How to reduce your Medicare Part D costs


If you have Medicare Part D, you know about the “doughnut hole” in the coverage. On my plan, through Humana, I pay 100% for prescriptions after total costs reach $2880 within a calendar year. If and when the total reaches $4550, then the plan kicks in again. Reaching the doughnut hole means you’ve either had a single very expensive episode, or you’re on high-priced monthly medications. I had thought I was doing okay.

Then last November the pharmacy told me that one of my regular drugs was in short supply nationwide and they had to substitute another similar drug. My doctor approved it. I didn’t think it worked quite as well, but there seemed to be no choice. My co-pay had been less than a dollar, and went up to $7, but I didn’t really think about that. I talked to the pharmacist twice, over the months, about switching back but each time the supply of the former drug was not yet stable.

Imagine my surprise when I looked over the detailed claims records just now, and found that it was costing $165 per month in November and now in July it’s $183. Six months of this substitute drug during 2010 has added over $900 to my total, nearly doubling it, and pushed me alarmingly close to the no-coverage point of $2830. I would have been at about $1000 total cost for this calendar year, with $1800 to go before coverage ended; now I’m at $1927.

This is a good reason to keep a close eye on your monthly statements and catch this sort of thing as early as possible. Your out-of-pocket costs may not be a good indicator of the total cost, which determines when you reach the “doughnut hole”. Although I had asked my pharmacist twice this year about going back to the original medication, I didn’t push it as hard as I would have if I had realized how much the substitute was costing.

I wish I had a week to put into researching pharmaceutical companies: what drugs are made where, results of FDA inspections, promotion of drugs for unproven uses, suppression of negative trials, why certain drugs suddenly are in short supply (collusion?), how pharmaceutical companies maximize their profits by manipulating patent law, and so on.

Here is just one of the many stories to be found, one that the House just took action on. Companies that own patented drugs sometimes reach “licensing” agreements with small companies that have developed generics, and by such agreements they prevent the generics [see ‘Pay-for-Delay’ Deals Cost Consumers $3.5 Billion a Year which summarizes a long FTC report of the same title available here, and If Pay-for-Delay Deals Are Good for Consumers, Why Do Companies Sign Them?] from being marketed even after the patent has expired. A chart in the FTC report shows the number of these agreements increasing from 0 in 2004 to 19 in 2009.

On July 2, Bloomberg News reported:

The U.S. House approved a measure restricting the ability of drugmakers to enter agreements that the Federal Trade Commission has said keep generic medicines off the market. … The restriction was included in an amendment to the war- funding bill, approved on a 239-182 vote.

Something we all might want to write our Senators about, to urge them to follow suit. The more generics are available in this country, the lower our costs will be as individuals, and the less our country will spend on health care. Let’s not worry too much about the profits of Big Pharma:


Chart from an AFL/CIO publication.

Not all of my unexpected total prescription cost was caused by the substitute drug (costing almost 20 times the original that was “in short supply” nationwide). There was a sudden jump due to my choosing in June to get an expensive newly prescribed drug in a 3-month supply via Humana’s mail-order pharmacy delivery. That added over $600 to the total, and since it occurred in June I haven’t yet gotten the paper cost-summary from which I would have known this. I thought I’d save a bunch of money by going the mail-order route, but in reality the saving was very little.

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