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Budget deal lowers drug costs for people with Medicare

Written by Diane Archer

Congress’ budget deal lowers prescription drug costs for people with Medicare. Under the budget agreement, pharmaceutical companies must absorb more of the cost of prescription drugs for people in the Medicare Part D “donut hole,” a gap in drug coverage for people with substantial drug costs. The budget deal also ends the donut hole in 2019, one year earlier than planned.

The donut hole is triggered when your total drug costs hit $3,750. At that point, in 2018, you pay 35 percent of your drug costs until you spend $5,000 out of pocket on covered drugs. The budget deal means that you will pay 25 percent of your drug costs while you are in the donut hole, beginning in 2019. Pharmaceutical companies will absorb 70 percent of drug costs, up from 50 percent.

These drug discounts for people with Medicare in the donut hole are often off of drugs that pharmaceutical companies are able to price preposterously high. So, out-of-pocket costs for people in the donut hole needing one high-priced drug can still be as much as $5,000. But, until Congress steps in to negotiate drug prices, as every other developed country does, the discounts are better than nothing. The change in the law could save people with high drug costs thousands of dollars.

With the budget deal, not only are drug costs lower for many people with Medicare, but people with Medicare should see lower Part D premiums because of lower drug spending.

In other good news, the budget deal ends the limit on physical, speech and occupational therapy. Historically, Medicare has capped coverage for therapy services. The budget deal also permits Medicare to cover a much greater array of telehealth services.

That all said, the budget deal did not include the CREATES Act, which is intended to speed drugs to market once they are off patent. CREATES would have made it harder for pharmaceutical companies, which lose their drug patents, from keeping generics off the market. They often do not share samples of these drugs, needed to manufacture the generics, with generic manufacturers. Right now, generic manufacturers do not have the right to sue pharmaceutical companies to get the samples of drugs going off patent.

Furthermore, the budget deal repeals the Independent Payment Advisory Board established through the Affordable Care Act to help Medicare control costs.

And, the one million people with Medicare with the greatest yearly incomes–individuals who earn at least $500,000 and couples who earn at least $750,000–will see an increase in their Part B and Part D Medicare premiums.

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