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In 2018, the Medicare Part D catastrophic threshold is $5000 in out-of-pocket total drug spending incurred by the beneficiary. Above this, Medicare pays 80%, prescription drug plans (PDPs) pay 15%, and beneficiaries pay a 5% copay. However, recent growth in catastrophic spending is caused by expensive specialty drugs. The 5% copay, on top of out-of-pocket spending, could result in beneficiaries not accessing specialty drugs. To assist beneficiaries, the Medicare Payment Advisory Commission (MedPAC) proposes to eliminate beneficiary catastrophic cost sharing, while PDPs pay 80% and Medicare pays 20%. Our objective was to assess other government cost-sharing approaches and consider how they would affect pharmaceutical access, PDP Part D incentives, and pharmaceutical innovation. We reviewed published literature and government reports on cost sharing between US government divisions or between government and private commercial entities. We discussed their cost-sharing applicability to Part D. We found that the US government has utilized numerous cost-sharing approaches to enhance public-private partnerships. We reviewed four cost-sharing arrangements and their applicability to Medicare: the Byrd-Bond Amendment to the Clean Air Act-Medicare bulk purchases drugs costing $8000 + ; North Atlantic Treaty Organization (NATO)-cost sharing based on high-risk markets; the Ryan White Ryan White Comprehensive AIDS Resources Emergency (CARE) Act-grants to PDPs in high-risk markets and grants to beneficiaries who cannot afford drugs; and the Department of Veterans Affairs-drug price negotiation for expensive drugs. In conclusion, a variety of federal cost-sharing approaches provide precedent for altering PDP cost sharing. The government tends to prefer options that have been tried elsewhere.

applied health economics and health policy

Paying for Drugs After the Medicare Part D Beneficiary Reaches the Catastrophic Limit: Lessons on Cost Sharing from Other US Policy Partnerships Between Government and Commercial Industry