Updated September 27: In 2019, people enrolled in Medicare Part D–the Medicare drug benefit–are supposed to have more comprehensive drug coverage. People with high drug bills should see their drug costs drop. Pharma had been pressuring Congress to undo this benefit for older adults and people with disabilities. Fortunately, Pharma did not get its way. Here’s the background.
When the Medicare drug benefit was enacted, the standard benefit only gave people with Medicare who had high drug costs, drug coverage to a point (up to $3,750, out of which they paid 25 percent). After that, they fell into a hole in which they were required to pay the full cost of their drugs out of pocket until they reach the limit for catastrophic coverage. That gap in coverage, sometimes called the Medicare donut hole, has shrunk over time. This year’s budget deal passed with a provision to help people with Medicare with high drug costs. It reduces their out-of-pocket costs while in the donut hole, beginning in January 2019.
Millions of people with Medicare will save a lot of money as a result of this change. But, pharmaceutical companies are not happy because it will cost them. They will need to absorb 70 percent of people’s brand-name drug costs, up from 50 percent today. Pharma tried to wield its enormous power in Congress to shift more drug costs back to people with Medicare.
Not surprisingly, an AARP poll of people over 50 found that the vast majority of them want the Medicare Part D donut hole to shrink as planned. The question was whether their political pressure will count more than Pharma’s. Now, we know that Pharma will not win this fight.
Pharma’s influence on Congress is real and effective. In July, 155 Republicans and 50 Democrats in the House of Representatives called for undoing this law and shifting more costs back onto people with Medicare. Here’s a letter to the House Speaker from House Republicans who support Pharma and want people with Medicare in the donut hole to pay more for their drugs. Here’s a letter to the House Speaker from House Democrats, including Beto O’Rourke, who is running for Ted Cruz’ Senate seat in Texas, also calling to undo this change in the law and benefit Pharma.
What’s also concerning is that beginning in 2020, the donut hole is set to get bigger if Congress does not act. Right now, people with Medicare with high drug costs will have to pay even more out of pocket before their catastrophic coverage kicks in. The ACA reduced the increase in the amount that people must pay out of pocket before their catastrophic coverage kicks in through 2019. It is $5,100 in 2019, but it will jump to $6,350 in 2020 unless Congress imposes a fix.
Reps. Frank Pallone and Richard Neal, Democrats on the House Energy and Commerce and Ways and Means committees, respectively, have introduced a bill, H.R. 6563, that would keep the jump from taking effect and impose a permanent slow growth rate. Time will tell whether that bill becomes law.
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