Celebrating Medicare: The Next 50 Years

Aug 10, 2015

Prescription drug costs are rising at the fastest rate in more than a decade. Effective strategies to control costs, improve adherence and generate better outcomes will help keep Part D an affordable and meaningful benefit.

  • Medicare
  • Caregivers
  • Seniors

By every objective measure, the Medicare Part D program is working as Congress intended:

  • Seniors have saved money on their prescription drugs – more than $7 billion.
  • Taxpayers have saved money; program costs are 45% below initial projections.
  • Seniors are happy with their prescription drug benefit; 94% report being satisfied, and 95% believe coverage meets their needs.

As we look ahead to the next 50 years of providing stable and secure coverage to millions of seniors and disabled beneficiaries, it’s time to examine what is working well and to highlight opportunities for improving the program.

Medication Costs

Medicare beneficiaries are the highest utilizers of prescription drugs and thus particularly sensitive to prescription drug price increases. On average, a Medicare beneficiary is taking six medications at any given time; 15% of seniors take 10 prescriptions at the same time.

In 2014, the total drug spend for Medicare plans increased 13.8%, to $2,987.96 per beneficiary, as a result of a modest increase in utilization – 0.5%, combined with a steep 13.3% increase in unit costs. Medicare specialty spend increased 45.9%, compared to a far more modest increase of 14.7% in 2013 and a stark difference to the 12% trend seen in 2010 for specialty medications.

Bottom line: Prescription drug costs are rising at the fastest rate in more than a decade. Effective strategies to control costs, improve adherence and generate better outcomes will help keep Part D an affordable and meaningful benefit.

Pharmacy Networks

Preferred retail pharmacy networks effectively align beneficiary and Medicare program priorities. For decades, doctors, hospitals, and other providers have been routinely designated as either preferred or nonpreferred – a strategy which aligns the best interests of the patient, the provider and the plan sponsor.

With about 65,000 retail pharmacies nationwide to draw upon in setting up preferred pharmacy networks – including chain drugstores and independent pharmacies – beneficiary pharmacy access has never been more robust.

In fact, Express Scripts research confirms preferred network pharmacies are, on average, nearly one mile closer to the patient’s home than the patient’s current pharmacy; at the macro level, industry studies show Medicare Part D plans with preferred pharmacy networks offer high-quality benefits with lower-than-average premiums, and significantly reduce Medicare spending.

Preferred networks are not just focused on cost: Express Scripts is pioneering a pay-for-performance network with client partners, such as SCAN Health Plan, to collaborate with retail pharmacies and reward pharmacist interventions that yield continuous improvements in patient outcomes aligned with CMS Star Ratings performance measures.

Bottom line: Part D preferred networks deliver significant cost savings, while still fulfilling CMS’ high standards for pharmacy access. Without a preferred pharmacy strategy, plan sponsors and members are exposed to higher drug spend.


Prescription-drug formularies foster competition in the pharmaceutical marketplace that lowers costs for beneficiaries and taxpayers. Plans rely on independent Pharmacy & Therapeutics committees to develop clinically based lists of preferred drugs, known as formularies.

While formularies have helped manage Medicare spending, Medicare’s rules do not allow plans to leverage all available tools. Unlike commercial health plans, Medicare health plans are not allowed to make mid-year formulary changes to remove high-cost drugs when lower cost, but equally effective, alternatives come to market. While plans can – and do – add new drugs to formularies during the plan year, CMS hampers their ability to remove medications mid-year. Brand-pharma companies have taken advantage of these rules by strategically timing their product launches early in a new plan year to maximize plan coverage – and profits – at the expense of beneficiaries, Medicare and taxpayers.

Bottom line: When plans have the flexibility to manage their formularies throughout the plan year, they can be more agile in protecting beneficiaries and taxpayers from the impact of high-cost medications while still ensuring access for beneficiaries who need the new medication.

Waste, Fraud & Abuse

Efforts to combat fraud, waste and abuse are vital to the program’s financial sustainability and have grown in recent years in response to the prescription drug abuse epidemic.

Express Scripts has led the industry in innovative solutions to reduce the financial and human costs associated with prescription drug abuse. Our cutting-edge programs rely on intensive data analytics to detect fraudulent behavior, proactively identify unusual utilization patterns, ensure compliance with government requirements, and provide actionable evidence for plan sponsors.

