Health care law offers doughnut hole relief on Jan. 1

Barbara Solum
Barbara Solum looks at a bottle of prescription medication at her home in Chanhassen on Dec. 8, 2010.
MPR Photo/Elizabeth Stawicki

Beginning Jan. 1, Medicare recipients in Minnesota who hit the annual gap in drug coverage known as the "doughnut hole" will be able to buy their name-brand prescription drugs at half price.

The discount drug program is the second step in the federal health care law's effort to close the Medicare Part D coverage gap entirely by 2020. It comes on the heels of $250 rebate checks those who hit the donut hole received this year.

Reaching the Medicare Part D coverage gap is a little bit like driving off a cliff. The program covers the first $2,840 in prescription drug costs and then -- poof -- nothing. Recipients then must pay the full cost of their prescriptions until they've spent about $4,500 out of pocket. Then, the coverage kicks back in.

Barbara Solum, of Chanhassen, is one of an estimated four million people who experienced that drop in coverage this year. With several prescriptions she hit the doughnut hole at mid-year -- and hasn't had coverage since then. She could no longer afford to refill all of her prescriptions so she found ways to make them last longer.

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"I've cut some of my pills down where I'm supposed to take two pills a day I'll maybe take one," Solum said. "Or, try to eliminate it completely which doesn't work real well. And the one I need the most is for my eyes and that is a very, very expensive product."

Since Solum hit the coverage gap in June, she's paid about $3,800 out of pocket for her prescriptions this year. She should be able to cut that cost in half once she reaches the gap next year.

Under the federal health care law, those Medicare recipients who hit the doughnut hole will receive a 50 percent break on name brand drugs and a 7 percent discount on generics. Solum said the 50 percent break would be a huge help and would allow her to take her medicines as prescribed. She's not banking on getting that break, however.

"We hear so many things are going to happen and then it doesn't come true," she said. "So I am skeptical whether that will happen or not. I hope so."

Solum is not alone. Many other senior citizens and their advocates are similarly concerned. The general worry is that drug companies will find a way to skirt the requirement. But federal officials say there's little reason for concern.

"The vast, vast, vast majority of manufacturers have signed agreements," said Jonathan Blum, who oversees Medicare's prescription drug program.

Blum, deputy administrator of the Center for Medicare, sad the federal government has received agreements from virtually every drug manufacturer for 2011.

"There are a handful of drugs not covered but all of them have therapeutic equivalents that are on the list," he said.

Officials with the pharmaceutical industry's trade group, Pharmaceutical Research and Manufacturers of America or PhRMA, said in a statement to MPR that said its companies were "committed to providing the 50 percent discount on brand name medicines for ... [those] who enter the Medicare Part D coverage gap."

The discount is part of the drug industry's $80 billion commitment over 10 years to help fund health care reform. But PhRMA will also gain a slew of new customers when federal healthcare overhaul reform law insures an estimated 32 million more Americans beginning in 2014.

Peter Wyckoff, the founder of the Minnesota Senior Federation, said drug companies could do a lot more to lower the cost of medication for seniors. But he said the doughnut hole discount is an important good step.

"This can be a major and prohibitively costly expense for people who by definition are not well if they're taking that many drugs or in need of help," Wyckoff said. "And this is one pain seniors did not need to have."

Meanwhile, Barbara Solum is cautiously optimistic that she'll get a 50 percent break on her name brand drugs next year. She said she'll know for sure when she hits the doughnut hole between May and June.