The letter advocates for the Acting HHS Secretary and Acting CMS Administrator to pull back new allowances under the PDM model that would allow participating plans to weaken coverage requirements to one drug per class, as well as limit coverage of medication in all six protected classes by CY 2023. The lawmakers note that Pat D plans are already equipped with the necessary tools to manage spending and encourage the use of generics when possible for the six protected classes.
 
“These proposed changes fail to consider the unique needs of patients who need the treatment that is best for their condition, or patients who must try different treatments before finding the right treatment for their needs,” the letter explains. “we do not believe these formulary flexibility changes to the model would result in significant cost savings but will instead push access to essential medications out of reach for vulnerable patients.”
 
The bipartisan group of 67 members joined “significant opposition from Congress, patient groups, providers, and other stakeholders” to the potential changes to protections for the six protected classes.
 
The letter in its entirety can be read here. 

For Medicare beneficiaries who need a specific medication that their doctor believes is necessary and most appropriate, the six protected classes policy is intended to ensure they can get it. However, even with these protections, this new research demonstrates that patients must often overcome layers of restrictive financial and administrative barriers put in place by plans intended to inhibit access to these essential medications.
 
According to the Avalere analysis, Part D plans are leveraging formularies and utilization management tools for Medicare beneficiaries across drugs in the protected classes. For example, in 2019, the most recent year for which data is available, plans covered just 54% of drugs across the protected classes — a decrease of nearly 20% since 2016 when the coverage rate was 67%.  For covered drugs, nearly two-thirds of all medications in the six protected classes were placed in a non-preferred or specialty category, with 89% of branded products categorized as non-preferred or specialty and 37% of generics also subject to placement on the higher tiers. In aggregate, Part D plans placed drugs from the protected classes on high tiers (non-preferred or specialty) 64% of the time.
 
These coverage limitations are particularly concerning because of the negative impact they have on patients and their quality of life. If a patient does not receive the best treatment option, it opens the door for complications resulting in emergency department visits, physician visits, hospitalization, or other types of care that increase overall Medicare costs. Moreover, because standalone Part D Prescription Drug Plans (PDPs) are not liable for the cost incurred under Medicare Part A and Part B or Medicaid, research shows that they do not work as hard as commercial plans to ensure they offer a robust formulary. That is why Congress explicitly created fundamental patient protections — including the six protected classes policy — which are unique to Medicare and recognize the unique needs of seniors and persons with disabilities who rely on Medicare. 

“The protected classes policy has been a cornerstone of Part D’s success: helping to ensure that Part D formularies serve the needs of all Medicare beneficiaries, including the most vulnerable patients with the greatest need for drug coverage,” the letter states. “Accordingly, we implore you to reverse [the Trump administration] policy immediately.”
 
On January 19, 2021, the Center for Medicare and Medicaid Innovation (CMMI) announced the opportunity for new “formulary flexibilities” for Medicare Part D plans that participate in its Part D Payment Modernization (PDM) Model. Under the proposal, participating plans can choose to limit the drugs they cover, including denying patient access to medications used to manage complex conditions such as cancer, mental illness, HIV/AIDS, epilepsy, Parkinson’s, and organ transplantation.

​The letter explains that the six protected class policy has allowed those living with HIV to avoid the burdens of step therapy to access needed medications, as patients often require more complex treatments due to comorbidities and resistance to other antiretrovirals. Stripping away access to these medications would also leave patients vulnerable to discrimination by Part D plan sponsors. Not only is a rollback of these protections harmful to patients, it is also inconsistent with federal HIV treatment guidelines.
 
“The changes move in the wrong direction for particularly vulnerable Medicare beneficiaries, and in direct opposition to what Congress intended when it established the statutory two drugs per class requirement and the six protected classes,” the letter states.  “We again request that you rescind these policy changes to the PDM model.”
 
