It’s known as the “donut hole” – the point at which Medicare’s prescription drug benefits shift a greater percentage of the cost to the individual.
And in the wake of the 9Wants To Know series “Side Effects” – which examined prescription drug costs in the United States – Colorado Medicare patients told 9NEWS they’re in the “donut hole” and reeling from the sky high prices of their medications.
So, what exactly is the “donut hole” and what are its ramifications?
It’s a coverage gap that occurs when someone on Medicare hits a pre-set spending limit on prescription drugs – the number changes each year, but in 2016 it’s $3,310. At that point, a greater percentage of the cost of drugs is shifted to the patient – a gap that exists until either a new year begins or a patient hits the out-of-pocket spending maximum.
Prior to the Affordable Care Act, once a patient reached the Medicare spending limit, prescription drug coverage ran out completely, leaving patients paying 100 percent of the cost for their drugs.
The Affordable Care Act has been chipping away at the donut hole – and the coverage gap should be effectively eliminated by 2020.
Generally speaking, a patient on Medicare pays about 25 percent of the cost of a prescription drug up until the point that he or she hits the $3,310 limit.
From that point on, the patients pay more.
In 2016, for brand name drugs, patients in the donut hole pay 45 percent of the cost, with the manufacturer covering 50 percent, and Medicare covering 5 percent.
For generic drugs, patients pay 58 percent of the cost.
The portion patients pay for drugs while in the donut hole will decrease again next year, following trends set by the Affordable Care Act – assuming there are no changes in federal law.
Still, there are plenty of complications.
First, a Medicare drug plan formulary can change at any time, meaning that a prescription drug that was covered last time you filled your prescription may not be covered now. In that case, Medicare would notify the patient that their prescription is no longer covered.
Another complication: drug prices can change anytime – meaning patients, like many in Colorado, face unaffordable drug prices, especially in the donut hole.
Mike Fierberg, spokesman for the Centers for Medicare and Medicaid Services, said Medicare beneficiaries should study all their options for 2017.
“What we recommend is that people do some comparison shopping among the plans that are available, because the prices vary from plan to plan,” Fierberg said. “As you know, pharmacy benefit managers, or PBMs, often negotiate better prices with individual drug manufacturers. They can then pass those savings along to the plans with which they are affiliated. So a given medication is not going to cost the same from one plan to the other.”
Even in the event that drug prices rise, someone on Medicare who has shopped for the least-expensive plan is likely to feel less impact.
“It's a bit like having a system that tells you where am I going to spend the least amount on gasoline next year?” he said. “Well, you can say that station A has the lowest price now, and station B is much higher. But there's no way to say that that's going to be the same thing in the course of the year, because the cost of the of the product is going to change.
“Nevertheless, what usually happens is that the plans that are the lowest now are still going to be the lowest later in the year, because if a pharmaceutical company raises its prices, those prices are going to go up for pretty much all plans.”
Medicare enrollment for 2017 ends at midnight on Dec. 7.
If you want to change your plan, use Medicare.gov or call 1-800-MEDICARE to shop for the best coverage that will give you the lowest estimated out-of-pocket costs.