Since the health care overhaul two years ago, medicare participants have saved$5 billion on prescription drugs.(Photo: Julia Cheng for USA TODAY)
Since passage of the health care overhaul two years ago, 5.8 million
Medicare patients have saved $5 billion from prescription drug
discounts, and the government can now predict lower health care costs
based on increased use of these cheaper drugs.
The savings are a
continuation of the 2010 health care law's attempt to close the
"doughnut hole" - or the prescription drug coverage expenses that kick
in once Medicare coverage runs out. The Department of Health and Human
Services plans to announce those savings Monday.
"The health care
law is saving money for people with Medicare," said HHS Secretary
Kathleen Sebelius, before adding that open enrolling begins next week.
2012, Medicare coverage ends when total prescription costs top $2,930.
Drugmakers participating in Medicare agreed to give the government a 50%
discount on premium drugs and 14% on generic drugs as part of the
health care law, and to extend those discounts to seniors who have
exhausted their coverage and are forced to pay for the drugs themselves.
of these discounts, in the first 10 months of 2012, Medicare
beneficiaries saved $1.86 billion on prescription drugs, compared with
$1.51 billion in the first 10 months of 2011, according to HHS. The last
months of the year tend to have higher savings as people run out of
coverage and enter the doughnut hole.
The Congressional Budget
Office announced an added benefit Thursday: Cheaper drugs means more
people taking their medication, reducing long-term medical costs. When
Medicare patients take an antibiotic to prevent further infection, or
properly take their insulin or hypertension medications, they save the
government money in the long run by stabilizing their illnesses and
preventing emergency hospitalizations.
"Using the revised
methodology, CBO estimates that the net cost of implementing the
provisions closing the coverage gap will be $51 billion, rather than the
$86 billion estimated prior to the revision," the CBO report states.
Michael Cannon, director of health policy studies for the Cato
Institute, a libertarian think tank that has come out against the
Affordable Care Act, said that as "politicians and lobbyists" expand the
drug benefits, more people who don't need them use them, and "health
care spending rises."
"It's an attractive story: New government
subsidies lead more people to take their medicine, leading to lower
health care spending," he said. "Problem is, it's almost never true."
has also argued that lowering the prices of name-brand medications will
steer seniors away from generic drugs, thus causing the government more
That may not be the case. Before the doughnut-hole
discounts started, customers would learn their benefits had run out and
stop taking their more expensive medications, said Steve Simenson,
president of Goodrich Pharmacy and past president of the American
Pharmacists Association. His store caters to hundreds of patients each
day, he said.
Now, however, more customers are taking advantage of
generic medication - even on the government's dime - so their coverage
lasts longer, Simenson said.
"They're asking for them," he said.
"I'm not sure they know it's because of the Affordable Care Act. They're
still not quite educated on the nuts and bolts of the benefits."
they see a difference, even if they don't know where the benefit comes
from, he said: "Better adherence leads to better outcomes."
CBO reports did not list the financial benefits of patients taking
affordable prescription medications, because there was insufficient
evidence of an "offsetting" effect. On Thursday, the office said every
1% increase in prescriptions filled by Medicare patients would cause the
program's spending to drop by one-fifth of 1%.
The change in
policy came after dozens of studies and research showed a link between
changes in prescription use and in spending for medical services,
according to the CBO.
"A substantial body of evidence indicates
that people respond to changes in cost sharing by changing their
consumption of prescription drugs," CBO stated in their report.
of the law had warned that Part D premiums would go up, as would
medications for non-beneficiaries as drug companies tried to make up for
the loss in profits in from the discounts. However, premiums have
stayed stable, and the Government Accountability Office, the
non-partisan watchdog arm of Congress, found that prices for brand-name
drugs used by Medicare beneficiaries increased at a similar rate before
and after the government required discounts in January 2011.