A report from the General Accountability Office found that among all Medicare Part D beneficiaries who used at least one specialty tier–eligible drug in 2007, 55 percent reached the catastrophic coverage threshold, after which Medicare pays at least 80 percent of all drug costs. In contrast, only 8 percent of all Medicare Part D beneficiaries who did not use a specialty tier–eligible drug reached this threshold in 2007.
Specialty tier–eligible drugs accounted for 10 percent, or $5.6 billion, of the $54.4 billion in total prescription drug spending under Medicare Part D plans in 2007. And Medicare beneficiaries who received a low-income subsidy accounted for most of the spending on specialty tier–eligible drugs—$4.0 billion, or 70 percent of the total, according to the GAO. High-cost drugs eligible for a specialty tier commonly include immunosuppressant drugs, those used to treat cancer, and antiviral drugs.
For those unfamiliar, the Centers for Medicare & Medicaid Services allows Part D plans to use different tiers with different levels of cost sharing to manage drug use and spending. The specialty tier is designed for high-cost drugs with prices that exceed a certain CMS threshold and beneficiaries who use these drugs - such as biologics - typically face higher out-of-pocket costs than beneficiaries who use only lower-cost drugs (here is the report).
"The report documents that competition is needed so that health insurers can negotiate for lower-cost alternatives to high-priced specialty-tiered brand drugs," Kathleen Jaeger of the Generic Pharmaceutical Association, which has been agitating for Congress to allow the FDA to create a so-called pathway for approving biogenerics, says in a statement. "The GAO findings also underscore the fact that the current system leaves older Americans particularly exposed to the high cost of brand specialty –tiered medicines."