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Employer-based retiree drug benefits have long been viewed as the gold standard of drug coverage for elderly Medicare beneficiaries. The question for policy makers is whether beneficiaries enrolled in Part D plans exhibit drug utilization patterns comparable with those seen in retiree plans.To compare utilization patterns for antidiabetic agents, renin-angiotensin-aldosterone system inhibitors, and antihyperlipidemics by elderly Medicare beneficiaries with diabetes enrolled in Medicare prescription drug plans (PDPs) and retiree health plans (RHPs).A random 5% sample (N=45,613) of elderly diabetic patients with continuous 2006 PDP enrollment was selected from Medicare files and compared with a similar sample of elderly RHP enrollees from MarketScan (N=211,919) on any use, duration of therapy, and medication possession ratio for each drug class. Adjusted comparisons were made on samples (N=16,859 each) using propensity score matching.Drug utilization and adherence rates were high in both groups. In propensity score adjusted comparisons, prevalence rates for PDP enrollees were within 2.2% of the level of RHP enrollees for antidiabetic agents and renin-angiotensin-aldosterone system inhibitors, but differed sharply for antihyperlipidemics (61% vs. 69%; P<0.0001). There were no clinically meaningful differences between PDP and RHP enrollees in duration of therapy or medication possession ratio for any drug class.When otherwise similar Medicare beneficiaries with diabetes have drug coverage, the source of benefits has little effect on use and adherence with most (but not all) drugs recommended in diabetes guidelines.