirect generic alternative, for $51.30 retail.
(Annual savings: $1,125.48)
4.Find
lovastatin 40mg under the WalMart $4 generics program. (Annual savings: $1,693.08)
If that
same patient were to skip the medication altogether, the savings in a year
could be far outweighed by the potential cost of hospitalization or other
measures resulting from an adverse event related to high cholesterol. Even with a traditional deductible-based health
plan covering this care, someone (the employer or health plan sponsor, for
example) is paying, and it will ultimately drive the cost of the health plan
up. Over the long term, taking advantage
of lower-cost alternatives can be a safer – and cheaper – bet.
1.SOURCE:
DestinationRx Drug Compare™
2.Always
consult a physician before changing a prescribed drug regimen.
The above chart illustrates the potential annual savings for the top ten searched drugs on www.drx.com should consumers switch to the lowest-cost option.
Over the next several months, we will be tracking the average cost of
several top hypertension medications. This chart shows average pricing
across four major retailers for both brand and generic options; each
month the line graph will grow illustrating trends within the drug
category as they emerge.
A recent Forrester study showed continued growth in the number of times consumers using the DestinationRx Drug Compare™ tool switched from higher to lower-cost options – reflecting a growing affinity for the technology and underscoring its value in driving greater savings for consumers, plans and payers alike.
Conversions were defined as choosing a lower-cost option, either via a therapeutic alternative or a different retailer.The rate of conversion nearly doubled from the first to fourth quarters of 2007, with a total of 440,000 conversions occurring in the fourth quarter alone.
Within the study, two groups of consumers were examined to determine the effectiveness of the Drug Compare tool.The group using the tool showed a 14% conversion rate, compared to only 9% conversion in a control group of similar average age that did not use the tool.This 5% difference in conversion rate, at an annual out-of-pocket savings of $171 per drug – assuming an average of one drug per covered life – translates into $8.6 million in savings per million lives covered. And the true benefit of lower-cost alternatives is very likely to be significantly higher for the senior population due to higher drug usage.
A clear difference in the rate of conversion was also seen between consumers who received communication about the tool (5.5%) and those who did not (3.6%).The better we can communicate with the public about drug pricing and raise awareness of their options as consumers – and the tools available to explore those options – the greater the ultimate cost savings will be.
The above chart illustrates the potential annual savings for the top ten searched drugs on www.drx.com should consumers switch to the lowest-cost option.