Consider the experience of one patient. In 2011, a 49-year old patient filled 43 controlled-substance prescriptions from 17 prescribers and five pharmacies. In a span of just 14 months, this patient received 825 days’ worth of medication. An Express Scripts pharmacist worked with the plan to establish a member-level benefit change so that the patient would transition to a single pharmacy and prescriber for her medications. This patient-specific plan also included a nurse case manager and the plan’s employee assistance program. Today, the patient has completed a rehabilitation program, sees just one pain management physician and follows common-sense benefit guidelines. This program has saved the plan sponsor more than $40,000 and may well have saved the patient’s life. Unfortunately, this program is not available for Medicare Part D.

Bottom line: Prescription fraud, waste and abuse is real, and so are our solutions to combat them. Legislation under consideration in Congress would allow Part D plans to adopt this best practice used in the commercial market and by 46 Medicaid programs. With overwhelming support for this policy, we are optimistic that it will be enacted in this Congress. And that is largely what has made Medicare Part D such a success – plans, lawmakers and regulators continue to innovate in ways to improve the program and protect beneficiaries.

Medication Therapy Management

Medication Therapy Management (MTM) programs play an important role in identifying and assisting beneficiaries at risk for gaps in care. However, only a small percentage of the Medicare Part D population is eligible for MTM according to CMS criteria.

Express Scripts’ Expanded MTM program applies Health Decision Science™, and relies on other innovative solutions, such as our Medicare-specific ScreenRx® predictive modeling program, to leverage behavioral science and actionable data to identify beneficiaries at risk for non-adherence so our specialist pharmacists can engage with the patients and implement a tailored intervention.

Bottom line: Clinical utilization management programs support seniors and help them overcome behavioral, clinical, and financial barriers to adherence and keep them on course with their therapy, yielding better health outcomes and better quality of life.

Medicare-Medicaid Demonstration

The Medicare-Medicaid Plan (MMP) demonstration provides a landmark opportunity to create a streamlined experience for both providers and members to improve health outcomes while helping to contain skyrocketing healthcare costs. However, streamlined requirements for the plan sponsors seem to have been overlooked, and the lack of aligned requirements from CMS and participating states is hindering the plan’s ability to execute demonstration’s intent.

Many requirements for plan oversight and operations are only included to provide the state and CMS with their preferred reporting formats. Accommodating these variances between state and federal requirements have taken up significant financial resources by the plan that may have been better allocated toward member- centric services to improve health outcomes.

Bottom line: Better coordination and alignment of the MMP requirements would lead to more efficiency for all stakeholders. A unified set of demonstration requirements for CMS and all participating states would give plans the ability to focus on processes that improve member outcomes, and would reduce the distraction of duplicative operational requirements that do not provide additional value.


The prevalence of generic drugs in Medicare has no doubt helped keep Part D premiums lower than originally forecast, reduced beneficiary cost sharing and contributed to high beneficiary satisfaction. Biosimilars have the same potential, but have faced many obstacles in coming to market in the U.S.

Fortunately, the FDA approved the first U.S. biosimilar in March 2015: Novartis’ ZarxioTM (filgrastim), which competes with Amgen’s Neuopogen®, which has been available since 1991. Amgen had filed suit to block Zarxio’s market entry, but a recent Court decision may allow Zarxio to come to market in September 2015. While the handful of biosimilars that are expected this year will not alone mitigate the marked increases in specialty trend, we do foresee significant discounts of about 20-30% compared to their reference product, saving the U.S. more than $250 billion over the next decade.

Bottom Line: Biosimilars have been used in Europe for the past 10 years without a single safety issue. It’s time they become available in the U.S. so we can lower costs and make room for newer therapies. However, we will only benefit from these medications if Congress, CMS and the FDA ensure fair reimbursement and naming practices. Treating biosimilars as brand products for the purposes of reimbursement prevents them from qualifying for manufacturer discounts in the coverage gap. These drugs will have higher copays, like brand drug copays, but without the manufacturer discount, the remaining costs will be borne by the plan and CMS. Similarly, Express Scripts believes that identical naming between the reference product and its biosimilar is important to helping patients and clinicians recognize and utilize biosimilars.

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