Letter to the Editor: Prescription drug costs and Delaware seniors

A new proposal could reduce Delaware seniors’ pharmacy bills

Delawareans spend lots on prescription drugs. Each year, the average resident spends about $1,500 on them, according to the Kaiser Family Foundation. Seniors face particularly high and unpredictable costs, since they generally need more medications than younger folks.

Fortunately, a new proposal from the Department of Health and Human Services could significantly reduce out-of-pocket expenses for people enrolled in Medicare Part D, the federal prescription drug benefit.

Today, more than 125,000 Delawareans are enrolled in Part D, which provides federally-subsidized drug coverage to seniors and some people with disabilities. Delawareans can choose from among 21 plans. Most of those plans require seniors to pay a deductible, a monthly premium, and a portion of a drug’s cost, either by a copay or through coinsurance.

HHS is pushing three key reforms to reduce seniors’ out-of-pocket spending.

The first would require private insurance companies and pharmacy benefit managers to share drug discounts with patients.

Insurers hire pharmacy benefit managers, or PBMs, to administer their drug plans. In this position, PBMs help design drug formularies and cost-sharing arrangements — so can generally secure deep discounts from drug makers.

But few of these discounts trickle down to patients at the drugstore.

HHS wants to require insurers to share a portion of these discounts with beneficiaries at the pharmacy counter. The Centers for Medicare and Medicaid Services estimate that passing along even a third of the discounts would save beneficiaries more than $19 billion over the next decade.

The second policy would create an out-of-pocket spending cap of $5,000 in Part D.

Right now, for most Part D plans, enrollees pay for all of their medical expenses out of pocket until they reach their deductible. In 2018, the maximum deductible is $405

After that, beneficiaries enter a second phase of coverage, where they and their insurer share the cost of medications until spending reaches $3,750. After this, consumers enter the “donut hole” phase of coverage — and pay a higher percentage of their drugs’ costs than before.

Once they spend $5,000 out of pocket, their cost-sharing obligations decline to about 5 percent of their drug spending — and Medicare picks up most, but not all, the rest.

However, even small amounts of cost sharing in the catastrophic phase can add up, especially if beneficiaries are very sick and need advanced treatments. An out-of-pocket spending cap would ease the financial burden on beneficiaries who are already facing physical health crises.

The third reform would make generic drugs free for beneficiaries enrolled in “Extra Help,” a special program within Part D that sharply reduces premiums and copays for low-income enrollees. Right now, single households that earn less than $18,210 and couples with household incomes of less than $24,690 are eligible. Here in Delaware, about one in four Part D beneficiaries is eligible for the program.

Thanks to the reform, these beneficiaries would no longer have a co-pay on generic drugs. That may not sound like much, since the program already caps these co-pays at $3.35. But many enrollees require multiple prescriptions to manage chronic conditions like high blood pressure and high cholesterol. Saving even $10 a month could significantly improve low-income seniors’ financial security.

Part D is already tremendously popular with seniors, boasting an approval rating of more than 85 percent. These three HHS reforms would make the program even stronger by trimming seniors’ out-of-pocket spending at the pharmacy.

Robert Hall

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