Signatories include: AIDS Healthcare Foundation (AHF), AIDS Action Baltimore, AIDS Alabama, AIDS Alliance for Women, Infants, Children, Youth & Families, AIDS Foundation Chicago, AIDS United, American Academy of HIV Medicine, APLA Health, Center for Health Law and Policy Innovation, Community Access National Network (CANN), Community Education Group, Community Research Initiative, Inc. (CRI), Georgia Equality, HealthHIV, HIV+Hepatitis Policy Institute, HIV Dental Alliance, HIV Medicine Association, iHealth, National Alliance of State and Territorial AIDS Directors (NASTAD), NMAC, Positive Health Solutions of the University of Illinois, Positive Women's Network-USA, Prevention Access Campaign, Rural Health Service Providers Network, San Francisco AIDS Foundation, SisterLove, Inc., The AIDS Institute, Vivent Health
 
The letter can be read here. 

When Congress designed the Medicare Part D program, it ensured that the full range of medications in the six classes of critically important drugs — antidepressants, immunosuppressants, antipsychotics, antiretrovirals, anticonvulsants and antineoplastics — would be guaranteed on all health plans for the patients who desperately need them. Due to the unique and variable ways in which patients respond to different drugs, it has been widely recognized that doctors need to be provided complete discretion to prescribe the most appropriate medicines for their patients. In short, the six protected classes policy has long stood as a guarantee to patients that their access to all available medications for the most serious diseases would never be in doubt.

In response, the Partnership for Part D Access has launched a national grassroots campaign to urge the Biden administration to swiftly rescind this dangerous program. To support this effort, we encourage you to visit our dedicated comment portal to send a letter encouraging the Biden administration to reverse this proposal. Through this portal, we encourage you to: (1) send our draft comment email directly the Biden administration, (2) incorporate our suggested text into your own message, or (3) draft a message of your own. Letters that you submit will be sent from your email directly to the agency. Letters that you submit will be sent from your email directly to the agency.
  
Thank you in advance for your help in echoing the broad opposition to weakening Medicare’s six protected classes policy.

The letter calls on the administration to abandon the previous administration’s formulary flexibilities for plans that participate in the Part D Payment Modernization Model, noting that two consecutive administrations have rejected proposals to weaken coverage requirements for drugs in the six protected classes. The organizations also highlight the devastating consequences that these changes would have for minority and underserved populations.
 
“…Allowing PBMs and Part D plans under the PDM model to opt-out of covering prescribed medications in the six protected drug classes is in direct conflict with President Biden’s Executive Order ‘On Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,’ to ‘pursue a comprehensive approach to advancing equity for all,’” the letter states. “Accordingly, our nation’s pharmacists strongly urge you to remove these provisions in the PDM Model that would effectively strip some of our most vulnerable patients with chronic and mental health conditions from their prescribed medications.”
 
Signatories include: The American Pharmacists Association (APhA), The American College of Clinical Pharmacy (ACCP), The Accreditation Council for Pharmacy Education (ACPE), The American Society of Consultant Pharmacists (ASCP), The College of Psychiatric and Neurologic Pharmacists (CPNP), The Hematology/Oncology Pharmacy Association (HOPA), The National Alliance of State Pharmacy Associations (NASPA), The National Community Pharmacists Association (NCPA), and The National Pharmaceutical Association (NPhA).
 
The letter in its entirety can be read here. 

​​Two leading Medicare beneficiary advocacy groups have joined the chorus of stakeholders calling upon the President Joe Biden to take immediate action to rescind the Trump administration’s last-minute attempt to weaken coverage requirements for drugs within the six protected classes policy. 

​​Led by the Medicare Rights Center and the Center for Medicare Advocacy, the letter calls on the administration to rescind formulary flexibilities for plans that participate in the Part D Payment Modernization Model. These changes would allow plan to cover only one drug per therapeutic class, and would drop the requirement for coverage of “all or substantially all” of the drugs in five out of the six protected classes.
​
In their letter, the organizations cite a June 2020 analysis by Avalere demonstrating that Medicare prescription drug plans are consistently applying utilization management tools to manage spending on prescription drugs within Part D. This analysis is consistent with the Partnership-commissioned Avalere study from 2018 that clearly demonstrates that Medicare’s existing protected classes policy is working as intended for beneficiaries with cancer, HIV, transplant recipients, epilepsy, and mental illness, among others.
 
