Congress should stand up for seniors and the Medicare Part D deal

Congress should stand up for seniors and the Medicare Part D deal
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Families across this country are struggling with rising prescription drug prices every day. Older Americans who rely on Medicare Part D — prescription drug coverage — take an average of 4.5 prescription medications and are hit particularly hard by these rising costs.

Earlier this year, Congress took an important step to help reduce that financial burden on older Americans by passing the Bipartisan Budget Act of 2018 (BBA). The BBA closed the Medicare Part D coverage gap — known as the “doughnut hole” — in 2019, a year earlier than planned under the Affordable Care Act of 2010.

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It also requires brand name drug companies to pay more of the cost of their drugs for beneficiaries who are in the doughnut hole. This important change will help seniors move through the doughnut hole more quickly and into “catastrophic coverage” where they will pay less for their needed medications.

 

In 2003, President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act which, among other things, authorized Medicare coverage of outpatient prescription drugs.

Starting in 2006, Medicare beneficiaries for the first time had the option to buy insurance — dubbed Medicare Part D — to help cover the cost of their prescription drugs.

The standard Part D benefit includes an annual deductible, an initial coverage period when enrollees pay 25 percent of their drug costs, a coverage gap or “doughnut hole” period (gradually closing under current law), and catastrophic coverage.

Part D plans temporarily limit their coverage for prescription drugs in the doughnut hole until out-of-pocket spending reaches a certain amount and the enrollee enters catastrophic coverage.

The coverage gap has gradually narrowed under the Affordable Care Act and is scheduled to close completely in 2020, when beneficiaries in the gap will have to pay 25 percent of their prescription drug costs until they enter catastrophic coverage, when seniors’ share of costs is reduced to 5 percent.

The BBA shortened this timeline for brand name drugs, and enrollees in the coverage gap will now be responsible for 25 percent of their brand name drug costs starting in 2019.

Along with closing the doughnut hole sooner, the BBA also requires brand name drug companies to pick up a greater share of costs in the coverage gap. Currently, brand-name drug makers pay 50 percent of enrollees’ brand name drug costs while they are in the doughnut hole.

Under the new law, they will pay 70 percent starting in 2019. The higher discounts will help push enrollees through the coverage gap more quickly and into catastrophic coverage, where they pay substantially less for their medications.

Make no mistake, the BBA Medicare Part D Doughnut Hole deal that Congress recently passed and the President signed is good for seniors. Medicare beneficiaries will save $6.7 billion in premiums and cost sharing between 2020–2027 because of this deal. Next year alone, according to one recent study, seniors are expected to save $1.3 billion in drug costs. The deal is also good for all taxpayers because the federal government is expected to save about $600 million next year, and nearly $12 billion over the next ten years.

The pharmaceutical industry is actively working to try and reverse the doughnut hole improvements. At the same time, drug companies continue boosting their prices to exorbitant heights. The latest AARP Public Policy Institute data found the average annual cost of just one prescription drug widely used by older Americans was nearly $13,000 in 2015, or more than three times the average annual cost in 2006.

That’s equal to 80 percent of the average Social Security retirement benefit of $16,101 and more than 50 percent of Medicare beneficiaries’ median income of $25,150. Considering that the average Part D enrollee takes 4.5 prescriptions medications a month, these numbers should concern everybody.

Because of today’s stratospherically-priced drugs, nearly 11 million seniors fall into the doughnut hole each year, forced to spend thousands of dollars out-of-pocket for the medications they need to stay healthy.

It’s a fact that Americans pay among the highest brand name prescription drug prices in the world. President TrumpDonald John TrumpSunday shows preview: Trump sells U.N. reorganizing and Kavanaugh allegations dominate Ex-Trump staffer out at CNN amid “false and defamatory accusations” Democrats opposed to Pelosi lack challenger to topple her MORE and Congress took an important bipartisan and laudable step to help lower prescription drug costs for older Americans when they passed the Medicare Part D Doughnut Hole deal as part of the BBA.

Congress should honor and protect that deal and stand up for seniors. It’s the right thing to do.

Nancy LeaMond is the executive vice president and chief advocacy and engagement office at AARP.