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Potential impact of policies to modify Medicare Part D

A University of Pennsylvania research team completed an analysis in 2020 to evaluate policy solutions to lower Medicare Part D out-of-pocket costs. Specifically, they assessed the impact on the out-of-pocket cost burden and access to specialty drugs for Medicare patients with serious chronic conditions. 

Key findings: 

  • An annual out-of-pocket cost cap alone, whether $2,000 or $3,100, will not alleviate the high financial burden faced by patients early in the year, nor reduce their likelihood of abandoning needed specialty drugs. 
  • The most effective and equitable policy option applies different annual cost caps based on a patient’s income and smooths these costs evenly over 12 months. This solution reduces the out-of-pocket cost burden while lowering abandonment rates for critical specialty drugs, especially for lower-income Medicare patients who do not qualify for cost sharing subsidies under Part D. 

This research was conducted by Jalpa A. Doshi, PhD; Pengxiang Li, PhD; Amy Pettit, PhD; and Vrushabh P. Ladage, MHCI at the University of Pennsylvania Perelman School of Medicine and Leonard Davis Institute of Health Economics, and presented at the AcademyHealth 2021 Annual Research Meeting (June 15, 2021). The research was made possible by a grant from the PAN Foundation.