“We encourage CMS to rescind the formulary flexibilities it recently extended to plans that participate in the Part D Payment Modernization Model,” the letter states. “As analysis of earlier proposals that relax restrictions requiring plans to cover substantially all medications in the six protected classes shows, these flexibilities are unlikely to significantly drive down costs and may greatly restrict access, above and beyond the impact of utilization management tools.”
 
The letter in its entirety can be read here. 

​A recent paper in the American Journal of Managed Care confirms that patients who are prescribed medications in Medicare’s “six protected classes” are consistently utilizing lower-cost generics, despite arguments from insurance companies who have said they have limited tools to contain costs for these treatments. Indeed, the authors concluded that generic dispensing rates (GDR) in the protected classes are often much higher than their non-protected counterparts — and are at least consistent with the dispensing rates among other classes of drugs. In fact, the paper suggests that plans that dispense generics at a lower rate do so to capture larger rebates from drug manufacturers, rather than to maximize access for their beneficiaries and minimize what they would pay out-of-pocket.

The team of researchers, composed of experts from the RAND Corporation, IQVIA, the University of Southern California, and the Schaeffer Center for Health Policy & Economics, found that GDRs for the protected classes studied are well in line with prescription drugs in general. They studied 10 classes of drugs, including three of the six protected classes — antidepressants, anticonvulsants, and antineoplastics. In 2016, standalone Part D plans (PDP) had an overall GDR of 88 percent and Medicare Advantage Prescription Drug (MAPD) plans had a GDR of 90 percent, respectively. Antidepressants, the researchers found, had GDRs of between 97 and 99 percent in most plans, antineoplastics had GDRs of between 81 percent and 88 percent, and anticonvulsants between 88 and 94 percent.
 
The variation between plans may be due to payers preferring non-generic drugs in some cases — in fact, the researchers write, the variation may strongly suggest that they are doing so to seek rebates, while patients pay cost-sharing based on the full price of the drug. It also suggests that insurers use leverage in formulary decisions to benefit themselves, not the patients they are supposed to serve. While insurers have pushed for the ability to further restrict drug formularies in the protected classes, it is clear that they already have leverage in their dispensing patterns. Ending the protected classes, as some have suggested, would simply further empower insurers to restrict access to needed medications likely harming patients.

A pair of recent analyses offer new evidence that Medicare’s protected classes policy does not drive higher costs for the program and beneficiaries, despite attacks from insurance companies who have argued they should be allowed to restrict access to these needed medications. Specifically, the two analyses -- one undertaken by Milliman and the other by BluePeak Advisors -- show that the six protected classes have similar cost patterns to non-protected drugs. 

Among the highlights of the respective analyses: 

• Milliman Analysis — An analysis from Milliman shows that from 2015-2018, both unprotected and protected class drug costs declined by an average of half a percent annually. This study focuses on drugs’ wholesale acquisition cost (WAC), meaning that notwithstanding formulary tiering by plans, beneficiary cost sharing as well as overall cost is likely to have been stable. While brand drug prices increased over that time, the study says, lower-cost drugs entered the market and achieved utilization rates that kept costs stable. Milliman used its proprietary Part D Consolidated Database (PDCD) for the analysis. The similarity in cost trends between protected and non-protected drugs shows that the protected class designation does not meaningfully influence drug costs and that plans and PBMs are equipped to manage costs, just as they are with non-protected class drugs.

 

• BluePeak Consulting Analysis — BluePeak Consulting and ACADIA analyzed CMS’ 2013-2017 actual Medicare expenditure data and broke down costs by drug class. Their results mirrored Milliman’s, but BluePeak also found that costs three of the six protected classes — antidepressants, antipsychotics, and immunosuppressants --declined between 2013 and 2017. The costs of protected class drugs have decreased as much as 14.6 percent on an annualized basis for antidepressants. Antiretrovirals’ costs are growing at roughly the same rate (2.9 percent annually) as all non-protected classes (2.8 percent). Annual cost growth for just two of the six protected classes exceeded non-protected classes as a whole over that five-year period.

