OBJECTIVES: This study investigated the amount paid annually by patients for ultra-expensive drugs in the Medicare Part D program in comparison to patients with commercial insurance between 2013 and 2019.

METHODS: Ultra-expensive drugs are defined as single-source brand-name and generic drugs with annual average spending per Medicare Part D beneficiary in excess of the United States gross domestic product per capita in that year. Ultra-expensive drugs were identified using the Part D Spending by Drug data. The Part D Prescription Drug Event (PDE) dataset and outpatient pharmaceutical claims from IBM MarketScan were used to identify beneficiary spending. The PDE dataset was linked with the Master Beneficiary Summary File to identify beneficiaries who received low-income subsidies. Mean per-beneficiary per-drug out-of-pocket spending was computed by subsidy type, insurance type, and for each year between 2013 and 2019.

RESULTS: Mean out-of-pocket spending for an ultra-expensive drug was approximately two to three times greater for Part D beneficiaries compared to commercially insured patients from 2013 to 2019. In 2019, mean out-of-pocket spending was $2789 (sd: $2724) for Medicare fee-for-service beneficiaries and $3240 (sd: $4290) for Medicare Advantage beneficiaries (p>0.05); $3.50 (sd: $2.06) for those with full low-income subsidies and $5983 (sd: $5742) for those without subsidies (p<0.001); $2954 (sd: $2205) for beneficiaries in commercial high-deductible health plans and $1033 (sd: $1170) for beneficiaries in commercial health maintenance organizations (p<0.001).

CONCLUSIONS: The average Medicare beneficiary ineligible for low-income subsidies and taking an ultra-expensive drug who moved from private insurance to Medicare in 2019 would have seen their annual out-of-pocket spending double if they moved from a commercial high-deductible health plan or increase six times if they moved from a commercial health maintenance organization. The Inflation Reduction Act, specifically the $2000 out-of-pocket cap, is expected to dramatically lower these costs.