Generics May Help Close Medicare Gap Coverage in Mentally Ill

Megan Brooks

February 26, 2013

Providing generic drug coverage instead of no drug coverage during the Medicare Part D coverage gap saves money and improves health outcomes in patients with schizophrenia and bipolar disorder, a new study suggests.

Dr. Yuting Zhang

The Medicare Part D coverage gap "has a greater impact on patients with bipolar disorder and schizophrenia," study investigator Yuting Zhang, PhD, told Medscape Medical News.

"Patients with severe mental illness are more likely to enter gap coverage, and if they discontinue psychotropic medications, they may relapse to more severe episodes and require psychiatric hospitalization," said Dr. Zhang, associate professor of health economics and director of the Pharmaceutical Economics Research Group at the University of Pittsburgh in Pennsylvania.

She added that policy makers and insurers "might consider covering essential generic medications for patients with severe mental illness because it may save downstream medical costs and improve patient health."

The study was published online February 19 in the American Journal of Managed Care.

Risky Business

Each year, about one third of all Medicare beneficiaries enter the Medicare Part D prescription coverage gap, where they have to pay 100% of medication costs out of pocket.

Many patients stop taking their medications or reduce their medication use when they enter the coverage gap in standard Medicare Part D plans, as reported by Medscape Medical News.

An earlier study by Dr. Zhang and colleagues showed that the Medicare Part D coverage gap may be causing a decrease in antidepressant use by elderly patients. Reducing or abruptly stopping medication use is particularly risky for patients with severe mental illness.

Some Medicare Part D plans offer coverage for generic drugs in the gap period, which seems worth it, according to the latest study from the University of Pittsburgh team.

They examined differences in health outcomes and cost-effectiveness of generic drug coverage compared with no gap coverage in patients with bipolar disorder and schizophrenia.

Better Health, Lower Costs

Of the more than 180,000 patients with bipolar disorder and schizophrenia who were evaluated, 14.6% had no gap coverage, and 7.1% had generic coverage. The remainder had low-income subsidies (LIS) with more generous coverage and therefore were not strictly comparable with the other 2 groups, the authors say.

When comparing the no-gap coverage and generic gap coverage groups, they found that patients with generic coverage had better health outcomes and reduced medical costs. For example, in disabled recipients with bipolar disorder and no gap coverage, costs were $570 per person more than for patients with generic coverage ($25,090 annually for no gap coverage vs $24,520 for generic coverage).

In an aged recipient with bipolar disorder and no coverage, medical costs were $563 more per year than for a patient with generic coverage, whereas in a disabled recipient with schizophrenia and no coverage, costs were $1312 more per year than for a patient with generic coverage. In an aged recipient with schizophrenia and no coverage, costs were $1289 more per year than for a patient with generic coverage.

Generic drug coverage was "cost-saving compared with no coverage because it saves medical costs," Dr. Zhang told Medscape Medical News. The savings come largely from fewer hospitalizations in those with generic drug coverage during the Medicare gap.

The authors note in their article that under current provisions of President Barack Obama's Affordable Care Act, the Medicare prescription coverage gap will be gradually filled until 2020; each year, the percentage that patients pay for medications during the gap will decrease.

"Based on our findings, policy makers and insurers should consider a faster decrease of the percentage paid by patients for generic drugs as a means to improve the health of patients who do not qualify for LIS plans while conserving healthcare resources," the authors conclude.

Closing the Gap

The underlying point of this analysis — that the coverage gap is associated not only with higher costs but also with reductions in medication use — is "sound," Jack Hoadley, PhD, a health policy analyst and researcher at Georgetown University's Health Policy Institute in Washington, DC, told Medscape Medical News.

"It's something we have found in other studies," he said. Therefore, "the decision by Congress in the Affordable Care Act to start closing the gap makes a lot of sense. Part D enrollees would certainly benefit from an acceleration of the phase-out, but the added cost of doing so during a period when policymakers are looking for budget savings makes such a change unlikely."

But from the perspective of an individual beneficiary, Dr. Hoadley said "it is not always clear whether the higher monthly premium for plans with this type of enhanced coverage is always justified given that generic drugs are mostly quite inexpensive (an issue not addressed in this article). Since it seems that generic gap coverage increases adherence to generic drugs, it is not so surprising that this study finds a pattern of higher drug costs but lower total medical costs — and further finds that generic gap coverage is cost-effective from the perspective of the program overall."

Summing up, Dr. Hoadley said that the use of generic drugs has been a "major driver in holding down cost increases more generally in Medicare Part D. Modifying plan benefit designs to increase generic use can save money overall."

The study was funded by the National Institute of Mental Health, the Agency for Healthcare Research and Quality, and the University of Pittsburgh Central Research Development Fund. Dr. Zhang and Dr. Hoadley have reported no relevant financial relationships.

Am J Manag Care. 2013;19:e55-e63. Full article