Introduction

The roll-out of Part D in January 2006 represented a significant leap forward, since it provided coverage for outpatient drugs for Medicare patients for the first time. A high number of both patients and insurance providers are now involved in the program, as a result of strong patient enrollment.

Scope

Overview of Part D enrollment, plus an analysis of how it has impacted the healthcare insurance market, and the branded and generic drug environment Analysis of how Part D plans have changed from 2006 to 2007 Analysis of problems faced by Part D since its roll-out, and the identification of possible improvement areas going forward Identification of how key issues such as the dual eligible patient population and drug sourcing in the donut hole are shaping Part D evolution

Highlights

Uptake into Part D has been strong, and despite the size and complexity of the program, patient satisfaction has been relatively high. The program faced a number of teething problems during roll-out, which have largely been resolved (e.g. IT issues); however, there are still a number of issues that haven't been remedied. A significant factor to impact Part D is the way that plan providers have handled patients covered by both Medicare and Medicaid. Providing these 'dual eligibles' with adequate coverage has been a significant challenge, particularly during the roll-out of the program. The choice facing Part D beneficiaries about where to source drugs when they enter the gap in coverage in Part D programs (termed the donut hole) is also impacting plan providers and patients, since patient choice in this situation has a significant impact on market dynamics.

Reasons to Purchase

Gain a clear understanding of how Part D has evolved since its roll-out in January 2006 Understand the problems that Part D has faced, together with identifying areas for improvement Gain insight into the key issues that are shaping Part D currently and in the future

CHAPTER 1 EXECUTIVE SUMMARY 4
Scope of the report 4
Key findings 4
CHAPTER 2 PART D: REVIEW OF THE PAST YEAR AND FUTURE DIRECTION 11
Overview of the usage of Part D in its first year 11
Patient enrollment in Part D has been strong 11
Part D beneficiaries have selected PDPs over MA-PD programs 12
Although the program has been going for a relatively short period of time, clear leaders in Part D provision have already emerged 13
Increased employer reliance on Part D is set to continue to drive strong enrollment in Part D in the future 14
Part D has significantly impacted the branded and generic drug marketplace, as well as the healthcare insurance providers 15
Currently, Part D is driving sales of both branded and generic drugs 16
Part D is also driving the growth of insurance companies, despite the significant financial risk of the scheme 17
There are a range of subtle differences in benefit design and formularies between 2006 Part D schemes and 2007 schemes 17
Although Part D costs to the patient are rising slowly, this is not set to significantly impact enrollment 18
The rise in the number of coverage plans and expanded formularies both increase the complexity of Part D 20
The requirement for six required categories of drugs in Part D formularies remains largely unchanged going into 2007 21
Future perspectives: 2007 will be similar to 2006, however, the Part D landscape is likely to change significantly from 2008 onwards 21
Patient switching is low going into 2007 22
2008 is likely to see a significant change in Part D structure and delivery, leading to greater switching 22
CHAPTER 3 PERSPECTIVES: PROBLEMS AND IMPROVEMENTS 24
Although there have been a range of problems with Part D, the incidence of these has fallen since its roll-out 24
Roll-out problems at the beginning of Part D have reduced drug access 26
Healthy senior citizens are angry with Part D enrollment criteria 27
Drug prices are slightly higher under Part D, although this does not appear to be significantly impacting Part D beneficiaries 28
Enrollees have had a number of problems accessing information on Part D, making it harder for these patients to gain optimal drug coverage 28
CMS helplines are more reliable than insurance plan helplines, yet there is still scope for improvement 29
Pharmacists and physicians are not well-enough trained in Part D, nor do they have enough time or resources to help patients navigate Part D 29
A number of pharmacies have faced significant cashflow problems as a result of Part D 31
Restrictive Part D plan requirements cause an increase in unnecessary hospitalizations 31
Part D is still overly complex, leading to coverage disruptions 32
Part D's complexity is making life difficult for Part D beneficiaries 32
There are key improvement opportunities to make Part D easier to navigate for patients 32
Patient and physician perspectives reveal that Part D is generally approved of, even if there are key improvement opportunities 34
Patients generally approved of Part D, even if they are not very enthusiastic about the program 34
Physician and pharmacist impressions of Part D are generally favorable, although they also believe the program is too complex 37
CHAPTER 4 SIGNIFICANT FACTORS INFLUENCING PART D FROM A PROVIDER AND PATIENT PERSPECTIVE 39
Dual eligibles are a critical Part D patient population because of their high cost, yet they have faced significant problems 39
Part D's complexity is a particular challenge to dual eligibles 40
Dual eligibles were transferred onto Part D on the first day of its implementation 40
Dual eligible healthcare is co-ordinated by a number of stakeholders who need to interact effectively 40
A large proportion of patients on Medicare are relatively unaware of low-income assistance 41
Dual eligibles faced problems being recognized and charged appropriately by Part D providers 41
Dual eligibles need to be continuously assessed 41
Patients source drugs from a range of options once they hit the donut hole 41
Patients deciding to stick in the Part D scheme can use specialized Part D plans, plus LISs and PAPs 43
Part D programs that provide donut hole coverage are scarce, although there are plans to increase the number 43
Financial support for Part D patients: LISs and MSPs are the primary financial support for low-income Part D patients 44
There is scope for PAPs to continue to be used in the donut hole 44
Patients sourcing pharmaceuticals outside Part D use PAPs, parallel importation and discount/free drug schemes 46
Patients turn to parallel importation from Mexico and Canada for cheap pharmaceuticals, both inside the donut hole and out 46
Beneficiaries can use the Part D appeals process to obtain necessary drugs 46
There are two key political factors shaping Part D evolution 47
The financial blow to the states following the transition of Medicaid patients to Part D has been softened by an improved state clawback 47
The recent change in Democrat/Republican power mix is changing the Part D landscape 48
CHAPTER 5 BIBLIOGRAPHY 50
Publications and online articles 50
CHAPTER 6 GLOSSARY 54
Glossary of terms 54
List of Tables
Table 1: Breakdown of Part D enrollment for top 10 providers, July 2006 14
List of Figures
Figure 1: At least half of the patients with access to Part D have enrolled in the plan 12
Figure 2: There have been a number of problems in Part D, for which a range of solutions have been proposed 25
Figure 3: Patient perspectives, six months after roll-out, 2006 35
Figure 4: Medicare-eligible seniors' impressions of Part D, 2006 35
Figure 5: Proposals judged by seniors as important when changing Part D 36
Figure 6: Pharmacists have more concerns than physicians over core problems with Part D 37
Figure 7: Part D patients' options for sourcing pharmaceuticals depend on whether they continue sourcing from Part D or if they leave the scheme 42
Figure 8: Sources of coverage in the donut hole for Part D enrollees 43