AARP renews campaign to close Medicare drug coverage gap

The senior advocacy group also calls on Congress to implement an approval pathway for generic biologics.

By Chris Silva — Posted June 8, 2009

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As Congress considers comprehensive health system reform, AARP is reminding lawmakers of what it perceives to be a growing problem -- a coverage gap in the Medicare drug benefit that results in high prescription drug costs for some seniors.

This coverage gap, commonly referred to as the "doughnut hole," starts when initial government subsidies run out and ends when the program's catastrophic benefit kicks in. During this time beneficiaries must pay all of their drug costs, in addition to their monthly premiums.

Today, roughly 3.4 million Part D beneficiaries fall into the gap each year, but only 15% of those end up spending enough of their own money to hit the upper limit and receive catastrophic coverage, AARP said. The government covers nearly all medication costs after that occurs.

Lawmakers who designed the benefit said they allowed the coverage gap in order to avoid an incentive for seniors to spend more than they need to on drugs simply to hit the catastrophic limit more quickly. Saying that the gap was too large and would affect too many needy seniors, AARP has been calling for revisions since before the benefit launched in 2006.

According to research from the Kaiser Family Foundation, nearly all Part D plans have a coverage gap in 2009, which totals $3,454 in out-of-pocket spending for seniors enrolled in the standard Medicare Part D benefit (link). By 2016, that gap is expected to exceed $6,000 per beneficiary, a figure that AARP says is much too high.

"Prescription drug coverage has literally been a life-saver for people in Medicare, but the widening doughnut hole is still leaving too many Americans on their own to face skyrocketing drug costs," said Nancy LeaMond, AARP's executive vice president. "We know that higher costs lead people to skip doses or give up their prescriptions entirely, putting their health in jeopardy and driving up long-term costs."

Some poorer Part D enrollees can qualify for a low-income subsidy that generally covers their costs in the coverage gap. Approximately 4 million beneficiaries receive this additional help, though AARP is calling on lawmakers to expand eligibility.

In 2009, 25% of drug plans offer some type of additional coverage within the gap, according to the Kaiser report. That's down from 29% in 2008 but still higher than in the program's first year in 2006.

The need for more generics

Seniors facing high drug costs also would benefit from the market presence of generic versions of biologic drugs used to treat diseases such as cancer and multiple sclerosis, AARP said.

The U.S. currently does not have a standard approval process in place for the Food and Drug Administration to review generic biologics, which also are known as follow-ons or biosimilars. The FDA examines applications for these generics on a case-by-case basis, applying various sections of law depending on the nature of the drug.

AARP maintains that without generic competition, brand-name biologic drugmakers sometimes can charge thousands of dollars per month for the drugs, even for those that have been on the market for years.

"Since the 1980s, safe, affordable generic drugs have helped Americans save billions of dollars on their health care bills," said LeaMond. "With biologics now making up a large and growing share of the market, it's time to bring those same savings to people taking these breakthrough drugs while protecting medical innovation."

The National Multiple Sclerosis Society also supports an approval pathway for generic biologics. The group says that some multiple sclerosis medications cost $30,000 or more per year.

"We've known of people altering their dosages because of the costs," said Shawn O'Neail, the society's vice president of federal government relations. "We think it would be irresponsible to not allow the FDA to approve generics when they are available and when they are safe and effective."

President Obama has shown his support for the generic biologics effort. His 2010 budget resolution calls for the establishment of a workable scientific pathway for accelerated FDA approval of the drugs. Expanding access to the medications would lead to Medicare and Medicaid savings, the administration has said.

Lawmakers have introduced legislation to create an approval process for generic biologics. The Promoting Innovation and Access to Life-Saving Medicine Act, reintroduced March 11 by House Energy and Commerce Committee Chair Henry Waxman (D, Calif.), is the version AARP favors. Senate companion legislation was introduced March 26 by Sen. Charles Schumer (D, N.Y.).

A competing bill, the Pathway for Biosimilars Act, was reintroduced March 17 by Rep. Anna Eshoo (D, Calif.).

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Falling through the cracks

Many seniors who rely on prescription drug coverage through Medicare Part D are caught in a growing coverage gap, according to AARP. Known as the "doughnut hole," the gap comes between the limit of initial Medicare coverage and the start of catastrophic coverage. During this time, beneficiaries must pay all of their drug costs. Here are the percentages of Part D enrollees in each state, excluding those who receive low-income subsidies and non-users, who hit the coverage gap in 2007.

Hawaii 36%
Arkansas 33%
Iowa 33%
Minnesota 33%
Montana 33%
Nebraska 33%
North Dakota 33%
South Dakota 33%
Wyoming 33%
Illinois 32%
New Jersey 32%
Georgia 31%
Indiana 30%
Kentucky 30%
Mississippi 30%
North Carolina 30%
Oklahoma 30%
South Carolina 30%
Alabama 28%
Pennsylvania 28%
Tennessee 28%
Texas 28%
West Virginia 28%
Delaware 27%
District of Columbia 27%
Idaho 27%
Kansas 27%
Maryland 27%
Utah 27%
Virginia 27%
Alaska 26%
Louisiana 26%
New Mexico 26%
Connecticut 25%
Massachusetts 25%
Missouri 25%
New York 25%
Rhode Island 25%
Vermont 25%
Colorado 24%
Ohio 24%
Florida 23%
Wisconsin 23%
California 22%
Oregon 22%
Washington 22%
Michigan 21%
Arizona 19%
Maine 17%
New Hampshire 17%
Nevada 12%

Source: Georgetown University/NORC/Kaiser Family Foundation analysis of IMS Health LRx database, 2007 (link)

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