Price Controls Hinder Treatment Access in Medicare Part D
Beneficiaries say Inflation Reduction Act will worsen access, affordability challenges
Key Takeaways
A new survey finds Medicare Part D health plans creating significant barriers to beneficiaries accessing and affording prescribed treatments
Most beneficiaries fear the Inflation Reduction Act will exacerbate these challenges
Key Takeaways
30% of beneficiaries said their Medicare Part D plan initially denied them access to a drug prescribed by their doctor. Among those, 40% said they ultimately had to use a medicine that was not their doctor’s first choice and 17% ended up not getting a medicine at all.
81% of beneficiaries expressed concern that new coverage restrictions due to the IRA will force them to switch from their current prescribed medication, and 87% worried the IRA will hinder access to newer prescription medicines moving forward.
92% of beneficiaries expect they will have higher out-of-pocket costs under the IRA.
More than 90% of beneficiaries want the government to establish stronger pro-patient safeguards to prevent prior authorization abuse and make it easier to appeal denials.
Introduction
Medicare formulary coverage for prescription drugs under the Part D benefit has eroded dramatically over the last 15 years. One recent study showed the share of non-protected class brand drugs excluded or otherwise restricted on Part D formularies rose from 32% in 2011 to 44% in 2020. Medicare’s Office of Inspector General also has found that Medicare Part D beneficiaries have faced extra steps to obtain drugs because their plans rejected prescriptions for avoidable or inappropriate reasons, with 26% of beneficiaries appealing these rejections and plan sponsors eventually overturning 73% of drug coverage denials.[1]
These access barriers have been observed in many chronic and acute conditions with urgent need for care. For example, people with cancer are finding it harder to access novel medicines due to strict prior authorization or other utilization management requirements despite “protected class” status requiring the drugs’ coverage. In fact, less than one quarter of Medicare beneficiaries with cancer received approval on their first time filling a cancer medicine.
The IRA made positive changes to the Medicare Part D prescription drug benefit by capping beneficiaries' total out-of-pocket (OOP) costs at $2,000 annually and limiting or eliminating cost-sharing for vaccines and insulins. But the IRA also introduced government price setting just nine years after FDA approval for small molecules, which are the vast majority of drugs prescribed, seeking to replace private and competitive market price negotiation and, consequently, changing insurers' risk and cost structures.[2] While the overarching intention of the law was to make drugs more affordable for the federal government and for Medicare beneficiaries, an important unintended effect has been that Part D plans have added new coverage restrictions, unnecessary administrative burdens, and higher cost-sharing that limit seniors' access to certain medicines.
Spending on brand medicines represents just eight cents of the nation's health care dollar, yet plays a high-leverage role in preventing chronic disease and its cascade of serious health complications. Rather than using the IRA as an excuse for access barriers and delays, it is vital for health plans and policy-makers to make sure each patient has access to the medicine that is right for them.[1]
Additionally, the IRA is anticipated to significantly impact investment in clinical development of medicines that are subject to government price controls by skewing incentives away from small molecule drugs, which are key to treating disease conditions that disproportionately impact the elderly populations such as cancer and neurological conditions.[2]
Ultimately, the Part D benefit drug provisions of the IRA will mean that seniors and people with disabilities who rely on the Medicare program for their drug coverage may not be able to access the drugs their physicians prescribe.
Methodology
An online survey was conducted between October and November 2024, gathering responses from 200 U.S. Medicare beneficiaries representing a diverse range of incomes, ethnicities, and health statuses. The survey was constructed to capture a range of people who utilize medication and spent at least $100 OOP on prescription drugs in the last year. Respondents were asked a range of questions across three themes:
Recent experiences accessing medicines, such as having to leave a prescription behind or change to a different medicine because their original prescription was not affordable or was not covered by their insurance.
Concerns over potential consequences of IRA policies intended to limit spending on medicines, such as the impact they may have on access to medicines on drug formularies.
Perspectives on cost and coverage tradeoffs, such as paying higher premiums to avoid high OOP costs for their medicines or gain greater formulary access.
Findings
The survey findings highlight key concerns among Medicare beneficiaries regarding access to medicines, rising premiums, and increasingly restrictive coverage under the IRA.
Access to Medicines
Access: In the last year, 30% of respondents reported that their insurance denied them access to a drug prescribed by their doctor. Among those, 40% stated that they had to use a medicine that was not their doctor’s first choice due to coverage restrictions and 17% ended up not getting a medicine at all.
