A recent analysis published in JAMA Internal Medicine reveals that the proposed Medicare High-Value Drug List Model could provide modest financial relief to a significant portion of Medicare beneficiaries. The study examined the potential impact of implementing a $2 monthly cap on select generic medications, finding that 38.3% of beneficiaries would see reduced out-of-pocket costs.
Key Findings and Financial Impact
The research, based on 2021 Medical Expenditure Panel Survey (MEPS) data, analyzed 4,092 Medicare Part D beneficiaries with a median age of 72 years. The study found that 81% of beneficiaries currently fill prescriptions for at least one of the 150 generic drugs likely to be included in the program. Among these prescriptions, 32.5% currently cost more than the proposed $2 monthly limit.
The projected median savings under the new model would be $11 annually, representing a 6.8% reduction in out-of-pocket spending for affected beneficiaries. However, only 1.5% of beneficiaries would realize annual savings exceeding $100.
Demographic Variations in Benefits
The study revealed notable disparities in potential savings across different demographic groups. Female beneficiaries were associated with higher annual savings, while Asian, Black, and Hispanic beneficiaries showed lower absolute savings. Similarly, individuals with income below the poverty level and those with Medicaid dual enrollment demonstrated reduced absolute savings potential.
Researchers note that these differences may be partially explained by existing programs, as racial and ethnic minority populations and low-income individuals are more likely to be enrolled in Medicaid and Medicare low-income subsidies, which already provide reduced out-of-pocket costs.
Program Implementation and Limitations
The analysis assumes full participation in the Medicare Part D plan model, though actual savings could be lower if not all plans participate. The study specifically excluded beneficiaries with annual out-of-pocket medication spending over $2,000, as these individuals will benefit from separate cost caps under the Inflation Reduction Act starting in 2025.
Clinical Implications and Future Considerations
While the financial impact may be modest for most beneficiaries, researchers suggest that more predictable out-of-pocket costs for commonly prescribed generic medications could yield important clinical benefits. The consistency in pricing could improve medication adherence for chronic conditions, potentially leading to better health outcomes.
The findings contrast with a government analysis that projected a 71% reduction in total out-of-pocket spending if all generic drugs were capped at $2 monthly. This disparity suggests that targeting generic drugs with higher out-of-pocket costs could maximize savings potential.
The researchers conclude that while the High-Value Drug List Model represents a step forward in reducing medication costs, additional policies will be necessary to address the broader challenge of expensive brand-name drug costs in the Medicare program.
