Expected out of-pocket costs for commonly prescribed brand name medications have grown substantially for Medicare Part D beneficiaries as drug plans increasingly tie patient costs to list prices, according to new research from the USC Schaeffer Center for Health Policy & Economics published in JAMA.
Patients typically pay either a fixed dollar amount (known as a copayment) or a percentage of a drug's list price (known as coinsurance), depending on their plan design. The researchers examined expected patient costs for preferred brand name drugs often lacking generic equivalents.
The share of stand-alone Part D prescription drug plans using coinsurance for preferred branded drugs sharply increased from 9.9% in 2020 to 71.9% in 2024, researchers found. By comparison, fewer than 5% of drug plans offered through more comprehensive Medicare Advantage coverage used coinsurance for preferred branded drugs last year.
As a result, Medicare beneficiaries in stand-alone drug plans, which account for 43% of the Part D market , are increasingly exposed to rising list prices. The coinsurance amount is usually around 25% of a drug's price before any rebates or discounts negotiated by a pharmacy benefit manager (PBM) or health plan are applied.
While rebates and discounts have also been increasing in recent years, those savings usually go to PBMs and health plans, rarely benefitting patients directly. Furthermore, steeper rebates and discounts demanded by PBMs may result in higher list prices, increasing the costs faced by patients with coinsurance.
"More and more Medicare beneficiaries who are taking highly rebated drugs are bearing the burden of artificially inflated list prices at the pharmacy counter," said lead author Erin Trish , co-director of the Schaeffer Center and associate professor of pharmaceutical and health economics at the USC Mann School of Pharmacy and Pharmaceutical Sciences. "They are paying more out of pocket and generating rebates that subsidize premiums for everyone else. That is the opposite of how insurance is supposed to work."
Average expected costs more than double for some drugs
The study highlights the blockbuster blood thinner Eliquis (generic name: apixaban), which is taken by nearly 4 million Medicare beneficiaries and in 2024 had a list price of about $550 per month – within the typical range for branded, non-specialty drugs. The drug's mean pharmacy cost, which is similar to list price, grew by 22% between 2020 and 2024, while its estimated Part D rebates recently averaged 45%.
Over that time, Eliquis's average expected out-of-pocket costs for beneficiaries in stand-alone Part D plans more than doubled, from $46.76 to $102.32, as the share of plans using coinsurance for the drug increased from 10.7% to 75%.
For those in Medicare Advantage drug plans, however, the average expected out-of-pocket cost for Eliquis increased just slightly from $44.57 to $46.93 between 2020 and 2024. Only 5% of Medicare Advantage plans used coinsurance for Eliquis last year.
Meanwhile, average expected out-of-pocket costs in standalone Part D plans also increased substantially for other common preferred branded drugs. Like Eliquis, some saw increases of more than double, including:
- Trulicity (dulaglutide) for Type 2 diabetes, from $54.04 to $128.43
- Xarelto (rivaroxaban) for blood clots, from $46.54 to $ 94.50
- Ozempic (semaglutide) for Type 2 diabetes (and other indications), from $56.95 to $135.43.
"Medicare beneficiaries are often blindsided when they suddenly have to pay much more for the same drug they may have been taking for years," Trish said. "While Part D's new out-of-pocket cap will help beneficiaries over the full year, that initial sticker shock could make it harder for them to maintain their prescription, potentially leading to worse health outcomes."
