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Congress Should Keep Medicare Drug Costs Low

Drugmakers want to overturn new law that lowers costs for beneficiaries

Medicare beneficiaries with high prescription drug bills were looking forward to seeing lower out-of-pocket costs a year earlier than expected under the bipartisan budget agreement that President Trump signed into law last month. But now big pharmaceutical companies are trying to persuade Congress to rescind that provision of the law.

Right now, Medicare Part D beneficiaries pay a larger percentage of their medication costs once the total tab reaches a certain threshold. That’s due to an odd provision in the prescription drug plan called the coverage gap, or doughnut hole.

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“Drug companies want to roll back this progress before the ink is dry” on the budget law, says David Certner, AARP legislative policy director for government affairs. “They are already out in force lobbying Congress to keep drug prices high and protect their profits.” AARP is urging its members to contact their lawmakers and demand that they protect the progress that has been made to lower drug costs for older Americans.

Under the Affordable Care Act, the doughnut hole has been steadily closing and was scheduled to be eliminated in 2020. The budget law closes the coverage gap next year by requiring drug manufacturers to pay more of the cost of enrollees' drug expenses in the coverage gap. This permanent change will lower out-of-pocket costs for beneficiaries with high prescription medication costs.

In 2018 beneficiaries enter the doughnut hole once they have spent $3,750 on their prescriptions; then they must pay 35 percent of the cost of brand-name drugs and 44 percent of generics. They’ll pay that share until their out-of-pocket costs reach $5,000. Once they reach that limit, they exit the doughnut hole and pay no more than 5 percent of their prescription drug costs for the rest of the year.

Some 28 percent — nearly 11 million — of Part D enrollees reached the doughnut hole in 2014. Of those, 3.4 million spent enough out of pocket for their drugs to reach the catastrophic level.

Patients with chronic illnesses such as leukemia or lymphoma, multiple sclerosis, viral hepatitis, HIV/AIDS, cancer and schizophrenia are among those most likely to have high drug costs.

Congress must pass another budget bill by midnight on March 23 to keep the federal government running. The pharmaceutical companies are urging Congress to revise this drug provision as part of that legislation.

“Congress needs to do their job and make prescription drugs more accessible and more affordable, not less ” says Certner.

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