Drug Prices Rise For Seniors Who Reach Medicare Part D Coverage Gap

Seniors who hit the coverage gap in their Medicare prescription drug plans and must use their own money to buy drugs are facing price increases that are far outpacing inflation, a new study finds.

According to the Kaiser Family Foundation, prices paid by enrollees in standalone Part D plans who enter the coverage gap increased 5 percent or more since January 2009 for half of 10 brand-name drugs most commonly used by seniors. That’s almost twice the rate of inflation over the same period. (KHN is a part of the foundation).

For example, the price of Actonel, a treatment for osteoporosis, increased 8 percent, from $91 per month in 2009 to $98 per month in 2010. Meanwhile, the prices for both Aricept, an Alzheimer’s medication, and Plavix, a drug used to prevent blood clots, both increased by 7 percent during the same period. Aricept’s prices rose from $184 to $198 while Plavix’s rose from $142 to $152. Lipitor, a cholesterol medication, was the only drug surveyed that decreased in price, from slightly more than $86 to just under $86 per month.

The rising prices are part of a longer-term trend. Between January 2006 and January 2010, the analysis showed, prices of drugs bought by seniors who hit the coverage gap increased 20 to 25 percent for Lipitor, Plavix, Nexium, a drug for acid-reflux, and Lexapro, a medication for depression and anxiety; 39 percent for Actonel, and 41 percent for Aricept. Over the same period, inflation has increased 9.2 percent while prices for medical care have surged 16.1 percent.

Researchers examined the prices for specific medications that don’t have generic substitutes, using data from the Centers for Medicare & Medicaid Services. The prices paid by seniors in the coverage gap, also known as the “doughnut hole,” vary by drug plan, and depend largely on prices negotiated between the drug plans and pharmaceutical companies.

Under Medicare Part D, seniors get government-subsidized drug coverage until their total drug spending – by them and their drug plans — exceeds a specific threshold, which is $2,830 in 2010. They then enter the doughnut hole, and must spend their own money — $3,610 this year — this year before they get “catastrophic” drug coverage. This coverage is more generous than their initial coverage.

The amount seniors must pay in the coverage gap is projected to increase to $5,755 by 2018. In 2007, an estimated 3.4 million Part D enrollees hit the coverage gap. The Democrats’ health care legislation now being debated in Congress would gradually close the doughnut hole. The study said that previous research showed that some enrollees who reach the coverage gap sometimes skip needed medications when faced with the full cost.