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Higher Gap Discount Payments for Employer Part D Plans

Summary

Avalere’s analysis shows differences in payments between employer and non-employer Part D plans.

The Affordable Care Act (ACA) created a discount program to help close the coverage gap. Under this program, manufacturers offer discounts on their medications for those enrollees who are in the coverage gap—or “donut hole”—portion of the benefit. The effect of the ACA changes to the coverage gap, including this new manufacturer discount gap program, was to fully phase out the donut hole.

Since the launch of the coverage gap discount program, different amounts of gap discounts are supplied on behalf of enrollees in plans that are employer plans—also known as employer group waiver plans (EGWP)—compared to those that are not employer plans. Avalere analyzed prescription drug data for a random 20% sample of enrollees to assess the amount of coverage gap payments for EGWP and non-EGWP enrollees from 2016 to 2019.

As shown in Table 1, per person spending for the gap discount was higher for the EGWP plans than the non-EGWP plans. Further, as a higher portion of the total spending, EGWP spending was also higher than non-EGWPs. Finally, gap discount payments increased as a percentage of total costs for non-EGWPs—from 6% in the 2016–2018 period to 9% in 2019—while gap discount payments as a percentage of total costs were relatively constant for EGWPs during the 2016–2019 period.

Table 1. Per Member Per Month (PM/PM) Spending and Gap Discount as a Percentage of Total Spending
Plan Type Year PM/PM Gap Discount
Spending
PM/PM Total
Drug Spending
Percentage
of Total
Non-EGWP 2016 $16.22 $270.81 6%
2017 $15.97 $277.23 6%
2018 $18.73 $291.33 6%
2019 $28.76 $313.76 9%
EGWP 2016 $49.74 $427.94 12%
2017 $48.87 $444.53 11%
2018 $53.16 $477.02 11%
2019 $67.26 $503.83 13%

Methodology

Avalere used a randomly selected sample of 2019 Medicare Part D Drug Event data representing 20% of the Medicare market under a research-focused data use agreement with the Centers for Medicare and Medicaid Services from 2016 to 2019. We tabulated total prescription drug spending and gap discount payments by type of plan—EGWP vs. non-EGWP—during this time period for the non-low income enrollees.

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