High Drug Prices Erode Part D Coverage
Medicare Part D, passed in 2003, has significantly reduced seniors’ spending on prescription drugs. But the coverage hasn’t protected Leslie Ross from near calamity.
The 72-year-old diabetic needs insulin to stay alive. The prices of these drugs have skyrocketed, forcing her to supplement her long-lasting insulin, Lantus, with more frequent use of a less-expensive insulin. This one remains in her body only four hours, requiring more vigilance to control her blood sugar.
To cut her Lantus bills – nearly $1,700 this year – she has sometimes resorted to buying unused supplies from other diabetics on eBay. “You take your chances when you do stuff like that,” she said. “I checked that the vial hasn’t been opened. It still had the lavender cap on it.” She also reuses syringes.
The issue facing retirees like Ross is an erosion of financial protections under their Part D prescription drug coverage because of spiraling drug prices. New medications are hitting the market at very high initial prices, and the cost of older, once-affordable drugs increase year after year, said Juliette Cubanski, director of Medicare policy for the Henry J. Kaiser Family Foundation.
“A fundamental problem when it comes to people’s ability to afford their prescription drugs is the high prices charged for many of these medications,” she said.
Part D has no annual cap on how much retirees have to pay out of their own pockets for prescriptions. A new Kaiser report finds that retirees’ spending on specialty drugs – defined as costing more than $670 per month – can range from $2,700 to $16,500 per year. Specialty drugs include Lantus, Zepatier for hepatitis C, Humira for rheumatoid arthritis, and cancer drugs like Idhifa, which treats leukemia.
They “can be a real retirement savings drainer,” especially for very sick seniors, said Mary Johnson of the Seniors Citizens League, a non-profit advocacy group.
Even if retirees do not take specialty drugs, they often take multiple brand-name drugs, which cost more than generics and drive up expenses. Ross spends several thousand a year on a raft of medications – for blood pressure, asthma, restless leg syndrome, acid reflux, and a sleep aid – as well as her physician copays and premiums.
Part D creates a financial catch-22. Her out-of-pocket spending, though onerous, is not quite high enough to qualify her for catastrophic coverage, where copayments are a low 5 percent of a drug’s cost. Catastrophic coverage isn’t triggered until spending reaches a dollar threshold ($5,100 this year).
Before catastrophic coverage kicks in, Medicare beneficiaries are in the donut hole – Medicare calls it a coverage gap – where they pay 25 percent of brand drugs and 37 percent of generics. The Affordable Care Act did provide significant relief to seniors, who used to pay 100 percent of their costs in the donut hole.
But, Ross said, “I never get to the other side of the donut hole.” Indeed, fewer than one in 10 people with Part D coverage benefit from the 5 percent copays under catastrophic coverage, according to Kaiser.
Johnson at the Senior Citizens League identified another issue that will erode future affordability. Increases in the $5,100 out-of-pocket threshold for catastrophic coverage are accelerating – and seniors’ costs with it. Since 2010, the threshold has risen only $550, to $5,100 this year. By 2024, it will be $8,050.
Seniors would pay 30 percent of this increase, or $885 more. Their financial burden would be even larger if drug manufacturers were not required to give a 70 percent discount, which also counts toward the beneficiary’s $5,100 threshold.
Ross gets $38,000 a year from Social Security and a Phoenix city pension. But to pay all of her medical bills, she must keep a close eye on her living expenses, which she does by staying home with her two cats.
“There are a lot of people out there who have it worse than I do. I don’t know how they manage,” Ross said.
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