APA has hailed an agreement by drug companies and the Obama administration
to discount by 50 percent the cost of pharmaceuticals that fall within
Medicare's drug coverage gap.
The voluntary agreement by pharmaceutical companies, announced in June,
will cut the cost of name-brand prescription medications by up to 50 percent
when they fall into the so-called donut hole of Medicare's Part D prescription
drug program that excludes coverage of drugs when their annual costs rise to
between $2,700 and $6,154. Drug costs are reimbursed at 75 percent when they
are less than $2,700 annually, and Medicare covers 100 percent of the cost of
drugs once their accumulated cost rises above $6,154 annually.
The agreement is predicted to provide up to $30 billion in discounts to
seniors and save the federal government an additional $50 billion over 10
years in health care costs. Obama administration officials have not specified
how these savings will occur.
APA President Alan Schatzberg, M.D., hailed the development, calling the
coverage gap "an excessive burden to those over 65 and those who are
chronically disabled, including those suffering from mental
"Although this is a first step, it is a step in the direction of
providing high-quality, affordable health care to all Americans,"
Schatzberg said. "APA recognizes that full prescription coverage is an
integral part of any meaningful health care reform and applauds the effort to
eliminate one of the most glaring deficiencies in Medicare."
The Obama administration described the agreement as part of the effort to
enact major health care reform under consideration in Congress, because the
details of the $50 billion projected savings in the agreement will be
negotiated as part of final health care reform legislation. The deal is the
latest high-profile voluntary agreement that the administration has announced
with entities involved in the health care sector. The White House also has
reached agreements for health care providers and hospitals to provide billions
in savings to Medicare over the next 10 years, according to administration
announcements. However, few details have been released on how those savings
will be achieved, and some congressional leaders have said they will not honor
the agreements in formulating health care reform measures.
"The agreement by pharmaceutical companies to contribute to the
health reform effort comes on the heels of the landmark pledge many
health-industry leaders made to me last month, when they offered to do their
part to reduce health spending $2 trillion over the next decade," Obama
said in a written statement issued in June.
Those deals are important because the high cost of expanding insurance
coverage to the nation's 47 million uninsured—estimated between $1
trillion and $2 trillion over 10 years—has slowed the pace of
legislation in Congress to overhaul health care. Public-opinion polls also
have consistently found that although most people support health reform,
support is weak for any specific funding proposal.
The impact of the latest agreement on people with serious mental illness
could be significant.
Roughly 3.5 million Medicare beneficiaries are projected to fall into the
donut hole this year, according to congressional health reform advocates.
According to a 2008 Kaiser Foundation study, about 500,000 Medicare
beneficiaries—or 15 percent—stopped using their prescription drugs
when they fell into the prescription costs range that comprises the donut
hole. The study examined some beneficiaries with chronic illnesses, including
people receiving treatment for depression, and found that 15 percent who were
prescribed antidepressants stopped taking the medication when they reached the
coverage gap in 2007. Another 8 percent stopped taking Alzheimer's medications
when they reached the gap.
Anita Everett, M.D., chair of APA's Council on Healthcare Systems and
Financing, said the planned assistance would have a "tremendous
impact" on fixed-income Medicare patients with mental illness.
"Many individuals with mental illness depend on Medicare for access
to psychiatric and other medications; the donut hole payment makes medications
unaffordable to many who choose to go without rather than to pay hundreds of
dollars each month for medications," said Everett, in comments to
Meanwhile, the pharmaceutical drug discount agreement drew some criticism
from consumer advocates and liberal politicians, who said the total $80
billion in drug company price cuts are a tiny fraction of the $3.3 trillion in
prescription drug spending that the Department of Health and Human Services
estimates will occur over the next 10 years.
The Kaiser Foundation report "The Medicare Part D Coverage
Gap: Costs and Consequences in 2007" is posted at<http://www.kff.org/medicare/upload/7811.pdf>.▪