The nation's pharmaceutical manufacturers will provide 50-percent discounts on the cost of covered brand-name prescription drugs for beneficiaries in the Medicare Part D coverage gap – the so-called doughnut hole – starting in 2011.
"Thanks to the Affordable Care Act, millions of people with Medicare who will fall into the Part D doughnut hole next year will pay less for their prescription drugs," said Vice President Joseph Biden, who joined representatives of the Department of Health and Human Services and the Centers for Medicare & Medicaid Services in announcing the discounts Thursday. "The discount manufacturers will pay on brand-name drugs, helping millions of seniors who are struggling to make ends meet at the end of the month, (is) just one of the ways the new healthcare law helps make Medicare stronger."
The discount is expected to reduce Medicare beneficiaries' out-of-pocket costs by more than $2 billion in 2011. The average beneficiary will see out-of-pocket costs for drugs in the doughnut hole fall from approximately $1,250 to approximately $725 in 2011.
The latest efforts to close the prescription medications coverage gap will now focus on lowering the cost of prescription drugs needed by seniors. Earlier this year, the federal government sent out $250 rebate checks to Medicare beneficiaries who were affected by this coverage gap.
"More than 1.2 million beneficiaries who have hit the doughnut hole so far this year have received their $250 rebate checks as part of the cost savings provisions in the Affordable Care Act, and millions more are on deck to get a check," said HHS Secretary Kathleen Sebelius. "Now, with these new agreements, people who rely on Medicare will see even more savings off their drug costs next year, and savings will continue even after the coverage gap is closed in 2020."
According to CMS officials, the costs of stand-alone prescription drug plans for seniors will remain relatively stable, with yearly premiums only expected to rise from $1 to $30 in 2011. In addition, more stand-alone and Medicare Advantage plans are offering doughnut hole coverage. Seventy-nine percent of enhanced stand-alone plans will offer coverage in 2011, up from 39 percent this year, while 59 percent of Medicare Advantage plans (up from 55 percent) will offer the gap coverage.
"Most Medicare prescription drug plan premiums will remain stable next year and beneficiaries will find there are clearer plan options and many plans that can help them save even more – like those plans that are offering benefits that help fill the doughnut hole," said CMS Administrator Donald Berwick, MD. "They will find that the Affordable Care Act improves the value of drug coverage they get next year."