Prescription drug costs are one of the fastest-growing expenses in retirement. Last year, about 23% of you postponed filling one or more prescriptions due to cost, according to the results pouring into TSCL’s latest Senior Survey. Our latest findings also suggest that 27% of retirees spend at least $95 per month on prescriptions. These individuals hit the Part D coverage gap, in which the costs for prescriptions can be higher.
Medicare Part D has an unusual benefit design that has a high level of out-of-pocket costs, with no annual cap on out-of-pocket spending. While Part D drug plans vary dramatically, the following “standard” Part D benefit in 2021 shows the following beneficiary out-of-pocket costs:
- Deductible: $445, but some plans have no deductible.
- Initial coverage: $587.50 in out-of-pocket costs for the first $4,130 worth of prescriptions, or $1,032.50 if the plan has no deductible.
- Coverage gap: Up to $5,183.75 in beneficiary out-of-pocket costs.
- Catastrophic period: When the beneficiary portion of spending reaches $5,183.75 the costs of drugs drop to the greater of 5% coinsurance or $3.70 copay for generics, $9.20 copay for brand or non-preferred drugs. For example, a medication that has a full retail cost of $5,000 per month would cost $250 with 5% coinsurance. Beneficiaries continue to pay drug costs through December 31, 2021.
In 2019, Congress came very close to enacting bipartisan legislation that would have provided an annual cap on drug costs of $3,000 ($250 per month), but the legislation was blocked by pharmaceutical interests that fight any and every measure that would lower drug costs for consumers.
The question has been, how would the cost of medications in excess of the cap be funded? And how would prescription costs be restrained? Without keeping cost increases restrained, any higher drug costs that exceed the cap would continue to balloon out of control. Surveys conducted by TSCL find that 85% of survey participants think that Medicare should be allowed to negotiate prices, and 83% think that prescription drug price increases should be restricted to the rate of inflation.
Medicare negotiates prices for virtually every other segment of healthcare, from hospital stays, to doctor fees and durable medical equipment costs. Ever consider why the pharmaceutical manufacturers have been exempt from negotiating with Medicare. The same drug companies already negotiate prices with the Veterans Administration and state Medicaid programs.
TSCL is working to change that. What can you do? Let us know how much you spent out-of-pocket on drug costs in 2020. Please take our annual Senior Survey and let us know! Your survey responses help raise public awareness and that helps press Congress for change. Take the 2021 Senior Survey.