These analyses are consistent with a recent study from Avalere, further refuting statements from plans and pharmacy benefit managers (PBM) that they cannot manage utilization of protected class drugs. In fact, the analyses show that drug costs have remained stable in the protected classes and generic utilization has increased – meaning plans are holding costs down as the protected class ensures that individuals with difficult-to-manage conditions are able to get the medication they need.  ​

The Centers for Medicare and Medicaid Services (CMS) issued a final rule that makes no changes to the current six protected classes policy — completely eliminating the potentially damaging changes included in a proposed rule released several months earlier. Instead, the agency finalized current practices that allow for prior authorization (PA) and step therapy (ST) to only be used within the protected classes for new starts.  Also consistent with current practice, antiretrovirals remain excluded from utilization management altogether. Importantly, CMS did not finalize exceptions for new formulations of existing drugs or drugs whose prices increase above the urban consumer price index (CPI-U). 

“Medicare beneficiaries with the most complex, chronic conditions are breathing a sigh of relief,” Chuck Ingoglia, the Executive Director of the Partnership said in a statement. “This rule cements the protected classes policy as an essential patient safeguard in Medicare’s prescription drug program."

​A new Medicare regulation could force hundreds-of-thousands of seniors and people with disabilities to lose access to the medications they use to treat conditions including cancer, HIV, mental health conditions, epilepsy, organ transplants, and others. Join this webinar to learn how you can make a difference. 

Specifically, a recent proposed rule from the Centers for Medicare and Medicaid Services (CMS) would substantially weaken Medicare’s “six protected classes” policy, which guarantees that patients with the most complex, chronic conditions have access to the medication that work best for them. In fact, over 140 patient groups from across the country recently joined in a letter to CMS expressing deep concerns with this new proposal.
 
This webinar, hosted by the Partnership for Part D Access, is aimed at informing individuals around the country about how this issue impacts them and how to engage with their Senators and U.S. Representatives to reverse this dangerous proposal. 

Webinar: How to Advocate for Medicare’s Six Protected Classes
Date: Thursday, May 23, 2019
Time: 11:00 am  |  Eastern Daylight Time (New York, GMT-04:00)  |  1 hr 

Over 220 HIV providers across the country signed onto a letter from the American Academy of HIV Medicine (AAHIVM) urging the Trump administration to abandon its proposed rule that would weaken Medicare Part D's six protected classes policy. AAHIVM points out that the proposed changes could lead to increased utilization management, resulting in decreased access to lifesaving treatments for Medicare’s most vulnerable beneficiaries. “In HIV, delaying and in some cases blocking patients’ access to tailored treatment is deleterious to not only the patients’ individual health, but also to the broader public health in terms of transmissibility of the virus,” the letter states. “For these reasons, we strongly oppose the Administration’s proposal to weaken the protected classes policy and urge this proposal to be withdrawn.”

The letter in its entirety can be read here. 

​Recently, Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma sent a letter to several Members of Congress in response to their concerns about proposed changes to Medicare’s six protected classes. This fact sheet includes key substantive excerpts, each of which are followed by important facts and policy details that policymakers should be aware of. 

A key group of 19 Democrats on the influential Energy & Commerce and Ways & Means Committees — which share jurisdiction over health policy — have sent a letter to HHS Secretary Alex Azar urging the Department to withdraw a proposal to weaken Medicare's protected classes policy. The letter, led by Rep. Doris Matsui (D-CA), explains that "the proposed changes to the six protected classes will result in negative outcomes for specific beneficiary populations that utilize drugs under these six classes." The Members go on to emphasize that "with a 91 percent overall generic utilization rate and only one percent of the more than 187 million prescriptions filled coming from specialty tier medications, we strongly believe this policy is working as currently implemented and should not be changed."