Patient costs: Additionally, 70% of beneficiaries were required to cover the full cost for prescriptions they needed out of pocket because their plan did not cover it, highlighting failures of insurance and the resulting financial burden faced by patients.
Impact of the IRA
Choice of medicines: 85% of beneficiaries anticipate fewer medicines being included on formularies due to the IRA, restricting their treatment choices. The percentage of respondents concerned rises to 90% among those with annual drug expenditures exceeding $2,000.
Access: 87% of beneficiaries are apprehensive about the IRA's potential to hinder access to newer prescription medicines, while 85% believe the law risks limiting their treatment options.
Patient costs: 92% expect to have to pay more out-of-pocket costs.
Barriers to getting the medicine prescribed by doctor: 78% are concerned the IRA will make them have to try a different medicine than their doctor prescribes. 81% expressed concern about the IRA leading to coverage restrictions that force them to switch from their current prescribed medication to an alternative.
Plan options: 85% of respondents expressed apprehension about Medicare drug plans withdrawing from the market due to the IRA and reducing treatment options, with 100% of high-spending beneficiaries (>$2,000) having this concern.
Insurance premiums
Patient costs: 57% of beneficiaries expect Part D plans to become more expensive as a result of the IRA.
Truth in insurance: A notable majority (92%) expressed concern over potential premium increases. While respondents are concerned about the risk of rising premiums, they would be willing to pay an average of $50 more per month in premiums if it would provide greater certainty that they would receive coverage for the medicines they need.
Patient Protections
Finally, there was strong support for government action to address these challenges in accessing medicines in Part D:
Prior authorization reforms: 98% of respondents believe it is important for the government to implement policies that ensure Medicare patients have more reliable access to necessary medications.
Unnecessary administrative burdens: More than 90% of respondents supported CMS setting specific safeguards such as making it easier to resolve claims denials and appeals, strengthening clinical standards for drug coverage, and requiring plans to be more transparent about potential access problems.
Conclusion
While the IRA seeks to lower prescription drug costs for Medicare beneficiaries and reduce federal spending, the law introduces significant structural changes with consequences that are expected to exacerbate challenges Medicare beneficiaries face in accessing medicines prescribed by their doctors.
The survey reveals widespread concern among Medicare beneficiaries, with many already reporting difficulties accessing prescribed medications because of restrictions and administrative burdens imposed on them by their Part D health plans. A clear majority expressed concern over future access under the IRA. Additional concerns center around greater financial pressures stemming from the potential for rising premiums, increased OOP costs, and reduced treatment options due to fewer medicines being included on formularies. These concerns are particularly worrisome for beneficiaries spending more than $2,000 per year OOP.
The concerns expressed by beneficiaries in the survey reflect the real-world impact of Medicare plans limiting access to prescribed treatments. For example, one 2024 study reported that when it comes to oncology treatments, Part D plans reject 77% of Medicare patients’ first attempts at accessing treatment. One in five of those patients had to wait four weeks to access plan-authorized treatments. Worse still, 53% of Medicare patients whose plans reject access never initiate therapy.[5]
These findings underscore the need for Medicare Part D policy to evolve to address the impact of major changes made by the IRA. It is particularly important to ensure stronger access safeguards in the oversight and review of Part D formulary design and utilization management policies. CMS regulatory action is needed to protect patients' access and prevent abuse of prior authorization and other coverage restrictions imposed by insurance companies
Transparency notice
The research used by Charles River Associates to develop this report was supported by No Patient Left Behind. However, the conclusions, interpretations and opinions expressed herein are those of the authors alone.
References
[1] Some Medicare Part D Beneficiaries Face Avoidable Extra Steps That Can Delay or Prevent Access to Prescribed Drugs. https://oig.hhs.gov/oei/reports/oei-09-16-00411.pdf
[2] U.S. Department of Health and Human Services. Inflation Reduction Act and Medicare. https://www.hhs.gov/inflation-reduction-act/index.html#:~:text=This%20year%2C%20people%20with%20Medicare,care%20more%20accessible%20for%20everyone.
[3] A lot for a little: The best 8% of our healthcare dollar. https://rapport.bio/all-stories/best-8-percent-of-our-healthcare-dollar
[4] Investors urge the Congressional Budget Office to adopt changes to its modeling https://www.nopatientleftbehind.org/resource-materials/modeling-impacts-on-innovating
[5] IQVIA (2024).How barriers to oral oncology affect patient initiation and persistency https://www.iqvia.com/-/media/iqvia/pdfs/us