Why Does it Take 10 Years to Close the Medicare Drug “Doughnut Hole”?

Friday, April 09, 2010

Congress has provided relief to millions of Medicare recipients struggling to pay for their prescription drugs, but the help won’t fully kick in for almost a decade.

The so-called “doughnut hole” refers to drug costs that are more than $2,830 but less than $6,440. About 3.4 million Medicare patients are left to pay for medications between these two amounts. The doughnut hole was created by 2003 reform legislation, apparently as a concession to pharmaceutical companies.
Medicare recipients will get some relief beginning this year in the form of a $250 check from the federal government. But that amount will pale in comparison to the thousands of dollars many seniors and the disabled have to pay for their prescriptions because of the gap in their Medicare Part D coverage.
More assistance will kick in next January, when patients will get a 50% discount on brand-name drugs. Eventually, the federal government will provide another 25% subsidy so that Medicare recipients end up paying only the remaining 25% share of non-generic medications—but that won’t take place until 2020.
It is estimated that filling the doughnut hole could cost drug companies $3 billion a year. However this amount might be offset by the fact that many seniors who would stop taking the medications all together will now be able to continue taking them.
-David Wallechinsky
Closing Medicare Drug Gap Helps Democrats Sell Reform (by Christopher Weaver, Kaiser Health News)
Steps Being Taken to Fix Medicare `Doughnut Hole' (by Ana Veciana-Suarez, Miami Herald)
For Drug Makers, Closing Doughnut Hole Promises Silver Lining (by Jared A. Favole, Wall Street Journal)


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