Cost of Doughnut Hole Drugs to Be Cut in Half
By: Patricia Barry | Source: From the AARP Bulletin print edition | July 1, 2009
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Announcing the “doughnut hole” deal at the White House: from left, President Obama, AARP CEO Barry Rand and Sens. Max Baucus and Christopher Dodd. Photo: Yuri Gripas
In a surprise move that will please millions of Medicare beneficiaries, President Obama announced plans to slash the prescription drug expenses of Medicare beneficiaries who fall into the Part D coverage gap—the doughnut hole. They’d pay only 50 percent of the cost of brand-name drugs in the gap instead of the 100 percent they pay now.
In an $80 billion deal brokered by the White House and Senate Finance Committee Chairman Max Baucus, D-Mont., drug manufacturers agreed to donate half the cost of their brand-name and biologic drugs to people in the gap, at no cost to the government. The new benefit, expected to be part of health care reform legislation that Congress will consider in the fall, could take effect in July 2010.
In a joint appearance at the White House June 22 with AARP CEO Barry Rand, Obama called the deal “a significant breakthrough on the road to health care reform.” The gap, he added, “places a crushing burden on many older Americans who … can’t afford thousands of dollars in out-of-pocket expenses.” Rand said that cutting those costs in half would “substantially fill” the gap.
Under the agreement, Part D enrollees in the gap will be able to access the 50 percent discounts directly at the pharmacy. They won’t have to apply or fill out any paperwork. Also, the full cost of drugs bought in the gap will count toward the annual out-of-pocket limit ($4,350 in 2009) that triggers low-cost catastrophic coverage, even though enrollees will pay only half of this amount to get there.
The discounts will apply to most Part D enrollees, though not all. Those excluded: people with high incomes (over $85,000 in 2009) who pay income-related Part B premiums, and low-income people who qualify for Part D’s Extra Help benefit and already receive coverage throughout the year, with no gap.
Patricia Barry is a senior editor at the AARP Bulletin.
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