Group Says Gap in Medicare Drug Coverage Will Be Costly

By Christopher Lee
Washington Post Staff Writer
Thursday, November 2, 2006; A11

http://www.washingtonpost.com/wp-dyn...103324_pf.html

Medicare beneficiaries will have to pay substantially more next year for coverage of brand-name prescription drugs that keeps them from falling into the "doughnut hole," according to a new report that government officials swiftly criticized as incomplete.

The report, released yesterday by the advocacy group Families USA, found that average monthly premiums will rise 87 percent, to $103.20, for plans that provide "meaningful coverage" in what otherwise would be a gap in Medicare's prescription drug benefit. Such coverage also will be harder to find -- 13 states will have no plans offering it in 2007, up from four states this year, the report found.

A plan was considered to have "meaningful" coverage if it paid for the top 25 drugs prescribed to seniors, including Lipitor, Prevacid, Zocor and Zoloft, group officials said. Eighteen of the drugs are not available in generic form.

"This coverage gap never made sense for seniors, but now it is getting much worse," said Ron Pollack, executive director of Families USA, who has repeatedly criticized the design of the drug benefit.

The "doughnut hole" refers to a gap in coverage in which Medicare beneficiaries must pay for 100 percent of their drug purchases. About 3 million people are expected to fall into it this year, according to the Centers for Medicare and Medicaid Services. Democrats have criticized the gap as unfair to seniors, but party leaders say they will not be able to get rid of it right away even if they regain control of the House in next week's elections.

Under the standard plan, Medicare picks up most of a beneficiary's drug costs up to $2,250. The coverage then stops until the beneficiary has spent an additional $2,850 out of pocket, after which Medicare covers 95 percent of additional drug costs. Beneficiaries may select plans that do not have a gap, but the premiums are higher than those of standard plans. Low-income beneficiaries get subsidized coverage with no gap.

Leslie V. Norwalk, acting head of the Medicare agency, said the Families USA report "presents a distorted and incomplete picture" because it ignores plans that fill the gap with coverage for generic drugs. Beneficiaries in every state can choose a plan that provides some or complete gap coverage, she said, and they will have even more choices next year.

"The report focuses on a very limited number of drugs used by beneficiaries and does not acknowledge the significant additional savings possible through the use of lower-cost generics and therapeutic substitutes," Norwalk said.

House Minority Leader Nancy Pelosi (D-Calif.) has said Democrats would require Medicare to negotiate with drug companies for lower prices and use the savings to shrink the doughnut hole. "We can and we must make the Medicare prescription drug plan fairer and more cost-effective," she said.

But Norwalk told Bloomberg News yesterday that having Medicare negotiate drug prices with manufacturers would not achieve savings over the current system, in which insurers and pharmacy benefit managers do the negotiating to offer competitive plans.

The national average monthly premium for all plans with any doughnut-hole coverage, including generics-only coverage, will drop from $48.40 this year to $47.40 in 2007, Families USA officials said. But a plan will not help most seniors unless it provides coverage for the brand-name drugs they take, Pollack said.

Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, said erasing the gap would cost more than $400 billion over 10 years: "The Medicare prescription drug program may not be perfect, but beneficiaries now can get affordable prescription drug coverage, and they can choose a plan, including a plan with gap coverage, that best meets their needs."