Affordable Care Act Lowering Prescription Drug Costs For Seniors

Seniors — the demographic most skeptical about health care reform — are already benefiting from provisions in the Affordable Care Act, the Associate Press’ Ricardo Alonso-Zaldivar reports, as the law gradually closes the doughnut hole in Medicare Part D. The coverage gap is the result of a political compromise in the Medicare Modernization Act of 2003, which created a gap in prescription coverage for seniors who spend more than $2,840 on medications this year. Beneficiaries are responsible for the next $3,600 in drug costs until they reach about $6,440 in spending.

The health law relies on money from the pharmaceutical industry to close the gap in coverage:

The “doughnut hole,’’ an anxiety-inducing catch in an otherwise popular benefit, will shrink about 40 percent for those unlucky enough to land in it, according to new Medicare figures provided in response to a request from The Associated Press. […]

The average beneficiary who falls into the coverage gap would have spent $1,504 this year on prescriptions. But thanks to discounts and other provisions in President Barack Obama’s health care overhaul law, that cost fell to $901, according to Medicare’s Office of the Actuary, which handles economic estimates.


A 50 percent discount that the law secured from pharmaceutical companies on brand name drugs yielded an average savings of $581. Medicare also picked up more of the cost of generic drugs, saving an additional $22. […] This year, the law provides a 50 percent discount on brand name drugs and 7 percent break on generics. Next year the discount on generics rises to 14 percent. When the changes are fully phased in, beneficiaries will still be responsible for their annual deductible and 25 percent of the cost of their medications until they reach catastrophic coverage.

The Center for Medicare and Medicaid Services (CMS) estimates that almost 1.8 million seniors have taken advantage of the discounts in the doughnut hole, saving more than $660 million on prescription drugs.