Drug Coverage for Dual Eligibles Benefits Drugmakers
The New York Times on Tuesday examined how "the pharmaceutical industry is beginning to reap a windfall" from the transfer of drug coverage for about 6.5 million dual eligibles from state Medicaid programs to the Medicare prescription drug benefit. Drug coverage for dual eligibles -- beneficiaries who are eligible for both Medicare and Medicaid -- was transferred on January 1.
According to the Times, "The windfall for the drug makers was made possible by a provision of the 2003 Medicare law that exempts Part D drugs from 'best price' rebates that the drug makers have been required to give to the state Medicaid programs since 1991." Under the rebate system, states pay no more than the lowest drug price pharmaceutical companies offer to any private insurer.
Because the 2003 Medicare law prohibits the federal government from negotiating drug prices under the drug benefit, many pharmaceutical industry experts expect that drug costs under the benefit will be higher, the Times reports. However, "[n]obody yet knows what the total drug bill will be for [dual eligibles] under Part D, beyond the assumption by many experts that it will be higher," according to the Times.
Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, said the federal government and the states previously paid about $14 billion annually for prescription drugs for dual eligibles. Without the rebates, the annual cost would have been about $17.5 billion, about 25% higher, Schondelmeyer said (Freudenheim, New York Times, 7/18).
In related news, Senate Democratic Policy Committee Chair Byron Dorgan (D-N.D.) and Sen. Bill Nelson (D-Fla.) on Monday proposed a bill (S 3647) that would eliminate Medicare beneficiaries' monthly premiums under the drug benefit during the doughnut hole coverage gap. Under the doughnut hole provision, beneficiaries are responsible for 100% of total prescription drug costs between $2,250 and $5,100.
Dorgan and Nelson presented the bill at a forum sponsored by the policy committee. Several beneficiaries who spoke at the forum said they have reached the doughnut hole and are experiencing problems affording medications. An estimated seven million to 10 million beneficiaries are expected to reach the doughnut hole this year, Gerard Anderson, a professor of health policy management and international health at the Johns Hopkins University School of Public Health, said (Estes, CQ HealthBeat, 7/17).
Most health care industry officials and policy experts believe that the Medicare prescription drug benefit is helpful to beneficiaries but that changes to the program are needed, according to the results of an online survey conducted by Harris Interactive for the Commonwealth Fund, CQ HealthBeat reports. The survey was sent to 1,246 individuals who work in health care policy, business, academia, health care delivery and the insurance industry; 180 individuals responded.
According to CQ HealthBeat "the survey overwhelmingly shows support" for the drug benefit, but "the majority of respondents said changes should be made to the benefit." Ninety-five percent of respondents in the business, insurance and health care industries support the benefit, while 56% to 67% of respondents in academia, research, health care delivery and similar fields think the drug benefit is good for beneficiaries, the survey finds.
Meanwhile, 51% of all respondents said the May 15 deadline for enrollment should have been extended and the financial penalty for late-enrollment removed. Only 8% said the financial penalty for late enrollment should remain in place. Thirty-nine percent of respondents said that the deadline should have remained but that the penalty should be removed (Abruzzese, CQ HealthBeat, 7/14). The survey is available online.