​In a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, a bipartisan group of 14 Senators — led by Sens. Marco Rubio (R-FL) and Kyrsten Sinema (D-AZ) — urged the agency to reconsider its proposed changes to Medicare’s six protected classes policy. The Senators emphasized that the protected classes serve as an essential patient safeguard for beneficiaries with complex medical conditions, noting that the policy has long enjoyed bipartisan support among lawmakers. “The proposed rule would allow Part D plans to limit access to critical medicines to patients in need of immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals, and antineoplastic medicines, by permitting prior authorization or step therapy,” the letter states. “We urge CMS to reconsider this proposal that would risk the health of our most vulnerable beneficiaries.

The letter in its entirety can accessed below. 

A bipartisan group of 73 House lawmakers — led by Reps. Barbara Lee (D-CA) and Will Hurd (R-TX) — penned a letter to Department of Health and Human Services (HHS) Secretary Alex Azar opposing changes to Medicare’s six protected classes policy. The lawmakers stressed that adding additional prior authorization and step therapy requirements could have detrimental effects to beneficiaries who deal with HIV, cancer, mental illness, and other serious health conditions. “…We are concerned that these provisions of the proposed rule will have reverberating effects for patients suffering from multiple conditions that are currently covered and exacerbate health disparities among poor and minority communities,” the letter states. “Considering the public health implications of the proposed changes to Part D protected classes related to prior authorization and step therapies, we respectfully request that you withdraw the relevant portions of the rule.”  

The letter in its entirety can be accessed below. 

At a recent hearing of the Energy and Commerce Committee featuring HHS Secretary Alex Azar, at least four key members of the committee raised concerns with the administration's proposal to weaken Medicare's protected classes policy — including Ranking Member Greg Walden (R-OR) and Health Subcommittee Chair Anna Eshoo (D-CA).  For example, when talking about the proposal that could require patients who are stabilized on an existing treatment to go through step therapy or prior authorization, Ranking Member Walden emphasized that "no patient wants to go through that, and it’s something we’ve got to pay attention to." Later, Health Subcommittee Chair Eshoo added that "I think both sides hold the same view so we have to move forward and correct that situation.”

​RANKING MEMBER WALDEN: “CMS has proposed a rule to change the formularies for patients in Part D protected classes. What assurances can you provide my constituents and those patients they’ll still be able to get access to the medications they need?”
 
SECRETARY AZAR: “Thank you for that question, because there is a lot of misunderstanding there. Of course, with the protected classes, what’s happening we, as a government, have disabled these middlemen — the pharmacy benefit managers — from being able to negotiate against the drug companies to get discounts. So the very drugs in the commercial space may be yielding 30 percent average discounts, we’re getting zero to six percent. So what we’re proposing — and it’s a proposal, we’re getting very important feedback from disease groups in and we’ll look at it — is to allow some of the basic formulary management tools used in the commercial space for regular, commercial employees.  For instance step therapy, try this drug before that drug. Prior authorization — make sure this drug is being used for the right indication. Without speedy appeals and exceptions processes and with the choice that’s embedded into Part D where you can pick a plan, if it’s not meeting your needs, you can choose a different one. But we’re hearing the feedback and we’ve heard very vigorous feedback. We want to protect our beneficiaries, of course.”
 
WALDEN: “Because I have heard from some patients today — before this becomes a rule — that they have a drug that works, they change plans, something happens, and they’re told they’ve got to go back through all these drugs they know don’t work to get to the one that does. And no patient wants to go through that, and it’s something we’ve got to pay attention to.
 
AZAR: “I’ve heard that feedback and obviously we’ll take that very seriously.

A series of recent news articles in dozens of publications across the country highlight a myriad of concerns raised by patient advocates over a new proposal that would weaken Medicare Part D's six protected classes policy.  As over 140 individual advocacy organizations are noted, it would be extremely dangerous to risk limiting access to medications for patients with the most complex chronic conditions, such as cancer, HIV, mental health conditions, Epilepsy, and others. This new one-pager from the Partnership for Part D Access provides a visual overview of some of the many articles that detail these concerns. 

