Doughnut-hole drugs found to cost more

October 11, 2006|By Bob LaMendola | Bob LaMendola,South Florida Sun-Sentinel

Medicare's prescription drug program was supposed to cost less than buying retail, but a new analysis of South Florida drug prices shows that seniors who fall into the "doughnut hole" coverage gap often pay more than they would at the drugstore.

The regular retail price at the lowest-priced drugstore beat doughnut-hole prices charged by Medicare drug plans 80 percent of the time, said a report released yesterday by Consumers Union, the nonprofit group that publishes Consumer Reports. In some cases, the drugstore price was 10 percent less.

"We were surprised," said Peter Sikora, a co-author of the report. "The Medicare drug plan is not working, because of the doughnut hole. It's not delivering the right prices for the consumers."

At a news conference outside a Costco in Pompano Beach, consumer activists said the report strengthened the argument that Congress should change the law to allow Medicare to bargain directly with manufacturers, to keep prices down for consumers. Democrats in Congress agree, saying the Republican-drafted program boosts profits for drugmakers.

The Department of Veterans Affairs can negotiate with manufacturers, and its prices were 54 percent less than prices charged by Medicare plans in the doughnut hole, the report said.

"It's absolutely appalling," said Bill Newton, director of the Florida Consumer Action Network. "The Medicare plan needs to be done over."

But spokesmen for Medicare and insurers offering the drug coverage said the report focuses on one aspect of the first-year program, which the government says saves each participant $1,500 a year on average.

A study by Medicare last month found that Medicare drug plans saved consumers 27 percent on average - as much as 56 percent at best - compared with retail prices. Surveys show 80 percent of seniors are satisfied with the drug program.

But Consumers Union focused on the most controversial piece of program, the doughnut hole, a period when most plans offer no coverage.

After a recipient obtains $2,250 in drugs, most plans halt coverage until the person has spent a total of $3,600 out of pocket on drugs.

At that point, the person comes out of the gap and the plan covers 95 percent of costs. An estimated 3 million to 7 million people are expected to reach the gap this year.

For its report, Consumers Union called all 261 retail drug outlets in Broward County to get regular retail prices for six commonly used medicines, including cholesterol drug Lipitor, antidepressant Zoloft and blood pressure drug Norvasc.

Then researchers compared doughnut hole prices charged by more than 40 Medicare drug plans available in Broward.

The results: The lowest price retail store had lower prices 80 percent of the time. For example, a Wal-Mart charged $62.85 for a one-month supply of Lipitor, but the lowest price for Lipitor for those in the doughnut hole was $67.46, in SilverScript Plus plan.

Bob LaMendola writes for the South Florida Sun-Sentinel.

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