Prescription Discounts And Medicare And Obamacare repeal

All of the following is from a HHS/CMS press release and the CMS website. I bet you didn’t know about this or that these provisions of Medicare Part D are in place as part of Obamacare. And speaking of pharmaceutical discounts, the ACA required drug companies to provide a 50% discount on brand drugs when a person is in the so-called “donut hole.”

The Department of Health and Human Services released today new information that shows that millions of seniors and people with disabilities with Medicare continue to save on prescription drugs and see improved benefits in 2016 as a result of the Affordable Care Act.  

More than 11.8 million Medicare beneficiaries have received discounts over $26.8 billion on prescription drugs โ€“ an average of $2,272 per beneficiary โ€“ since the enactment of the Affordable Care Act. In 2016 alone, over 4.9 million seniors and people with disabilities received discounts of over $5.6 billion, for an average of $1,149 per beneficiary. This is an increase in savings compared to the 2015 information released this time last year, when 5.2 million Medicare beneficiaries received discounts of $5.4 billion, for an average of $1,054 per beneficiary.


Most Medicare Prescription Drug Plans have a coverage gap (also called the “donut hole”). This means there’s a temporary limit on what the drug plan will cover for drugs.

Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. In 2017, once you and your plan have spent $3,700 on covered drugs, you’re in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs wonโ€™t enter the coverage gap.

Brand-name prescription drugs

Once you reach the coverage gap in 2017, you’ll pay no more than 40% of the plan’s cost for covered brand-name prescription drugs. You get these savings if you buy your prescriptions at a pharmacy or order them through the mail. Some plans may offer higher savings in the coverage gap. The discount will come off of the price that your plans has set with the pharmacy for that specific drug. 

Although you’ll pay no more than 40% of the price for the brand-name drug in 2017, 95% of the priceโ€”what you pay plus the 50% manufacturer discount paymentโ€”will count as out-of-pocket costs which will help you get out of the coverage gap. These items aren’t counted toward your out-of-pocket spending:

What the drug plan pays toward the drug cost (5% of the price)

What the drug plan pays toward the dispensing fee (55% of the fee)


Mrs. Anderson reaches the coverage gap in her Medicare drug plan. She goes to her pharmacy to fill a prescription for a covered brand-name drug. The price for the drug is $60, and there’s a $2 dispensing fee that gets added to the cost. Mrs. Anderson pays 40% of the plan’s cost for the drug and dispensing fee ($62 x .40 = $24.80). 

The amount Mrs. Anderson pays ($24.80) plus the manufacturer discount payment ($30.00) count as out-of-pocket spending. So, $54.80 counts as out-of-pocket spending and helps Mrs. Anderson get out of the coverage gap. The remaining $7.20, which is 10% of the drug cost and 60% of the dispensing fee paid by the drug plan, doesn’t count toward Mrs. Anderson’s out-of-pocket spending.

If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan’s coverage has been applied to the drug’s price. The discount for brand-name drugs will apply to the remaining amount that you owe.

Generic drugs

In 2017, Medicare will pay 49% of the price for generic drugs during the coverage gap. You’ll pay the remaining 51% of the price. What you pay for generic drugs during the coverage gap will decrease each year until it reaches 25% in 2020. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.


  1. On top of that, CMS allows the Rx deductible to be raised each year! So, as usual it is fuzzy numbers. We will save you as you enter the ‘donut hole’ but you pay an upfront deductible (up to $400 depending on the insurer) for brand name drugs. This deductible started out at $250, then $360, now $400. What will it be in 2018? Shifting the cost to deductibles vs the donut hole.


  2. Mr. Quinn, thanks for the information. I don’t have either Medicare Part B or D, so I’m not personally familiar with the workings of them. (The so-called “donut-hole” in coverage seems to me to be a maddening bureaucratic snafu. )

    Big Pharma was consulted, and placated, by the Democrats who put the ACA, aka Obamacare, in to place. My guess is that if you polled drug company CEO’s what they thought of ACA’s pricing, they would endorse it. Why wouldn’t they, they got what they wanted. If you polled physicians on what they think of Medicare’s reimbursement schedule for delivered services, you’d get the opposite response.


  3. So if I was a drug manufacturer, I would slowly or maybe quickly raise my prices to account for the loses that will occur by being forced to the “manufacturer’s discount”. At some point the discount will start cutting into manufacturing costs instead of profits if they do not raise the price and since all the companies have stockholders they will have to maintain the profits.

    Name one federal government program that guarantees payment that has not caused prices to rise? Mortgages, student loans, Obamacare, Medicare.


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