According to the Centers for Medicare and Medicaid Services (CMS), the total costs for the Medicare Part D prescription drug program based on actuary estimates will be $37.2 billion in 2008 and $46.4 billion in 2009. When the drug benefit was being debated in Congress, however, the actuary estimated the benefit would cost $68 billion in 2008 and $74 billion in 2009. Based on these estimates, Medicare Part D is currently operating at 37-45% under initial projections.
Further, officials at CMS report that monthly premiums for Medicare prescription drug plans will average $28 in 2009 – a 37% decrease from $44.12 when the benefit was created in 2003 – translating into significant savings for the Federal government as well as beneficiaries.
Certainly many factors have contributed to the reduced Part D costs for enrollees and taxpayers, but Part D plan designs and the choices they created – most notably with regard to generic alternatives – seems to have played a significant role. According to a study by the Kaiser Family Foundation, one in four Part D enrollees who filled any prescriptions in 2007 reached the “Donut Hole” coverage gap. The study also found that entering the coverage gap effectively changed patient use of their prescription drug benefit, including switching to generic alternatives. A recent Wolters Kluwer Health Source study revealed that generic drugs now own 63% of the Medicare Part D market, up from 50% less than three years ago.
We are not aware of any direct Part D data that shows the direct fiscal impact of generic utilization and other behavior changes. If the generic usage trends for Part D translate as they have with commercial plans, however, a strong case can be made for a substantial role for behavior change in keeping Part D costs under the projections. Express Scripts has estimated that in 2007 commercially insured Americans and benefit plan sponsors saw nearly a $5.2 billion savings in prescription drug costs thanks to greater use of generic drugs. The savings from this type of consumerism can be significant – and based on the current Medicare Part D cost estimates may be far reaching.
