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Out-of-Pocket Costs for Oncology Drugs Vary Substantially Between Employer and Non-Employer Based Part D Plans

Summary

New Avalere analysis finds that beneficiaries enrolled in Employer Group Waiver Plans (EGWPs) have lower out-of-pocket (OOP) costs for select drugs than beneficiaries enrolled in other types of Part D plans.

Avalere analysis finds that non-low-income subsidy (LIS) beneficiaries taking 1 of 3 oncology drugs and enrolled in standalone Prescription Drug Plans (PDPs) or Medicare Advantage Prescription Drug Plans (MA-PDs) pay OOP costs of $6,060, on average across the 3 medications. Individuals enrolled in EGWPs, however, pay $1,047, on average across the same 3 medications, or over 80% less. Further, for the 3 drugs analyzed, average annual OOP per person was 8–10% higher in PDPs than MA-PDs. Despite the substantial variance in OOP costs for the 3 oncology products, utilization is similar across all plan types, averaging about 7.5 scripts filled per person annually.

EGWPs are a type of Part D plan that are permitted to waive certain Part D program requirements that PDPs and MA-PDs must follow (e.g., EGWPs can restrict enrollment to an employer’s or union’s retirees and vary premiums and cost-sharing amounts for beneficiaries living in different areas). In Part D, EGWPs receive the same direct subsidy from the federal government as other Part D plans (though they do not submit bids), but employers may choose to further subsidize premiums. Overall, EGWPs must meet the same standard for actuarial value as other Part D plans, but they have more flexibility to vary cost sharing in different phases of the benefit.

EGWPs are designed to provide an option for employers that are interested in providing benefits that are more comparable to those provided to current employees. Therefore, prescription drug coverage offered through EGWPs may differ considerably from non-employer-based Part D plans benefits, as suggested in this analysis.

Table of average drug prices for oncology drugs

Funding for this research was provided by Incyte. Avalere maintained full editorial control.

Methodology

Avalere analyzed 2016 Part D prescription drug event (PDE) data under a CMS research data use agreement. Avalere created 3 cohorts of non-LIS beneficiaries taking 1 of 3 high-cost, specialty oncology drugs with similar characteristics with a full 12 months of Part D enrollment. For each cohort, Avalere analyzed drug costs, OOP costs, and coverage gap discounts by plan type and LIS status.

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