Addressing the crisis of drug costs (Opinion)

By Kathleen Stoll
Aug 17, 2021

Many Americans — uninsured and those with health insurance — face unaffordable, high prescription drug costs. Medicare enrollees are no exception.

First, Medicare prescription drug coverage is not free. Medicare enrollees must either pay a premium for a Part D plan or a Medicare Advantage Plan.

Second, even after paying a premium, Medicare coverage can be more caveats than coverage.

There is nothing simple about understanding Medicare prescription drug coverage. Most Medicare 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.

The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. In the coverage gap, you’ll pay up to 25% of the cost for your plan’s covered prescription drugs. The donut hole ends when you reach the catastrophic-coverage limit for the year. In 2021, the donut hole will end when you and your plan reach $6,550 out-of-pocket in one calendar year. When you go beyond the coverage gap, you do pay a lower 5% copay.

But here’s the kicker: Unlike private health insurance, Part D drug plans have no out-of-pocket caps on prescription drug spending for most patients when they leave the donut hole.

These copays add up when you need specialty drugs to treat cancer and other serious diseases.

Prescription drug prices are soaring every year. For instance, prices for 54 orally administered cancer drugs shot up 40% from 2010 to 2018, averaging $167,904 for one year of treatment, according to a 2019 Journal of the American Medical Association study. Part D enrollees’ average out-of-pocket cost for 11 orally administered cancer drugs was $10,470 according to the JAMA study.

Compare that $10,000-plus bill for lifesaving drugs against the median income for Medicare beneficiaries: $26,000 a year.

There is a prescription drug affordability crisis in our state. Polling of West Virginia voters in April and May released by West Health and conducted by Global Strategy Group found:

• More than a quarter of voters (27%) say they or someone in their household could not pay for prescription drugs that were prescribed by their doctor in the past year. That means that, in the past year, 387,000 residents could not pay for medicine or drugs prescribed by their doctor.
• Nearly one-fifth of West Virginia voters (17%) say they knew someone who had died in the past five years because they could not afford their medication.

Thus, it is no surprise that West Virginia voters support Congress addressing prescription drug costs, including using the power of Medicare to negotiate lower drug prices.

• 93% of voters rank prescription drug costs among their top priorities for congressional action — with 38% saying it is their very top priority.
• An overwhelming majority of West Virginia voters (87%) support requiring drug companies to negotiate with Medicare for lower prescription drug prices for all Americans. Only 5% express any opposition.
• West Virginia voters show a preference for broader reforms. A majority (61%) say they support giving Medicare the power to negotiate prescription drug prices for all Americans, not just for people who are on Medicare (32%).

Further, West Virginia voters are not fooled by Big Pharma claims that reducing drug prices will negatively affect innovation and standards. Only 12% of voters are agree with this pharmaceutical industry argument:

“By letting Medicare dictate prescription drug prices, we will undercut drug companies’ ability to innovate and develop new drugs.”

The reality is that pharmaceutical companies make much more in profits than other companies. The Wall Street Journal reported that, in 2020, the CEO of Johnson & Johnson received $29,803,000 in compensation. The CEO of Pfizer Inc. made $27,914,000.

Medicare price negotiation could save the federal budget $450 billion to $650 billion that could be used to pay for other health programs — for example, new vision and dental benefits in Medicare.

Hugely profitable drug companies should not have a totally free hand to set their own prices. We must call on our West Virginia congressional delegation to support Medicare drug price negotiation and other reforms to address the crisis of unaffordable prescription drugs in our state.

Kathleen Stoll is the policy director for West Virginians for Affordable Health Care (wvahc.org) and operates a policy and economic consulting business, Kat Consulting.