There is no denying many prescription drugs are expensive, that many prices have increased at questionable rates or that many patients struggle with payment.
However, there is a great deal of misleading going on as well and this distorts our ability to seek better solutions.
Aside from contributing to overall health care spending, the cost of a prescription to a patient involves several factors. Do they have insurance, are they covered by Medicare, are generic versions available and what is their deductible and co-pay?
Few people are required to pay 100% or any percentage of a drugs retail price which unfortunately is often used as the basis for news stories. For many Americans with employer coverage co-pays are reasonable under most circumstances. Of course, individuals taking many different drugs may be the exception.
For families covered by high deductible plans the overall risk is the annual deductible. (NOTE: Recently the rules were changed and now insulin is considered a preventive item which can be excluded from high deductibles) Even seniors with Medicare have a reduced risk for prescription costs.
Study: Cost affects insulin use
Newton, Massachusetts, resident Deidre Waxman has good prescription-drug coverage through Medicare.
But she worries that the $1,300 to $1,500 monthly retail cost of her insulin will be unaffordable if she reaches the doughnut hole, Medicare’s deductible that kicks in once drug spending exceeds $3,820. USA Today
But wait, this lady is never going to pay the retail price. Note below from Medicare.gov she will pay a percentage of the plan’s (negotiated) price.
Once you reach the coverage gap in 2019, you’ll pay no more than 25% 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 25% of the price for the brand-name drug in 2019, 95% of the price—what you pay plus the 70% manufacturer discount payment—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 in 2019)
• What the drug plan pays toward the dispensing fee (75% of the fee in 2019)
In 2019, 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 25% of the plan’s cost for the drug and dispensing fee ($62 x .25 = $15.50).
The amount Mrs. Anderson pays ($15.50) plus the manufacturer discount payment ($42.00) count as out-of-pocket spending. So, $57.50 counts as out-of-pocket spending and helps Mrs. Anderson get out of the coverage gap. The remaining $4.50, which is 5% of the drug cost and 75% of the dispensing fee paid by the drug plan, doesn’t count toward Mrs. Anderson’s out-of-pocket spending.