Fewer Medicare Prescription Drug Benefit Plans cover brand-name medications during 'Doughnut Hole' in 2007

Nov 29, 2006--Purchasing Medicare prescription drug plans that offer coverage during the so-called "doughnut hole" will be "more restricted and more expensive" for beneficiaries in 2007, the Los Angeles Times reports.
 

Beneficiaries are responsible for 100% of prescription drug costs during the doughnut hole in the standard drug benefit for 2007, but they can purchase plans that offer some coverage during the gap for a higher premium.

Although more plans will offer coverage of generic drugs during the doughnut hole next year, the number of plans offering coverage of brand-name medications will decrease from 33 to 27, according to a recent Kaiser Family Foundation study cited by the Times.

For example, Humana's drug plan Complete Medicare, which enrolls about 410,000 beneficiaries, covered both generic and brand-name drugs during the doughnut hole in 2006 but in 2007 will cover only generic medications as a way to reduce costs.

Some experts say the change in the Humana plan "raises a new complication for Democrats vowing to reform the prescription drug program," according to the Times. In addition, the change "shows that the actions of insurers ... can have a profound effect on seniors' pocketbooks," the Times reports.

Democrats have proposed authorizing Medicare to negotiate with pharmaceutical companies to lower drug prices, but such negotiations "may or may not resolve such problems," according to the Times.

Robert Laszewski, a health care industry consultant, said, "When an insurance company has a plan design that it cannot make money on, it can be pretty ruthless in what it does to correct that." Humana spokesperson Dick Brown said, "After reviewing the 2006 experience with our complete plan that covered brand drugs through the coverage gap, it became clear to us that we could not continue to do that in 2007 and be able to offer it at an affordable premium."

He added, "When we bid for the 2006 plans, we assumed other companies would do as we did and offer one plan that covered brand drugs through the gap. That did not happen. We under priced the plan based on that erroneous assumption." Humana in 2006 paid $1.33 in benefits for each $1 it took in under the PDP complete plan, according to the insurer (Alonso-Zaldivar, Los Angeles Times, 11/29).