New drugs added to formularies

Cigna and Express Scripts have announced new "bio similar" meds added to their formularies. These means generic versions of some medications like Humira (for rheumatoid arthritis) and bio similar hormones may soon be much lower cost as a covered benefit under Medicare Part D. Coverage would not begin until 2024. in 2021, Medicare spent almost $3Billion for Humira.

Speaking of meds

Medicare drug spending in 2021 reached an all time high, mostly due to two newly approved blood thinners. Eliquis cost Medicare over $13Billion in 2021, and Xarelto approximately $5Billion.

This is important because, under the Inflation Reduction Act, Medicare will start capping your out of pocket costs next year, and negotiate pricing for the 10 most expensive drugs beginning in 2026.

From Kaiser Family Foundation:

Cap Out-of-Pocket Spending for Medicare Part D Enrollees and Other Part D Benefit Design Changes

Medicare Part D currently provides catastrophic coverage for high out-of-pocket drug costs, but there is no limit on the total amount that beneficiaries pay out of pocket each year. Under the current benefit design, Part D enrollees qualify for catastrophic coverage when the amount that they pay out of pocket plus the value of the manufacturer discount on the price of brand-name drugs in the coverage gap phase exceeds a certain threshold amount. Enrollees with drug costs high enough to exceed the catastrophic threshold are required to pay 5% of their total drug costs above the threshold until the end of the year unless they qualify for Part D Low-Income Subsidies (LIS). In 2022, the catastrophic threshold is set at $7,050, and beneficiaries pay about $3,000 out of pocket for brand-name drugs before reaching the catastrophic coverage phase.

Medicare pays 80% of total costs above the catastrophic threshold (known as “reinsurance”) and plans pay 15%. Medicare’s reinsurance payments to Part D plans now account for close to half of total Part D spending (47%), up from 14% in 2006 (increasing from $6 billion in 2006 to $52 billion in 2021).

Under the current structure of Part D, there are multiple phases, including a deductible, an initial coverage phase, a coverage gap phase, and the catastrophic phase. During the coverage gap benefit phase, enrollees pay 25% of drug costs for both brand-name and generic drugs; plan sponsors pay 5% for brands and 75% for generics; and drug manufacturers provide a 70% price discount on brands (there is no discount on generics). Under the current benefit design, beneficiaries can face different cost-sharing amounts for the same medication depending on which phase of the benefit they are in, and can face significant out-of-pocket costs for high-priced drugs because of coinsurance requirements and no hard out-of-pocket cap.

PROVISION DESCRIPTION

The Inflation Reduction Act amends the design of the Part D benefit. For 2024, the law eliminates the 5% beneficiary coinsurance requirement above the catastrophic coverage threshold, effectively capping out-of-pocket costs at approximately $3,250 that year. Beginning in 2025, the legislation adds a hard cap on out-of-pocket spending of $2,000, indexed in future years to the rate of increase in per capita Part D costs