Trump’s drug plan can bring cost savings to aging Texans
Texans are aging rapidly. By 2030, 17 percent will be older than 65, up from just 12 percent in 2015. In real numbers that’s an increase of about 3 million seniors.
As Texans grow gray, their health will increasingly depend on Medicare Part D, a federal program that helps more than 1.6 million Lone Star State residents access prescription drugs. Fortunately for them, President Donald Trump recently proposed three major reforms to strengthen the program and make medicines more affordable for seniors.
Part D is an optional program for all seniors and many people with disabilities. Enrollees can choose a private insurance plan that is regulated and partly subsidized by the government. The plans cover a different mix of drugs and have different premiums and levels of coinsurance — a requirement that patients pay a set percentage of a medicine’s price, rather than a flat copay.
Since insurers have to compete for customers, they have an incentive to keep premiums low. Among Texas’ 24 available Part D plans, for instance, one costs just $16.70 per month.
Although most beneficiaries find Part D to be affordable, out-of-pocket spending for many has become more unpredictable — and even increased. The big reason? Insurers are shifting more and more costs onto beneficiaries. Indeed, beneficiaries’ out-of-pocket spending per brand-name drug jumped 40 percent from 2011 to 2015.
High out-of-pocket costs can prevent patients from taking their medications as directed. About 1 in 4 cancer patients, for example, has declined to fill a prescription because of cost concerns. Without proper treatment, patients’ health deteriorates.
Trump’s reforms seek to reduce seniors’ out-of-pocket costs and increase medication adherence.
One proposed measure would impact pharmacy benefit managers, ” or PBMs. Insurance companies hire PBMs to administer drug plans and negotiate with manufacturers for bulk discounts and rebates.
PBMs help decide which drugs will be covered by each Part D plan. Consequently, they have significant leverage over biopharmaceutical manufacturers. If a drugmaker doesn’t grant a PBM large discounts, the PBM can retaliate by excluding the drugmaker’s medicines from the plan, thus cutting it off from customers. In 2016, drug manufacturers offered $127 billion in rebates and discounts.
Generally, PBMs keep a share of these discounts for themselves and pass the rest back to insurers. Little of these often huge savings actually find their way along to patients in the form of lower copays or coinsurance.
The White House’s proposal would require insurers to actually share a portion of the discounts and rebates with patients. The administration calculates that if just 33 percent of the discounts were passed on at the pharmacy counter, Part D beneficiaries would save almost $20 billion over the next decade.
A second proposed reform would especially help the sickest Part D enrollees, who often suffer from multiple chronic diseases.
Across every plan, Part D’s “catastrophic” coverage kicks in once a patient has spent $5,000 out of pocket on prescription drugs in a single year. Currently, beneficiaries are responsible for 5 percent of a drug’s cost once they reach this phase of the program.
This relatively small cost-share still imposes a big financial burden on Texas seniors who have already spent $5,000 on medications. Trump’s plan would eliminate out-of-pocket spending in the catastrophic phase.
A third reform would boost drug access for low-income Americans. Right now, low-income Part D beneficiaries pay a $3.35 copay to fill each prescription for generic drugs. Trump’s proposal would eliminate these copay requirements entirely. Scrapping this fee would help more patients get the medications they need to stay healthy.
This blueprint for Part D will help Texans access the medicines they need. With the state’s population aging fast, the reforms are needed now more than ever.
Betty Streckfuss is a member of the Harris County Area Agency on Aging’s Advisory Panel and Council. She also serves on the Legislative Committee on Aging.