Medicare Part D’s benefit structure has been very unusual. First, you have a deductible with no coverage; then you get some coverage, then there is a coverage gap or “donut hole” with no coverage and finally there is very generous coverage in the ‘catastrophic phase’. Patients with high drug prices were particularly affected by this structure. They had high out-of-pocket costs during the coverage gap phase. However, the Patient Protect and Affordable Care Act (ACA) will gradually close the Medicare prescription drugs coverage gap between 2011-2020 (and the Inflation Reduction Act won’t eliminate it entirely). A key question is, how did the ACA’s closing of the coverage gap impact patient out-of-pocket (OOP) cost and supply of branded vs. generic drugs.
A study by Liu et al. This research aims to answer the question. In the analysis, they use Medicare Part B claims data between 2011 and 2020. An analysis using a difference in difference method is used to evaluate changes in OOP costs and branded/generic availability before and after the ACA intervention. The ‘intervention’ group was individuals who did not qualify for low-income subsidy (i.e., non-LIS) (as these individuals benefit from the closing…
