Special Report: Medicare Part D. A Research Resource with Insights into. Medicare Part D

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1 Special Report: Medicare Part D 2006 A Research Resource with Insights into Medicare Part D SilverScript SM is an indirect wholly-owned subsidiary of Caremark that offers a nationally-approved Medicare Part D Prescription Drug Plan (PDP) solution to clients and their Medicare-eligible beneficiaries. Caremark and SilverScript are committed to supporting clients Medicare Part D needs and creating the best solutions for Medicare-eligible retirees. T he Medicare Prescription Drug, Improvement and Modernization Act paved the way to bring federally-funded prescription coverage to Medicare beneficiaries at the beginning of this year. As a result, it has provided significant savings for millions of Medicare beneficiaries across the country. Despite its benefits, Medicare Part D is a complex issue in today s healthcare industry. To assist you in addressing these issues, Caremark has developed the Special Report: Medicare Part D. This report illustrates relevant and timely statistical information reflecting the current Medicare Part D landscape, beneficiaries' perceptions of the program and the ongoing projections for pharmaceutical trend. This report will provide you with insights into the opportunities and challenges of the Medicare Part D benefit and marketing to seniors. The valuable benchmarking data in this report is reprinted from the following sources: Market Strategies, Inc.; the Centers for Medicare and Medicaid Services; the U.S. Department of Commerce, Bureau of Economic Analysis and Bureau of the Census; U.S. Department of Health and Human Services as cited by The Henry J. Kaiser Family Foundation; and Kaiser/Hewitt.

2 Medicare Part D Enrollment, 2006 Projected vs. Actual 1.0 million 3.6 million 4.9 million 6.4 million Actual Part D Enrollment Note: Enrollees have until May 15 to enroll without penalty. Source: Projected: HHS, Medicare Prescription Drug Benefit Final Rule, January 28, 2005; Actual: HHS, December 22, 2005, January 17, 2006, February 22, 2006, and March 23, 2006, cited by The Henry J. Kaiser Family Foundation, Medicare Prescription Drug Coverage Enrollment Update, February There remains considerable confusion regarding Medicare Part D benefits among those who need to make an enrollment decision. Understanding of Medicare Part D Prescription Drug Benefit Using a scale of 1 to 7 where 1 means not well at all and 7 means very well, how well do you understand this new benefit? (Sample Size=903) 0% 10% 20% 30% 40% 50% 60% Over half do not believe they have enough information to make a choice.

3 Do Beneficiaries Have Enough Information to Make an Enrollment Decision? Do you believe that you have enough information now to make an enrollment decision? (Sample Size=521) Approximately half of seniors without prescription drug coverage will seek assistance when selecting a plan. Those seeking assistance will turn primarily to Medicare directly, insurers, pharmacists, and other Medicare experts. Will Seek Assistance on Which Plan to Enroll In Sources Used for Help in Decision Making? Will you seek help from any person or organization on deciding on which plan to enroll in? (Sample Size=613) Whom will you personally contact in making a decision on which specific plan to enroll in? (Sample Size=413)

4 The majority of seniors without prescription drug coverage do not have access to the Internet, eliminating it as an information resource for Medicare Part D decision making. Access/Use of the Internet Do you PERSONALLY have access to and use the Internet? (Sample Size=903) In addition to premium amount, the donut hole remains a significant consideration for seniors needing prescription coverage. Importance of Coverage Gap in Enrollment Decision 63% On a scale of 1 to 7 where 1 is not at all important and 7 is very important, how important is a coverage gap in your decision on whether or not to enroll in a prescription drug plan? (Sample Size=903) 26% 7% 4% contributions, conducted from 12/22/05 to 01/08/06 with consumers age 65 and older, were provided by Market Strategies, Inc. Copies of the full report are available for purchase by contacting, Susan McIntyre, Vice President, Healthcare Research and Consulting, Market Strategies, Inc., at

5 In the coming years, continued growth of prescription drug expenditures is projected. Prescription Drug Expenditures for Selected Calendar Years, Prescription Drug Expenditures * * * * Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group; and U.S. Department of Commerce, Bureau of Economic Analysis and Bureau of the Census, cited by Christine Borger et al., Health Spending Projections Through 2015: Changes on the Horizon," Health Affairs, February 22, * Estimated expenditures In the next four to five years, it is expected that employers will primarily continue participating in the Retiree Drug Subsidy program. Continuing Drug Benefits and Accepting Employer Subsidy in 2007 and 2010 Among Employers Taking the Subsidy in 2006 Note: Data are for firms maintaining drug benefits and accepting the employer subsidy in Based on responses from private-sector firms with 1,000 or more employees offering retiree health benefits Source: Kaiser/Hewitt 2005 on Retiree Health Benefits, December 2005.

6 Beneficiaries have a wide range of questions regarding drug plan enrollment, with coverage and cost topping the list. Questions Beneficiaries Have After Reading the Materials List of medications covered under plan Cost of medication Coverage information Premium amount/monthly premium Confused/Did not understand material information Explanation about value of plan Comparison to current/other plans Co-Pay information Deductible information Criteria for qualification for plan Allowed expenses/maximum amount paid by plan Reason for existence of benefit Other None Don t know/refused What questions did you have after reading the materials from the insurance companies and/or plans? (Sample Size=414) 2006 Caremark, Inc. All rights reserved A (9m) High blood pressure, high cholesterol and heart disease are the top three reported conditions of beneficiaries without prescription coverage. High Blood Pressure High Cholesterol Heart Disease Arthritis Type 2 Diabetes GERD Osteoporosis Rheumatoid Arthritis Health Conditions Currently Being Treated (Total Mentions Comorbidities) Congestive Heart Failure Emphysema or Asthma Anxiety Depression Cancer Insomnia For additional copies of Special Report: Medicare Part D, contact Caremark at consultant.resource@caremark.com or toll-free at Which of the following conditions are you currently being treated for? (Sample Size=614) Irritable Bowel Syndrome Type 1 Diabetes Neuropathic pain Migraine Erectile dysfunction Psoriasis I don t have any conditions