A Trump administration proposal to exclude drug companies’ discounts from the total of Medicare Part D beneficiaries’ out-of-pocket cost levels to reach lower cost sharing has some worried that seniors in the “Donut Hole” would suffer.
According to HealthAffairs.org, Trump’s proposed budget includes provisions aimed at modernizing Medicare Part D drug benefits. However, the proposal could potentially keep Medicare beneficiaries in the coverage gap for longer, delaying them from reaching levels at which cost sharing is lower. Presently, Part D beneficiaries pay a $405 deductible and 25 percent coinsurance up to $3,750 in total drug costs. Above this level, the beneficiary is responsible for about 35 percent total cost for brand-name drugs and 44 percent for generics up to an out-of-pocket spending level of $5,000. This phase of coverage is known as the coverage gap or “donut hole.” Once they hit $5,000 in out-of-pocket spending, beneficiaries move into “catastrophic coverage,” in which the cost-sharing burden is much lower — 5 percent for beneficiaries.
In the coverage gap, drug makers must offer branded drugs at half cost, however the pre-discounted price counts toward the beneficiary’s out-of-pocket level, thereby limiting recipients’ time in the donut hole. Trump’s proposal would use the discounted price in calculating out-of-pocket expense in the coverage gap, resulting in beneficiaries’ spending more of their own money to reach catastrophic coverage. The plan would save about $47 billion over 10 years, but would cost enrollees who do not receive low-income subsidies an estimated $1,000 more in cost sharing annually.
Out-of-pocket costs for prescription drugs are already an issue for many beneficiaries, according to HealthAffairs.org. Beneficiaries spend an estimated 24 percent of their income on medical expenses, of which about a quarter is spend on out-of-pocket costs on prescriptions. Those who do not take or begin medication regimen due to expense is not uncommon, either.
About 75 percent of newly-diagnosed cancer patients applied for drug copay assistance, and some 33 percent of Medicare patients diagnosed with chronic myeloid leukemia did not start treatment within six months of diagnosis due to drug costs used in treatment.
Eliminating discounts from the coverage gap calculation could exacerbate poor adherance and medication discontinuation, critics say.
To read more on the impacts of Trump’s proposal, click here.