February 21, 2019
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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It would be interesting to find out what the cost of Lantus is in Europe and Canada.
As everyone knows, we have a very strong drug lobby in the US — essentially because of the large sums of money required to run for elective office and the way our campaign finance system is structured. Elected officials cannot vote the best interests of their constituents without taking into serious account the best interests of their largest financial backers. When it comes to drug prices (and a lot of other things), big money wins.
It is near criminal the way that medical and drug costs are the principal driver for quality of life experience after retirement. We often hear of this bill or that discussion to provide assistance or a cap for retired seniors outlay on this, seems like just a carrot dangling and we’re never going to get there. All this from the greatest country on earth… Sigh…
So the real cause of the $3.3 trillion spent in the U.S. on healthcare per annum at 20% of GDP — with no better outcome than any European country — is twice what they spend on the healthcare lobby on K street that buys votes, period.
This case points to the importance of shopping Part D plans in the Annual Election Period (AEP) each fall. This person may have saved substantially with a different plan. I went to Medicare.gov and plugged in a Phoenix zip code and Lantus Solostar, sold in a package of 5 pens of 3 ML each as standard monthly amount. The results varied as much as $1,400/yr. in costs. The lowest cost plan for this drug is SilverScript Allure at retail of $214.75 per mo. (amount used to reach donut hole). It had no deductible and co-pays of $42.95 in Initial Coverage Level, $53.69 in the donut hole gap, then $10.74 at Catastrophic Level. The highest cost plan covering Lantus Solostar was Humana Preferred with retail of $447.08 per mo. (the amount used to reach the donut hole). This plan has a $415 deductible, then co-pays of $111.77 in Initial Coverage Level, $111.77 in the donut hole gap, then $22.35 at Catastrophic. There were several other plan with costs between these two, with AARP Medicare Saver Plus splitting the difference. Since we don’t know from the article what other drugs this person takes, the impact on her total costs for the year cannot be known. But based on this one drug, she’d reach the donut hole gap twice as fast!
Btw, not reaching Catastrophic costs is a good thing since to reach it, you have to incur higher total costs during the year. Reaching it only means costs for the remainder of the year will be lower, but not total costs for the year.
Picking the wrong drug plan (or failing to change plans during AEP) is one of the most costly mistakes people with Medicare can make. You cannot pick a plan on premium or deductible. Instead, look at total costs which include: Mo. plan premium + Deductible (if any) + co-pays for drugs at all stages.
Other savings sources: Many drug makers have Patient Assist Programs. You can find them at http://www.rxassist.org. Lantus, made by Sanofi has a program for it. You can qualify even with a Medicare Part D plan, however, you must meet their income limit, capped at 250% of Fed. Poverty Level (FPL). Unfortunately for the person in the article, her income of $3,188 per mo. is about $500 above the threshold. There is no “asset” test and these plans are not to be confused with LIS or Medicaid. Each drug and manufacturer sets it’s own income limits, so don’t assume you can’t qualify. I’ve seen limits as high as 400% of FPL and even 500% of FPL for cancer drugs.
The article didn’t mention either that AZ has a discount drug plan available to all residents called CoppeRx administered by CVS/Caremark (888-227-8315 to enroll). Other states have SPDAP programs (Senior Prescription Drug Assistance Programs) that vary by state. AZ ended it’s SPDAP in 2009 but still offers the discount card.
I hope this is helpful to you or someone you know.
My Part D insurer won’t pay for a new drug (topical immune modulator) unless I show documentation of failure of 5 less expensive drugs tried. I actually could do this, but no longer have paperwork; former dermatologist has passed. My out-of-pocket cost is about $700 for a tube. I am using samples from my current dermatologist and rationing it to my face and hands.
A pharmacist friend told me he has many kinds (but not all) of creams, gels and ointments he receives in bulk, wholesale. He can then fill these types of prescription at lower cost plus a small dispensing fee. He’s a local independent pharmacist, not a “compounding pharmacy” and says this is common practice. So it’s worth checking into.
The price of Lantus around the world averages about 20% of what we pay in the U.S. The same is true for most brand name drugs and most medical devices. It is an embarrassment that we pay double per capita what comparable western countries pay for health care with worse national health statistics. Read my book and get angry: Prescription for Bankruptcy
There is a lot of talk about “Medicare for all” now. Maybe before they do that they should improve Medicare by adding an out-of-pocket maximum – just like most health insurance.
My example of outrageous drug pricing involves the drug Rapaflo. It cost me about $37 per month and then a generic came out last month. I was excited that it would be paying less. But the excitement quickly became outrage when I was charged $40 for the generic. When I asked what happened I was told that that is the generic price and that the price for the Rapaflo was now more than $85 per month.
So how is that possible? Coincidence or collusion between drug manufacturers? Seems to be the latter in my opinion.
You’re lucky…a bump from $37 to $40 a mo. is not bad. A possible explanation is your plan either changed pharmacy benefit managers or the plan formulary changed. It’s a fluid environment out there on costs….plans bid on drugs every year, often times in “packages” of drugs for their members. Your plan may have had to pay more for your drug in order to pay less for some other drug. Medicare itself doesn’t bid on Part D drugs, but the plans themselves do who are under contract to Medicare. In effect, the bid process is sub-contracted out to the plans, i.e. “managed competition” much like envisioned under “Hillary Care.”
Expecting costs to never change isn’t reasonable or possible. And there are some drugs where costs have dropped.