Digesting the doughnut hole

• Published in: Journal of health economics Vol. 32; no. 6; pp. 1345 - 1355
• Main Authors: Joyce, Geoffrey F., Zissimopoulos, Julie, Goldman, Dana P.
• Format: Journal Article
• Language: English
• Published: Netherlands Elsevier B.V 01.12.2013; Elsevier Sequoia S.A
• Subjects: Aged; angiotensin-converting enzyme inhibitors; Antidepressants; Antipsychotics; Beneficiaries; Beta blockers; Brands; Central nervous system; Choice Behavior; Coverage gap; Diabetes; doughnuts; Drug Costs; Drug therapy; Empirical Research; Female; Generic prescribing; Humans; Insurance coverage; Insurance Coverage - economics; Insurance Coverage - legislation & jurisprudence; Insurance Design, Price Elasticity; Male; Medicare; Medicare Part D; Medicare Part D - economics; Medicare Part D - organization & administration; Medication Adherence; Nervous system; Older people; Penetration; Prescription Drugs; Prescription Drugs - economics; Prescription Drugs - therapeutic use; Studies; United States; United States; United States > US; I18; Prescription Drugs; I1; Coverage gap; I13; Medicare Part D; Insurance Design, Price Elasticity
• ISSN: 0167-6296; 1879-1646; 1879-1646
• DOI: 10.1016/j.jhealeco.2013.04.007

•We study Medicare beneficiaries’ drug and medical service use in the Part D coverage gap.•Use of high-cost brand name drugs declined modestly in the coverage gap.•Beneficiaries switched from brand name drugs to generics in the coverage gap.•Lower adherence to medications did not increase use of medical services.•Beneficiaries reduced drug expenditures to avoid the coverage gap in subsequent years. Despite its success, Medicare Part D has been widely criticized for the gap in coverage, the so-called “doughnut hole”. We compare the use of prescription drugs among beneficiaries subject to the coverage gap with usage among beneficiaries who are not exposed to it. We find that the coverage gap does, indeed, disrupt the use of prescription drugs among seniors with diabetes. But the declines in usage are modest and concentrated among higher cost, brand-name medications. Demand for high cost medications such as antipsychotics, antiasthmatics, and drugs of the central nervous system decline by 8–18% in the coverage gap, while use of lower cost medications with high generic penetration such as beta blockers, ACE inhibitors and antidepressants decline by 3–5% after reaching the gap. More importantly, lower adherence to medications is not associated with increases in medical service use.