Medicare Plan D and Inflation
Many of us older folks who take prescription drugs are enrolled in a Medicare Part D plan, either as part of an Advantage plan or as a stand-alone. Doing so results in a slighly lower overall cost, although not a spectacular one.
When these plans were first implemented, the designers came up with the so-called doughnut hole, meaning that once your total drug costs reached a certain point, the plan no longer gave you any help until you reached an even-higher point, a “catastrophic” level, at which point the drugs were quite cheap.
The idea behind the doughnut hole was that it would encourage people to keep their drug costs down. And for those without overwhelming drug costs, it did. For example, by switching to generic drugs, when that was possible, I made sure that I never reached the doughnut hole.
This year, it’s projected that I’ll reach the doughnut hole in August or September, taking fewer drugs than I did last year.
What’s going on here? Aren’t the plans keeping up with drug inflation? Isn’t Social Security giving us raises to cope with inflation?
The answer is no.
In 2006, the first year I was in the program, the doughnut hole started when your total drug costs reached $2250. Note that total drug costs means what you paid plus what the drug company paid. At that time, a 3-month prescription for the lipid-lowering drug Vytorin cost $282, or about $94 per month, a little less if you got a discount.
That meant that if Vytorin were your only drug, you could get 24 prescriptions for Vytorin (not that anyone would take that much) before you hit the doughnut hole.
For 2014, they’ve raised the doughnut hole a little, but not much. It’s now $2850. But one popular drugstore I called told me that a 3-month prescription for Vytorin now costs $611, or $203 per month, again a little less if you got a discount.
But that means you could get only 14 prescriptions for Vytorin filled before you hit the doughnut hole, even though the doughnut hole is higher. The doughnut hole cutoff has increased by about 1.3 since 2006, and the cost of the drug has doubled. Has your Social Security doubled since 2006? I don’t think so.
Why is this happening?
Obviously, because the drug companies want to ensure a profit. When legislation was passed requiring the drug companies to phase out the doughnut hole, which they’re doing slowly, they figured out how to ensure that their profits stay the same, or even increase. They’re increasing the prices of many of their drugs more than the rate of inflation, definitely more than the rate of Social Security increases.
So what can we do about this?
Probably not a lot. Lobbying for legislation to get rid of what was often described as “the hated doughnut hole” simply means that the costs will be taken somewhere else. They’re increasing the monthly fees for the Plans D, or increasing the deductibles (which is the same thing), or increasing the costs of the drugs, or moving a drug that was in Tier 2 to Tier 4, in which you pay a lot more.
The only thing we can do to avoid astronomical drug costs is to get off drugs. The problem is that not everyone can do that. A person with type 1 diabetes needs insulin, and the only basal insulins available today are expensive.
Most of us are also at high risk of heart disease. I knew a man who was on several heart drugs and decided all drugs were just ways for the pharmaceutical companies to make money, so he stopped taking them. After a few days he said he’d never felt better in his life. The only side effect was that after a week he dropped dead of a heart attack.
There’s no proof that he wouldn’t have had the heart attack if he’d kept on taking the drugs, but the fact is that drugs do have beneficial as well as bad side effects. A good discussion of this can be found in Jerry Avorn’s book Powerful Medicines. It was published in 2004 and hence isn’t the latest word, but you can get a used copy for a penny on Amazon, and I found it very readable.
There are no easy answers. If we can control our diabetes through diet and exercise alone, that’s wonderful, and the escalating prices of prescription drugs is certainly a good incentive to do so. But if we can’t, then our only option is to grit our teeth and pay the price. It’s better to be alive with a little less money than to be dead with a huge bank account.