Medicare benficiaries in donut hole could save 50% on drugs in 2011

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Medicare Part D beneficiaries who fall into the “donut hole,” or coverage gap, effective Jan. 1, 2011, will benefit from a 50 percent savings on brand name and generic drugs under the Medicare Coverage Gap Discount Program, according to draft guidance put forth by the Centers for Medicare & Medicaid Services (CMS) in the May 21 Federal Register.

According to the agency, the discount on each drug is 50 percent and only drugs whose manufacturers have signed an agreement with CMS to provide the discount on coverage gap claims for all of its applicable drugs and who remain compliant with the terms will be covered.

CMS said that the requirement will be enforced by having sponsors “specify in the discount agreement the labeler code(s) that are covered under the agreement”—these are the first five digits of a drug product's 11 digit national drug code.

According to CMS, the agency will make the list of labeler codes available to the public by Oct. 1, and update it annually, making the system more transparent.

Beginning Jan. 1, 2011, Part D sponsors “must provide the discounts for applicable drugs in the coverage gap at point-of-sale,” CMS stated. The information necessary for the discount to be implemented during point-of-care will be whether the drug is discountable, whether the beneficiary is eligible, whether the claim is wholly or partially in the coverage gap and the amount of the discount.

According to CMS, it will estimate the per member per month cost of the discounts for each plan by subtracting projected drug costs for generics provided to applicable beneficiaries in the donut hole from the total drug costs in the coverage gap and multiply that difference by 50 percent.

“This guidance makes no changes to negotiations between Part D sponsors or other entities with drug manufacturers to obtain additional rebates, discounts, or other price concessions for drugs purchased in the coverage gap or throughout the Part D benefit,” CMS said.

However, the employer group waiver plan will be included in the discount program, “if they can attest and/or otherwise demonstrate that their beneficiaries have cost-sharing between the plan initial coverage limit and the catastrophic threshold and that they will apply any supplemental benefits before determining the applicable discount that will be reported on the prescription drug events.”

"The documents we are releasing…facilitate the implementation of the Affordable Care Act's provisions to help Medicare beneficiaries with the high costs of their prescription medicines," said Jonathan Blum, CMS deputy administrator and director of Medicare.

The guidance incorporates public comment that was issued April 30.

On June 1, CMS held a public meeting to discuss public feedback about the manufacturer agreement which CMS said would be required in order for drug manufacturers of Part D drugs to participate in the discount program.