When Affordability Isn’t a Possibility

Wayne is not wrong. When Congress passed the Medicare Modernization Act in 2003 and the Part D program launched in 2006, many expensive, specialty drugs were not on the market yet. In fact, a 2018 MEDPAC report notes that “specialty-tier drugs now account for over 20 percent of overall gross drug spending in Part D, up from about 6 percent to 7 percent before 2010.” Over time, as more and more patients rely on high cost specialty drugs to manage chronic conditions, the 25 percent coinsurance they pay out-of-pocket through Medicare Part D has become increasingly unmanageable. 

To afford high cost specialty drugs, individuals with commercial insurance often rely on patient assistance programs and manufacturer copay cards (also called copay coupons). A 2019 NPF survey found that 54 percent of people with psoriatic disease on commercial insurance use manufacturer assistance to afford their biologics. However, Medicare beneficiaries are prohibited from using manufacturer assistance due to the Anti-Kickback Statute, which prohibits manufacturers from giving anything of value to someone to entice them to purchase a product or service that is reimbursable by a federal health care program. Therefore, Medicare beneficiaries can only use patient assistance programs that are often based on income.

Making a Plan

Because Wayne could not qualify for a patient assistance program, he talked to his doctor about the new costs he faced through Medicare Part D. Much to his surprise, his doctor had a plan.  “My doctor recommended changing from my current biologic to a biologic that can be infused. The infusions take 2.5 hours and are considered as a medical procedure, meaning it is covered by Medicare Part B instead. With this change, Medicare pays 80 percent of the costs and my Medigap plan (supplemental insurance) pays the other 20 percent.”

For Wayne, this plan worked. The new infusible treatment was just as effective for managing his psoriatic disease. But this plan was not without sacrifice. “I went from a 30 second injection that could be mailed to my door to a 30-minute drive each way plus time to get the infusion.”  

Wayne considers himself lucky but finds it frustrating that he had to change treatments because of the structure of Medicare and not because his doctor thought this new treatment would work better. “I took a risk switching medications. That risk paid off for me, but not everyone will be able to switch to an infusion just to reduce their out-of-pocket costs by using Medicare Part B instead of Part D.”

The Takeaways

1.      Medicare Part D needs an out-of-pocket cap and smoothing mechanism: The Medicare Part D program is not working for seniors who rely on high cost treatments to manage a chronic condition. People who are taking a treatment that effectively manages their disease should not be forced to switch to something new just to bill it through Part B. Instead, the Part D program – which is designed for prescription drugs – should have an annual out-of-pocket maximum or “cap” so seniors can predict their annual drug costs. Additionally, this cap should be paired with a smoothing mechanism to allow seniors to spread their costs across the calendar year in affordable monthly installments. The cap and smoothing mechanism for Medicare Part D has bi-partisan support and has been included in drug pricing packages in both the House and Senate. NPF is continuing to advocate for these important policies and hearing from you can help.

2.      Request the Health Insurance Quick Guide: Request our free Health Insurance Quick Guide to learn how to use your plan’s benefits and get info on picking a new plan during Open Enrollment. If you are new to Medicare, contact the Patient Navigation Center to receive our Switching from Commercial Insurance to Medicare Fact Sheet.