![James E. Dalen, MD](https://i0.wp.com/amjmed.org/wp-content/uploads/2012/05/JD-foto-2-210x300.jpg?resize=210%2C300&ssl=1)
Medicare D, which became effective in January of 2006, was a major step forward in providing prescription drug coverage to one segment of our population: those age 65 and older. As of 2009, 90% of all seniors (Medicare beneficiaries) had signed up for Medicare D, which is voluntary, or had other insurance coverage for prescription drugs.
The Medicare population accounts for one third of all prescription drug use in the US. The vast majority (87%) of seniors have at least one chronic condition that requires life-long medication, and more than 45% have 3 or more chronic conditions. The average number of prescription drugs for seniors with one of the commonest chronic conditions, congestive heart failure, was 7.5 with an annual cost of $3823 in 2001. The health of our Medicare population is dependent on their being able to afford prescription drugs.
Unfortunately, 2 features of the Medicare D legislation jeopardize the ability of seniors to afford the drugs they require. The legislation forbids Medicare from negotiating drug prices with drug manufacturers. Unlike the Department of Defense, the Veterans Administration, and Medicaid, which are able to negotiate discounts of 30 to 50%, Medicare is forced to pay the manufacturers’ asking price. As a result, Medicare and Medicare beneficiaries pay more for prescription drugs than the citizens of any other country. Medicare pays 30% more for prescription drugs than Medicaid pays. In 2 years (2006 and 2007) Medicare paid $3.7 billion more than Medicaid would have paid for the same prescription drugs.
The second feature of the legislation that jeopardizes the ability of seniors to afford prescription drugs is the infamous “donut hole.” Once a deductible of $250 has been paid by the senior, Medicare pays 75% of the cost of drugs and the senior pays 25% until the total amount paid by Medicare and the patient reaches $2250. At that point, the senior pays 100% out of pocket until the total amount paid by the patient and Medicare reaches a catastrophic limit of $5100. After that point has been reached, the senior is freed from the donut hole and Medicare pays 95% of further prescription costs. In one study, only 3%, and in another study, only 4% of seniors falling into the donut hole emerged to receive catastrophic coverage.
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— James E. Dalen, MD, MPH
This article was originally published in the July 2009 issue of The American Journal of Medicine.