The Rest of the Story
A recent series of Washington Post headlines announced an agreement crafted by Senate and administration officials with the pharmaceutical manufacturers. As reported, the voluntary agreement would lower the cost of prescription drugs to low and middle income Medicare recipients. Eligible individuals would receive a hefty discount on drug purchases that fall into the dreaded "doughnut hole" thereby reducing their out of pocket costs. What's not to like?
The only thing really publicly known about this deal is that the industry will provide a 50 percent discount for drugs sold in the the coverage gap or, "doughnut hole." There are two ways to protect people in this predicament. One is to lower the cost of drugs in the doughnut hole. The other is to keep people from reaching it in the first place. About half the people who wind up in the doughnut hole get there because they have been prescribed expensive brand name drugs rather than less expensive generic drugs that are just as effective. Integrated systems like Kaiser Permanente and Group Health Cooperative prescribe generic drugs much more frequently than the rest of the medical community and their patients reach the doughnut hole about half as often as other Part D beneficiaries.
The others who reach the doughnut hole don't really have a choice. Either the drugs they are taking have no generic alternatives, or they are using very expensive medications such as the newer "biologics." Don't get me wrong; these new generations of drugs are an important and powerful therapy for patients. However, virtually every Medicare beneficiary taking biologics will reach the coverage gap and be forced to pay for medication out of their own pocket. It's very important for these beneficiaries that these discounts apply to these very expensive drugs as well, and we should look carefully at the details of the agreement to be certain this is the case. That's an important detail to know.
This is a good start to the vexing problem of out-of-control drug costs. It will help some of the Medicare beneficiaries who face a series of heart-rending choices based on the cost of their drugs when they hit the doughnut hole. Which medication do I fill? Can I skip a month?
However, while this may very well provide an important benefit for vulnerable seniors, it is unlikely to lower Medicare costs. And the savings from those discounts do not accrue to help fund health reform. It will also be important to see what else the industry has agreed to that will contribute to lower health system costs and help to make expanding coverage under health reform more affordable.
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