Senior patients with diabetes could be more than $350 better off each year if a share of negotiated manufacturer rebates is passed on the patients at the point of sale, according to recent IHS Markit analysis commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA).
Passing on a portion of rebates on diabetes drugs could save on overall healthcare spending by $1,352 and reduce individual patient out-of-pocket expenses by more than $350 annually for each Medicare Part D beneficiary with diabetes, according to the analysis from the research firm.
Under the current system, payers are able to negotiate discounts with the manufacturers of branded medications, in some cases reducing the net price by as much as 70 percent. However, this is often not passed on to seniors on the Medicare Part D program, with many still paying high prices and incurring high out-of-pocket expenses at the pharmacy counter. IHS Markit’s analysis projected sharing 80 percent of the rebates would lower out-of-pocket expenses for seniors with diabetes by an average of $367 every year.
Furthermore, it suggested reducing the overall cost for the patient could help improve patient health and disease management, citing a 2016 study published in the Journal of Health & Medical Economics, which found that only around half of all Medicare beneficiaries have their diabetes under control. The study also found that the high cost of drugs is one of the reasons most commonly reported by patients who fail to properly follow their medication regimen.
“Robust competition and choice in Medicare Part D has led to expanded coverage and stable premiums, but more needs to be done to improve affordability and predictability for seniors,” said Stephen J Ubl, president and CEO of PhRMA, adding that taking this action would result in “significant savings across the Medicare program”.
Diabetes type 1 and 2 incur significant expenses to the Medicare program, costing more than $100 billion each year. Diabetes type 2 is the most common form of the condition, accounting for more than nine in ten cases in the United States. In 2017, an estimated one in five adults over the age of 65 had diabetes, adding an extra $13,240 to the annual healthcare bill, according to figures from the American Diabetes Association (ADA). The ADA’s recent “Economic Costs of Diabetes in the US in 2017” report found the disease is the most costly in the country, with the cost of diagnosed diabetes reaching $327 billion annually.
Currently, most medicines used to treat diabetes, for example Lipitor (atorvastatin) or Precose (acarbose), are covered under Medicare Part D. Coverage has four phases: standard benefit in which patients absorb the full cost of medication; an initial coverage phase where patients pay 25 percent of the cost; and then a coverage gap reached when a certain level of drug spending is reached and patients again pay a larger proportion of their medication (in 2015, these beneficiaries paid 45 percent of the costs associated with their branded medication).
The final phase called the catastrophic phase in the analysis, is when beneficiaries reach a certain level of out-of-pocket expenses and are eligible to pay only five percent of drug costs until the end of the year.