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New Study: Medicare Preferred Pharmacy Network Plans Offer Lower Average Premiums, Same Quality as Non-Preferred Network Plans
Date:12/9/2013

WASHINGTON, Dec. 9, 2013 /PRNewswire-USNewswire/ -- Medicare prescription drug plans (PDPs) using preferred pharmacy networks have lower average premiums and the same or better average quality ratings as plans without preferred networks, according to a new analysis by Avalere Health released today by the Pharmaceutical Care Management Association (PCMA). The analysis is the first to examine 2014 premiums and star ratings for PDPs with preferred pharmacy networks, which now account for around 70% of Part D enrollment.

"Preferred pharmacy plans can offer Medicare beneficiaries the same quality at less than half the premium of plans without preferred networks," says PCMA President and CEO Mark Merritt.

Click here to read the new analysis.

Avalere analyzed recently released CMS data on 2014 premiums and star ratings for Medicare PDPs. Key findings include:

  • Premiums: On average, PDPs with preferred pharmacy networks have lower premiums than PDPs without preferred networks.
    • For basic PDPs, the average monthly premium for plans with preferred networks is $29.83, 17% less than for plans without preferred networks.
    • For enhanced PDPs, the average monthly premium for plans with preferred networks is $49.15, 57% less than for plans without preferred networks.
    • For all PDPs offered in 2014, the top seven plans with the lowest average monthly premium all use preferred pharmacy networks.
  • Quality (Star Ratings): On average, PDPs with preferred pharmacy networks have similar star ratings compared to PDPs without preferred networks.
    • Basic PDPs with preferred networks have an average star rating of 3.3, compared to 3.0 stars for basic plans without preferred networks.
    • Enhanced PDPs with preferred networks have an average star rating of 3.5, the same as enhanced PDPs without preferred networks.

The Avalere analysis adds to a growing body of evidence demonstrating the value of preferred pharmacy networks for the Medicare program and its beneficiaries.

A recent study by Milliman estimated that preferred pharmacy network plans will reduce federal Medicare spending by $7.9 to $9.3 billion over the next 10 years. Milliman found that the largest two-year decrease in federal direct subsidies in the history of the Part D program has coincided with the rapid adoption of preferred pharmacy network plans and the increased use of generic drugs.

Separately, Part D seniors in plans with preferred pharmacy networks are overwhelmingly satisfied, citing lower costs, convenient access to pharmacies and other benefits, according to a survey from Hart Research Associates.  The survey found that 85 percent of seniors surveyed are satisfied with their preferred network plan.  In addition, the survey found that four in five seniors would be disappointed if their preferred network plan is eliminated.

Currently there are more drugstores in the U.S. than McDonald's, Burger Kings, Pizza Huts, Wendy's, Taco Bells, Kentucky Fried Chickens, Domino's Pizzas, and Dunkin' Donuts combined, creating a highly competitive environment.

PCMA represents the nation's pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 216 million Americans.

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SOURCE Pharmaceutical Care Management Association
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