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HHS Says 48,000 Have Used Medicare Drug Discounts This Year

Mar 22, 2011

The health care law's discount on brand-name drugs for some Medicare beneficiaries has been used by 48,000 people who saved a combined $38 million – $800 on average -- through the first two months of this year, according to the Department of Health and Human Services.

New HHS figures released today also show that the 11,000 Medicare enrollees who have already hit the Medicare prescription drug benefit's annual out-of-pocket maximum this year have saved $1,175 on average as a result of the health law. HHS officials expect the number of Medicare beneficiaries who buy discounted drugs to increase throughout the year.

People who opt for the Medicare Part D drug insurance program pay a portion of their prescription bills until they've run up a total of $2,840 in drug costs and deductibles. That's when they hit the coverage gap known as the doughnut hole. At that point, they must pay all the drug costs until they have spent a total of $4,550 out-of-pocket for the year.

Starting this year, Medicare beneficiaries hitting the doughnut hole receive a 50 percent discount on brand-name drugs and 7 percent discount on generic drugs to help offset the cost of prescriptions. Even when getting the 50 percent discount, the full price of the drug counts toward reaching the $4,550 limit to get out of the doughnut hole.

The law closes the doughnut hole by 2020.

The new health law last year also provided 3.8 million Medicare beneficiaries who hit the coverage gap a one-time $250 rebate check.

"For too long, many seniors and people with disabilities have struggled to choose between paying for needed prescription medication and other necessities, like food, rent and utilities," HHS Secretary Kathleen Sebelius said in a statement.

As Obama administration officials celebrate the health law's one-year anniversary this week, they have promoted many of its provisions, including the rebate checks and the drug price discounts, with hopes of building seniors' support for the measure. According to the latest Kaiser Family Foundation tracking poll 52 percent of senior citizens oppose the law. (KHN is an editorially independent program of the foundation).

Brian Blase, a policy analyst in health studies at the conservative Heritage Foundation, said that while Medicare can leverage its 46 million enrollees to get better prices on prescription drugs, giving the largest discounts for brand-name drugs in the doughnut hole simply steers beneficiaries to more expensive drugs over cheaper generics. "Why would you give a bigger subsidy for the more costly medicine?" he said.

An HHS official countered that many of the costliest drugs don't have a generic equivalent and the requirement that seniors pay half the cost of a brand-name drug encourages use of generics where possible.

Blase also was critical of the $250 checks given to Medicare beneficiaries last year and said it makes no sense with the current federal deficit. "It's not like manna from Heaven," he said. "Seniors will get checks, but the checks will come from people's taxes."

The HHS analysis released today found that nearly one-fourth of the $250 rebate checks were given to Medicare beneficiaries under 65 and disabled, while 16 percent went to beneficiaries age 85 and older. Of beneficiaries so far using the drug discount program, 29 percent were under age 65 and nearly one-half were between the ages of 65 to 74.

Contact Mary Agnes Carey at macarey@kff.org.

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