Congress codified the six protected classes in 2008 as part of the Medicare Improvements for Patients and Providers Act (MIPPA) to ensure those patients with the most complex health conditions would have access to needed medications.  The original policy required Medicare Part D drug formularies to include “all or substantially all” drugs in the six identified classes. Although the law was updated in 2010 to require coverage of “all” drugs in the protected classes, Medicare regulations have not been updated to reflect the new standard.
 
While Part D plans are required to cover all unique products in the protected classes, this requirement does not result in universal coverage. In fact, often times, plans will opt not to cover brand name drugs when clinically equivalent generic drugs are available. For example, if there is one brand product in a category and three generic products, the health plan may choose to cover just one of the four available drugs in this category. The Centers for Medicare and Medicaid Services (CMS) walks through these exceptions in their Prescription Drug Benefit Manual (see pg. 28), where they detail the following exclusions to coverage within the protected classes:

• multi-source brands of the identical molecular structure;
• extended release products when the immediate-release product is included;
• products that have the same active ingredient or moiety (i.e. brand vs. generic); and
• dosage forms that do not provide a unique route of administration.

 
Utilizing this policy, plans often exclude coverage for a significant amount of medications within the protected classes. In fact, according to Avalere’s analysis of Medicare claims data, Part D plans covered just 67% of available drugs within the protected classes on average (brand and generic combined) and only 60% of brand drugs. Further, in classes where there are more generic medications available, even more branded medications were excluded from formularies. In the class for antidepressants, for example, plans cover only 37% of brand name medications, and for anticonvulsants they cover just 46% of brand name products.
 
This data demonstrates that when there are multiple clinically equivalent drugs available in a class, plans typically choose to cover the lower cost generic products. This ability to exclude coverage of certain medications allows plans to hold down cost and can enhance a plan sponsor’s negotiating power with manufacturers. But still, as detailed in a previous issue brief, guardrails such as the protected classes are necessary to ensure that drug plans are providing access to an appropriate range of medications and keeping people healthy.

In a letter to Department of Health and Human Services (HHS) Secretary Alex Azar, House Mental Health Caucus Co-chairs Grace Napolitano (D-NY) and John Katko (R-NY) urged HHS not to move forward with harmful changes to Medicare’s Six Protected Classes Policy. The bipartisan letter — signed by 39 House members — states that the proposed changes are “particularly worrisome” for Medicare beneficiaries living with mental illness, noting that the change “directly targets” some of the program’s most vulnerable populations. “CMS has stated that patients will be able to use the lengthy appeals and exceptions processes to gain coverage for medicines if plans deny access to needed medicines,” the letter states. “However, those processes are difficult for patients to navigate and are likely to become overwhelmed with patients desperate to stay on the medicines they have been using to successfully manage complex conditions.” 

The letter in its entirety can be read here. 

Millions of Americans rely upon their Medicare drug benefit to help manage their health conditions, including mental illness, cancer, HIV, organ transplants, epilepsy, Parkinson’s Disease, and lupus. Because patients with these illnesses react differently to different medicines, access to the full range of effective medications is a crucial component of successful treatment and recovery. Medicare’s “Six Protected Classes” policy has long stood as a guarantee to patients that their access to all available medications would never be in doubt.
 
To discuss the importance of Medicare’s “protected classes” and to provide context for this policy, we invite you to join our roundtable discussion featuring a panel of experts.

​In a February 12 speech before the American Medical Association (AMA), HHS Secretary Alex Azar acknowledged the dangers inherent in requiring step therapy for patients who are already stabilized on an effective regimen of medications. Interestingly, his remarks seemed to run counter to his agency’s current proposal to weaken Medicare’s successful “six protected classes” policy. A new fact sheet from the Partnership sheds light on these comments and provides background on their application to the six protected classes policy. 

A group of more than 140 leading patient advocacy organizations sent a letter today to the Centers for Medicare and Medicaid Services (CMS) in opposition to a recent proposal that would establish broad exceptions to Medicare Part D’s protected classes policy. As the letter explains, these changes to the protected classes policy threaten the well-being of Medicare beneficiaries with chronic conditions, cognitive impairments, and limitations in their activities of daily living.  Meanwhile, the groups point out that potential savings CMS could realize from allowing plans to add new, more expansive restrictions on access to drugs in the protected classes would be reversed by increases in costs in other areas of Medicare and lead to undesirable patient outcomes. Specifically, CMS’s analysis overlooks the importance of the costs that could be incurred from disrupting treatment for stabilized patients and restricting access for those patients starting treatment. 

