New Research Undermines Insurance Industry Attacks on Medicare's Six Protected Classes

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.  

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