EDITORIAL: CLOSE THE DONUT HOLE

Two new reports published online by the journal Health Affairs confirm with hard data what millions of people with Medicare know through hard experience. When people hit the doughnut hole—the infamous gap in the Part D drug benefit when people must pay the full price of their drugs and their Part D premiums—many stop taking their medicines. This is especially true for people with diabetes, people with multiple chronic conditions and people who take expensive brand-name medicines. Experts also know that people who stop taking medicines for diabetes, hypertension and other chronic illnesses can wind up in the hospital.

The Congressional Budget Office estimates it would cost taxpayers $134 billion over the next ten years for Medicare to provide a drug benefit with no built-in coverage gap. The reason why closing the doughnut hole is so expensive is that the cost of prescription drugs is so high.

Interestingly, CBO estimates that taxpayers would save $110 billion over ten years if drug manufacturers had to give the Medicare program the same deal they give the Medicaid program—basically a 15 percent rebate per prescription and a refund to the government for any price increases above the rate of inflation. Based on CBO’s estimates, we could come up with the other $24 billion needed to close the coverage gap by making sure Medicaid HMOs get the same deal on drugs; by ending the tricks manufacturers play to avoid the Medicaid cap on year-to-year price increases; and by using generic biologics under Medicare Part B.

Problem solved?

Probably not. Congress may be too focused on covering the uninsured and too afraid of having to fight a multimillion dollar campaign by PhRMA, the drug lobby, to push proposals that would take such a big bite out of the drug manufacturers’ bottom line.

But we should still fight to get Medicare a better deal on the drugs it buys. We should at a minimum recoup the windfall reaped by drug manufacturers when over 6 million low-income people with Medicare were switched from Medicaid to Medicare drug coverage.

And at least some of those savings should go toward improving the drug benefit. Right now, an individual earning just $17,000 per year gets no help paying for drugs when they are in the doughnut hole. If the ceiling for the Extra Help program were extended to 200 percent of the poverty level—$21,660 per year for an individual, $29,140 for a couple—millions more older adults and people with disabilities would have drug coverage with no doughnut hole.

There are other ways to narrow the gap. Some have suggested allowing taxpayer subsidies to cover generics in the gap, rather than making enrollees pay the full cost of gap coverage through a higher premium. That would help some people, although not those who need help buying an expensive brand-name drug while in the coverage gap.

A better alternative is to have Medicare provide drug coverage directly. Medicare would negotiate lower prices and Medicare would decide which drugs—generics and brand-name drugs that provide real clinical benefit—would be covered.

There is no shortage of ideas that could help, but it will take a lot of public pressure to get Congress to stand up to the drug manufacturers. You can start by asking your senators and congressperson to cosponsor the Medicare Prescription Drugs Savings and Choice Act, which provides the option of receiving drug coverage directly through Medicare.

-Adapted from: “The Doughnut Hole”, Asclepios; Your Weekly Medicare Consumer Advocacy Update, Medicare Rights Center, February 5, 2009 • Volume 9, Issue 5.

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