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Preparing for Medicare Part D Benefit Redesign

Summary

A pharmaceutical manufacturing company requested our assistance in estimating the impact of shifting financial liability under several Part D redesign options. We analyzed the financial implications of these options and provided the client with a strategic roadmap based on those analyses. The client used this information to guide its government affairs strategy, prepare for contracting adjustments, and create pricing strategies.

Client Type

Pharmaceutical manufacturing company

Challenge

The client needed to understand how changes to the Part D program could affect out-of-pocket costs and expected drug utilization for its patients, manufacturer discount liabilities for its Part D product portfolio, and costs for plans as well as associated decisions by plans related to formularies and benefit designs.

Solution

We modeled every potential policy change that could affect the Part D program and provided the client with a tool to estimate the impact of various policy options using user-defined inputs to accommodate multiple scenarios.

Approach

Data-Driven Projections to Anticipate Business Impacts

We developed a precise and flexible Excel-based tool to estimate the impacts of various policy changes for the client and its customers across a range of Part D redesign scenarios. The tool included a range of possible benefit redesign scenarios and allowed for user-defined inputs to reflect assumptions such as rebate levels and pricing decisions.

The policy scenarios were informed by current and past Part D redesign proposals introduced by Congress. These policies differed in some respects but shared a similar structure, which included eliminating the coverage gap, capping beneficiaries’ out of pocket costs, creating a new manufacturer discount program across all phases of coverage, and raising plan liability for costs incurred in the catastrophic portion of the benefit.

We used the most recently available Medicare Part D Prescription Drug Event data as well as forecast data provided by the client to model these policy scenarios. Together, we selected 4 outcomes to assess across the company’s Medicare portfolio and the Part D program overall.

Meaningful Recommendations

With information gleaned from the modeling exercise, we recommended a clear path forward for the client’s policy and market access strategies. We tailored these recommendations to the individual products across the client’s portfolio and to the Part D program overall.

Outcome

Following our research and guidance, the client understands in detail the financial implications of the Part D redesign and possesses a clear roadmap for navigating in a complex and uncertain policy environment. The client shared our recommendations with senior leadership, who used them to inform global projections, guide government affairs strategy, prepare for contracting adjustments, and create pricing strategies.

Keywords

Medicare Value-based care Drug pricing
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