'Substantial Percentage' of Medicare Beneficiaries are Uninformed on Out-of-Pocket Costs for Specialty Tier Prescription Drugs

09 August 2011

New York -- Consumers are largely unaware of the potentially high out-of-pocket costs associated with medications placed on specialty tiers by their prescription drug plans, according to a new study released today from NERA Economic Consulting.

"How Much Does that Medication Cost?" analyzed Medicare Part D beneficiaries' knowledge of the out-of-pocket costs associated with drugs placed on specialty tiers. Specialty tiers are typically a fourth formulary category that includes higher-cost, brand name medications and often include medications used to treat conditions like cancer, multiple sclerosis, rheumatoid arthritis, HIV/AIDS, and lupus.

A NERA team led by Special Consultant Dr. Eugene P. Ericksen and Consultant Melissa A. Pittaoulis was recently commissioned by Pfizer to determine the level of awareness of out-of-pocket costs associated with drugs on specialty tiers among consumers.

Survey Results

  • Many survey respondents were unaware that Part D insurance plans charge differently for expensive medicines used to treat complex, chronic diseases. Half of the survey respondents mistakenly believed their plan would require them to pay a co-pay rather than coinsurance for a drug on the specialty tier.
  • Respondents also underestimated the amounts they would have to pay out-of-pocket for specialty tier drugs, including those used to treat rheumatoid arthritis and multiple sclerosis.
  • The findings suggest that most beneficiaries are unlikely to anticipate the financial impact of being prescribed a drug on a specialty tier.

According to "How Much Does that Medication Cost?," "while most respondents are aware that plans use tiered cost-sharing, a substantial percentage remains uninformed about the out-of-pocket costs associated with specialty tier drugs. These results suggest that, if confronted with having to take a drug on a specialty tier, many beneficiaries would be surprised to learn that they are responsible for a percentage of the cost rather than a flat co-pay. Furthermore, even those respondents who are aware that they would have to pay a percentage of the cost of a specialty tier drug underestimate the amount they would have to pay."

The report, "How Much Does that Medication Cost?," may be viewed at: http://www.nera.com/publications/archive/2011/how-much-does-that-medication-cost-a-study-of-medicare-benefici.html


NERA designed a survey questionnaire that was administered by Knowledge Networks Inc. Panel members were 65 years and older and included persons living in cell phone-only and non-Internet households. A total of 638 respondents qualified and completed the survey.

About NERA

NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For more than six decades, we have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world’s leading law firms and corporations. We bring academic rigor, objectivity, and real-world industry experience to issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA’s clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world’s largest economic consultancies. Continuing our legacy as the first international economic consultancy, NERA serves clients from major cities across North America, Europe, and Asia Pacific.