Unintended Consequences of Medicare Drug Benefit Caps

Paying for prescription drugs is a challenge in the United States.1,2 As costs escalate, public and private payers are increasing how much patients pay for prescription drugs.3-6 Many employers and Medicare Choice health plans have implemented caps on annual prescription-drug benefits or have eliminated benefits altogether. Drug-benefit caps require patients to pay the full price of drugs consumed after their spending exceeds the cap amount. To date, there has been little information on how such caps affect clinical and economic outcomes. In theory, increasing the share of costs paid by patients creates an incentive for more efficient use of care.7-9 Drug-benefit caps could encourage efficiency if patients and their physicians made judicious choices about drug therapies. Alternatively, these incentives could create barriers to care, especially for patients requiring long-term drug therapy.10-12 Reduced access to drugs is of particular concern when there is strong evidence that a drug is cost-effective.13,14 Previous studies indicate that limiting drug coverage has adverse effects in non-Medicare populations.15-17 Surveys also suggest that Medicare beneficiaries reduce their drug consumption because of cost sharing.18,19 In a prepaid integrated-delivery system, we investigated the effects of a $1,000 cap on annual drug benefits in Medicare Choice beneficiaries 65 years of age or older by comparing them with a concurrent control group whose benefits were not capped because their former employers supplemented their Medicare benefits. We examined drug consumption, hospitalizations, visits to the emergency department, office visits, mortality rates, and medical costs in 2003. We also examined drug adherence and physiological outcomes associated with drug therapy among patients receiving therapy for hypertension, hyperlipidemia, and diabetes mellitus. This information can help us understand the effect of the new Medicare Part D drug plans, in which many patients pay in full for annual drug costs between $2,250 and $5,100. (June 2006)