​Today, Partnership for Part D Access (Partnership) submitted a comment letter to the Centers for Medicare and Medicaid (CMS) expressing concern that the agency’s recent Medicare proposal to weaken Medicare’s six protected classes will ultimately harm patients with the most complex conditions. In the letter, the Partnership highlights several concerns with CMS’ proposed rule, arguing that the agency misunderstands both the congressional intent of the policy and the reality of how it is appropriately working for Medicare patients today. The letter provides ample evidence highlighting the effectiveness of the current protected classes policy, which was created to ensure patients with the most challenging medical conditions have access to the full range of treatment options under Medicare Part D. “The flaws in the proposed approach and the potential for significant harm to patients lead us to respectfully request the agency withdraw each of the three proposed exceptions,” the letter states. 

The letter in its entirety can be accessed below. 

​The most popular type of Medicare drug coverage is through a stand-alone prescription drug plan (PDP). A stand-alone plan never has to pay for hospital or physician visits — those are covered by traditional Medicare. Another way to get drug benefits from Medicare is through Medicare Advantage (MA) plans, which are private insurance plans subsidized by the government to manage prescription drug benefits alongside other medical benefits. ​Because of this difference, stand-alone drug plans have less incentive than MA plans to keep people healthy enough to avoid some hospital visits.

This phenomenon is brought to light in multiple economic analyses, which repeatedly highlight how “profit-maximizing” PDPs are incentivized to limit benefits or increase out-of-pocket costs because they are not responsible for costs incurred by other parts of the Medicare, such as hospitalizations.
​

• ​A study issued in 2015 and updated in April 2018 by researchers at Northwestern University’s Kellogg School of Management and the University of Texas at Austin highlights how PDPs are encouraged to reduce drug spending without bearing financial responsibility for the holistic health of the patient. The authors conclude that in covering drugs less generously, Part D plans end up costing traditional Medicare $475 million per year.
• Another study found that formulary restrictions within the Medicaid program appear to lead to worse outcomes for patients with major depressive disorder and increased the probability of an MDD-related hospitalization by nearly 17 percent with no significant reductions to pharmacy or total spending.  Importantly, there was no evidence that these restrictions resulted in any net savings for Medicaid.
• A June 2016 study published by the National Bureau of Economic Research (NBER) determined that stand-alone drug plans charge enrollees about 13 percent more than MA plans in cost sharing for drugs that are highly likely to help patients avoid an adverse health event within two months. They charge up to 6 percent more for drugs that help avoid an adverse health event within a year.​ 

As detailed in a New York Times article by health economist Austin Frakt, "Part of the purpose of Medicare’s drug benefit is to encourage enrollees to take prescription drugs that can keep them out of the hospital." In July 2003, promoting the legislation that created Medicare’s drug benefit, President George W. Bush articulated this point. “Drug coverage under Medicare will allow seniors to replace more expensive surgeries and hospitalizations with less expensive prescription medicine,” he said. This effect is illustrated by a recent study led by a Harvard economist that shows that seniors’ increased use of medications to manage health conditions contributed to much slower growth in Medicare spending than had been expected.

In practice, the design of Medicare’s drug benefit includes stand-alone plans that aren’t liable for hospital costs and don’t work as hard as commercial plans to avoid them. That's why Congress explicitly created a handful of patient protections — including the Six Protected Classes policy — which are unique to Medicare, and encourage plans to provide benefits that help keep people healthy. By ensuring that Medicare beneficiaries with the most complicated conditions have access to the right combination of prescription drugs, the Six Protected Classes policy helps hundreds of thousands of patients effectively manage their illness — keeping them out of the hospital and ​ultimately producing considerable savings in Medicare Parts A and B.