PART D DONUT HOLE EVEN BIGGER IN 2007

By now most people have heard that the Part D benefit has a large gap in coverage that often hits people by surprise when they go to the pharmacy and discover they have to pay 100 percent of the cost of their drugs.

Less well known is that the coverage gap is even wider next year. The Bush administration has bragged to the press that the average Part D premium is going down, but it failed to mention that all other out-of-pocket spending is going up. The amount people will have to spend out of pocket before their Part D coverage starts picking up the tab again will rise from $3,600 in 2006 to $3,850 in 2007 (see chart below to learn how the standard Part D benefit changes in 2007).

Worse, that money will buy fewer medicines in 2007 because Part D fails to rein in drug prices. An AARP study found that prices for the prescription drugs most commonly taken by older Americans rose over 6 percent, more than double the cost of living adjustment in Social Security benefits that kick in on January 1. Earlier research found that Part D plans pass on price hikes by pharmaceutical manufacturers nearly dollar for dollar to plan members.

Supporting Documentation

“Through the end of the second quarter of 2006, annual increases in manufacturer prices charged to wholesalers and other direct purchasers for widely used brand-name prescription drugs, on average, continued to substantially exceed the rate of general inflation. In addition, the average annual rate of price increase for the 12-month period ending in June 2006 (6.3 percent) is higher than the 6.0 percent average increase for the 12 months ending in December 2005” (“Trends in Manufacturer Prices of Brand-Name Prescription Drugs Used by Older Americans – Second Quarter 2006 Update,” AARP, September 2006).

“The ten largest pharmaceutical companies enjoyed substantial profit increases in the first six months of the new Medicare drug program. In the first half of 2006, profits for these companies increased by over $8 billion, a 27% increase” (“Pharmaceutical Industry Profits Increase by Over $8 Billion After Medicare Drug Plan Goes Into Effect,” U.S. House of Representatives Committee on Government Reform, September 2006).

According to the recently released J.D. Power and Associates 2006 Medicare Part D Beneficiary Satisfaction StudySM , almost 70 percent of individuals enrolled in a Part D plan said they are either paying the same as or more than what they were paying for prescriptions before the benefit (“Three-Fourths of Beneficiaries Enrolled in Medicare Part D Are Satisfied with Their Drug Plan ,” J.D. Power and Associates, September 19, 2006).

Part D Monitoring Project

The Medicare Rights Center (MRC) wants to hear about all the problems with the Medicare Part D benefit, whether they happen to you or someone in your community. With this information, they will be armed with the needed evidence to push for a Medicare-administered drug benefit.

Submit your story at www.medicarerights.org/partdstories.html

-Source: Asclepios, e-newsletter of the Medicare Rights Center. Retrieved at www.seniorjournal.com/NEWS/MedicareDrugCards/6-09-22-MedicaresDoughnutHole.htm, cited in ElderLaw Answers e-mail, 10/02/06. For subscription information for Asclepios see www.kintera.org/TR.asp?ID=M719996686124750435113765

10/06